Equal’s 2023 Research POV

Equal Ventures
16 min readJan 17, 2023

Themes we’re watching in the year ahead

By Chelsea Zhang, Simran Suri, and Adam Chadroff

As a concentrated, thesis-driven firm, we spend the beginning of each year in planning mode. We outline the new ideas we’re excited to dive into, others we want to explore and a few that we may no longer be pursuing. The final result is what we call a “hunting list” — a set of theses for which we develop a Prepared Mind. The goal for each thesis we’re “hunting” is to have visibility of every company that aligns with our Prepared Mind — meeting with as many as possible and sharing our internal research with founders along the way. While we’ve historically kept our hunting lists internal, we decided to open source our new research themes for 2023 in the hopes of meeting more operators, founders and investors focused on similar areas.

With that, we’re excited to share our initial hunting lists for 2023 across our five key sectors.


We saw a massive whiplash to the retail industry in 2022. E-commerce activity retreated to pre-pandemic levels, pushing brands / retailers towards omnichannel strategies, particularly brick & mortar retail. Inventory levels overcorrected and left retailers swimming in tremendous amounts of excess inventory. As we look to 2023, choppy economic conditions threaten further headwinds to the retail sector, forcing what we believe will be a focus on fundamentals, not growth.

The Great Unbundling — Moving away from retail verticalization

A turning point in the DTC revolution was the realization that for most brands, digital alone was not enough and they would have to venture into other channels, namely brick & mortar retail, to truly achieve significant scale. Most digitally native brands chose to venture into the physical world alone — unsurprising, given that one of the core tenets of the DTC narrative is that verticalization of the value chain would lead to better economics. The results haven’t necessarily proven the hypothesis. Of the notable players that made significant investments into B&M retail, Rent the Runway’s market cap is $255M but raised $526M to date and has ~$175M of cash as of 10/31/2022. Allbirds’s market cap is $383M but has raised $202M to date and has ~$180M of cash as of 9/30/2022. Casper sold for $286M to a private equity firm after raising $340M from venture investors and another $100M during its IPO. Warby Parker is the only DTC OG with a respectable market capital but even they have never made a single dollar of net profits. Either verticalization doesn’t work in retail or it requires such an insane amount of capital that it simply does not make sense.

We have long believed that brands should outsource parts of the retail value chain that are not their core competencies and focus on what they do best — understanding the consumer, product development, and brand building. Everything else, particularly things that rely on economies of scale like brick & mortar retail, should be outsourced across both digital and physical services. We’ve already invested in two — Leap, “retail-as-a-service,” and Ghost, “disposition-as-a-service,” and will continue to be on the lookout for “as-a-service” platforms, particularly those that accelerate economies of scale.

Return of Omnichannel — Focusing on profitable channels

The cracks were there pre-pandemic (see our Death to DTC blog) but the hypothesis that a digital-only strategy can build and grow a significant, public retail company was finally, and firmly, rejected in 2022. As consumer spending shifted back to stores, brick & mortar became sexy again, particularly given its lower return rates with higher AOVs vs. DTC. B&M was one of the sole bright spots in 2022, particularly for DTC darlings like Warby Parker and Allbirds and our portfolio company Leap, a retail-as-a-service platform enabling brands to expand their B&M presence, continues to see massive demand from the market. Omnichannel strategies will be a major focus for retailers and brands in 2023 and we are excited to meet more founders enabling brands to diversify their businesses through other profitable channels such as 3rd party marketplaces (such as Amazon), wholesale, international markets, and more.

Reverse Logistics / Disposition — Salvaging margins for brands

Excess inventory is not going anywhere and will be a critical lever for margin expansion. Per Equal Ventures analysis, we estimate excess and returned inventory to total $1T+ and retailers are still working through the inventory overglut of 2022. Things may worse as we enter the January “returns tsunami” post the holiday season — Salesforce estimates that returns are up 57% yoy, which will only exacerbate the excess inventory problem. Disposition of returned and excess inventory will have a massive impact on gross margins and solutions like Ghost, a managed marketplace for excess inventory and Equal portfolio company, will be supremely helpful for brands as they look to optimize the ROA on excess inventory while protecting their brand equity. Per our Point of No Return blog, we are still searching for disruptive platforms within the returns space that brings enterprise-level data and logistics capabilities to the long tail of brands and retailers.

Squeezing Pennies — Bringing value to consumers

Like we’ve seen in past cycles, consumer spending is likely to move to the value and the luxury ends of the market. We saw the signs in 2022 — P&G and Nestle reported falling sales volume and higher prices while LVMH and Hermes boomed and TJ Maxx and Dollar General reported strong earnings and hit all-time highs. Mass-market retailers and brands will need to adjust their offerings to appeal to a consumer with a vastly different spending appetite than that of the last two years. Consumers will be looking to squeeze pennies and even households with more spending power will be cutting back. We will be interested in learning more about innovative platforms and marketplaces that can bring value to today’s consumers, particularly through optimizing sourcing, distribution, and other critical parts of the supply chain.

Supply Chain

As always, the supply chain was at the mercy of global geopolitical and economic factors in 2022. From China’s COVID troubles continuing to pressure manufacturing supply chains and the Russia-Ukraine crisis’s impact on oil prices to domestic issues like mounting inflationary pressures and sustained labor shortages, the supply chain didn’t get much of a respite. Unfortunately, 2023 is likely to deliver more of the same.

Troubles in the Far East — Restructuring manufacturing supply chains

We fully expect international conflicts to continue to wreak havoc on supply chains in 2023, namely — the China question. Beijing has begun the unwieldy process of opening up the largest population in the world with an unproven vaccine and there’s no predicting how smooth (or bumpy) the process will be. Foxconn has already been hit by worker protests and major cities hit hardest by COVID such as Beijing, Shanghai, and manufacturing-giant Shenzhen have seen unending shut-downs for months. Continued delays in resurrecting U.S.-Sino trade flows will only further flame the cries of reshoring. Advanced manufacturing, especially semiconductors and breaking up Taiwan’s near-monopoly of the category, will likely be priority #1 for U.S. technology companies and a matter of national and international security. The reshoring wheels, already in motion for the past few years, are accelerating — a recent Deloitte survey indicates that 62% of manufacturers reported that they have started reshoring or near-shoring their production facilities. While a total reconfiguration of current manufacturing supply chains is still a ways away, we believe that there will be massive opportunities in the next few years to enable businesses of all sizes to better diversify existing manufacturing supply chains.

Bodies, Bodies, Bodies — Filling the labor gap

Labor shortages, particularly for frontline workers, caused significant supply chain delays and shortages in 2022. Despite transportation and warehousing labor wages increasing 4x faster than before the pandemic, logistics operators still had issues hiring and retaining workers. A December potential rail strike was nipped in the bud by Biden but could have frozen ~30% of U.S. cargo shipments by weight and cost the American economy as much as $2B per day. Upcoming infrastructure legislation, particularly within construction, is likely to add more labor demand on blue collar workers and given that logistics and construction often attract similar pools of labor supply, we expect labor shortages to continue into 2023. Platforms and solutions that can enable existing labor supplies to upskill or create net-new labor supplies will find ready adopters.

Freight Softness — Navigating the downturn

Freight markets came down to Earth in 2022 from 2021 highs. Rates are down ~30–40% as inflation curbed consumer demand in addition to the significant new capacity that was enticed to enter the market when the market was “hot”. Even FedEx furloughed workers in early December — the “peak season” of the year and we expect freight markets to remain soft in 2023 given weak consumer demand. In a rather bleak start to the year, Amazon revealed their workforce reduction will actually be 80% higher than what was announced in November last year. In addition to low rates, oil prices are likely to remain elevated. There’s no end in sight for the Russia-Ukraine conflict and OPEC has continued to signal that it will not move from its production quota. Given heavy pressures on freight margins, we unfortunately expect more carrier bankruptcies to come. Carriers will be looking for any edge to optimize for more profitable loads — solutions that enable carriers to survive will see a lot of interest in 2023.

Circular Economy — Advancing the reverse infrastructure

As discussed in the Retail section, optimizing the reverse logistics / disposition supply chain will be a massive focus for brands as they shift their focus to improving profitability in 2023. An effective solution will require the full participation of other important stakeholders in the retail supply chain, especially 3PLs who are also dealing with the headache of returns. We believe there is ample opportunity for platform solutions that can bring a novel rethinking to the existing infrastructure to improve circularity (and margins) for brands.


Macro hit insurtech investors hard in 2022, as the first generation of IPOs got crushed in public markets and new exits ground to a halt. Meanwhile, P&C premiums continued to rise, as insurers grappled with large catastrophe losses, shifting geopolitical risks, higher inflation expectations, and generally hardening reinsurance markets. Looking ahead to 2023, we predict ongoing digitization but with a focus on profitability, capital efficiency, and product differentiation. And given insurtech funding fell by 40+% in 2022, we expect insurance M&A to be strong across the value chain.

Specialty Lines — Growth in underserved markets

Specialty lines are growing, as embedded offerings provide access to new markets and as insurers look to diversify risks. Relative to larger or more traditional product categories, these lines are often underserved in terms of underwriting data, loss mitigation, customer access, and differentiation. Products that leverage higher data quality at the point of underwriting help brokers identify and retain top accounts, and improve profitability for carriers. And since these niche spaces are less crowded, we see an opportunity for tech-enabled new entrants to take meaningful share quickly and with limited competition — as demonstrated by the growth of niche power players like Ryan Specialty and Skyward.

Embedded Solutions — Driving monetization in new channels

Investment in embedded solutions climbed in 2022, and we expect the trend to continue. While we don’t see most lines quickly shifting to DTC channels, new digital infrastructure reduces friction for service providers, retailers and marketplaces to embed protection products into purchase experiences. Embedded products offer merchants and SaaS providers new revenue streams, which is particularly compelling in a low-growth or recessionary environment. Even more importantly, embedded creates a new opportunity for insurers to target underserved segments and leverage new insights, enabling competitive advantages in distribution and underwriting. We’re interested in embedded products that decommoditize coverage by delivering a superior customer UX, and that drive sustainable growth or category dominance for insurers.

Broker Digitization — Improving access, insights and efficiency

Agent and broker channels still dominate distribution, but there is increasing urgency for legacy distributors to modernize and digitize their capabilities. Insurance purchasers demand a modern UX with multi-channel interactions and customized coverage recommendations. Platforms and software can help – agents that adopt digital best practices increase their top-line growth and operating margins. For example, quote-and-bind solutions offer turnkey access to markets, thereby increasing broker efficiency and competitiveness. Similarly, streamlined customer insights drive improved cross-sell and retention capabilities. This points to a need for more advanced data integration and APIs between brokers and carriers/MGAs. And since the legacy distribution space is deeply fragmented, we also see potential for tech-enabled aggregators and platforms that provide scale advantages and margin expansion for the long-tail of small IAs.

All Eyes on Climate - Managing changing risks

The urgency for climate risk-management and risk-transfer solutions is rapidly increasing, and we believe it will serve as a catalyst for insurance innovation in 2023 and beyond. Insurers regularly flag climate change as the industry’s top long-term risk, and risks are increasingly acute not just to P&C insurers, but also for homeowners, business owners, and public utilities. While it’s generally tough for new entrants in this space to prove differentiation and defensibility, we believe there is still white space for market leadership in climate risk modeling, resiliency, loss mitigation services, and claims innovation.

Modern Protection Solutions — Addressing supply chain complexity

Pandemic lockdowns and closures laid bare a fragile global supply chain. Today, even as China abruptly reopens, it’s hardly back to business-as-usual risks for freight, logistics, transportation and supply chain operators. As I write this, global maritime and commodity shippers are managing unprecedented geopolitical challenges, and Southwest is recovering from the cascading disruptions that grounded most of its fleet. Moreover, the proliferation of electric and autonomous vehicles is introducing new hard-to-model liabilities. New risk transfer solutions aimed at the shipping and transportation industries, as well as loss-prediction and mitigation products, will proliferate to address these emerging challenges.


We thought 2022 would be the record-breaking year in climate, but it’s looking like 2023 didn’t come to play around. With a record $94B of new private climate AUM raised since Jan 2021 and $19B invested into 500 venture deals in the first half of 2022 alone, we expect to see increased activity in the venture-backed climate tech market moving into the new year. We have our eye on a few key themes:

ESG Allocation — Greenwashing goes away

Last year, we began rethinking the Montgomery Burns Principle for the first time. But, after questions around carbon credit reliability rose and financial executives around the world faced the gauntlet for fudging ESG metrics, we’re renewing our belief in the Montgomery Burns Principle. We expect greenwashing to fade as the economy tightens and think this could push firms to invest directly into green infrastructure, giving them greater control and certainty over the credibility of hitting their ESG objectives. We also expect increased scrutiny on the types of projects/assets/companies that qualify as ESG. This could place additional pressure to funnel investments into the clean energy transition (an area which faces little controversy of its ESG impact). Only 1% of institutional investors directly invested into infrastructure projects between 1999 and 2019, but we expect ESG dollars to flow more freely moving forward. This will create a need for platforms that can aggregate a high volume of profitable infrastructure projects so institutional investors can more efficiently and transparently allocate capital.

Green Workforce — Creating climate careers, not gigs

We’ve discussed the opportunity in green workforce development in years prior, but are excited to double down in 2023. The BLS ranks wind and solar technicians amongst the fastest growing occupations (continuing the trend we first highlighted in 2021). With the IRA increasing focus on domestic renewables deployment, it’s safe to say most are expecting a spike in DER installations around the country. That said, we’re facing a massive shortage of skilled technicians with the requisite qualifications to install solar, EV chargers, new electrical panels, and more, as Canary Media recently highlighted. While the IRA has committed over $200M in grants for training contractors in energy audits and energy efficiency retrofits, we believe there will continue to be a need for platforms that empower careers in climate, not just gigs. We think these platforms could look more like upskilling business-in-a-box solutions with free, robust training that enable anyone to start their own long-tail solar or HVAC business, rather than verticalized labor marketplaces connecting customers to existing developers or contractors.

Grid & DER Technology — Volatility is here to stay

Energy markets and legacy infrastructure are growing increasingly unstable, making decentralized energy infrastructure increasingly attractive. We’ve called out this opportunity in years prior and are excited to continue doubling down on solutions that increase access to clean, affordable power across the country by addressing energy volatility like our portfolio company, David Energy. We’re actively looking for solutions addressing energy volatility via better connectivity/interoperability of DERs or through new business models such as virtual power plants. We highlighted these themes in our “Prepared Mind” deep dives on Buildings as Power Plants and unified API infrastructure for the new energy economy (Plaid for Energy), but see additional opportunities on the horizon. As the grid marches toward decentralization, volatility is a natural byproduct of that evolution. We need to find the technology solutions capable of managing, incentivizing and optimizing grid operations for this evolution to come to fruition.

Geographic Scope — Global is the real frontier

In 2022, Russia’s invasion of Ukraine and heightened trade tensions with China squeezed the international energy industry and rare earth metal/DER supply chains, leading to a renewed focus on energy security and independence. As geopolitical tension continues to increase globally and COVID rages on, this could lead to the US and other countries increasing deployment of capital into renewables abroad to achieve global energy security and transition goals. We’re already seeing players like our portfolio company Odyssey Energy Solutions attack this need by connecting capital providers to developers in emerging markets. Looking forward, we plan to dive into additional opportunities accelerating deployment of capital into clean energy infrastructure across new geographies and project types.

Business Model Innovation — Don’t discount counterpositioning

Despite the massive influx of venture capital into climate tech businesses in the last few years, the longtail of climate customers still exist offline given their irrationally low willingness-to-pay for software, despite clear ROI. Whether solar developers, carbon brokers, or commercial building owners, increasing digital penetration across the longtail will require new, innovative business models that differ from hefty, annual SaaS contracts, like counterpositioning. We outlined our perspective on this business model for selling to non-digitally native customers in Give It Away, Give It Away, Give It Away Now and believe the same principle holds true for climate. Taking a counterpositioning approach by giving away software for free while monetizing through alternative means can unlock the non-digitally native climate longtail, allowing new climate tech companies to meaningfully, efficiently scale. We think the counterpositioning business model can be applied across multiple verticals in climate tech, from DERs to nature-based projects and we’ll continue to be on the lookout for businesses using the counterpositioning strategy to access non-digitally native customers.


The cost of healthcare is steadily increasing, and coverage gaps continue to widen, with 37% of seniors unprepared for healthcare costs and 1 in 3 parents struggling to find childcare. Looking into 2023, we’re excited about companies that enable increased accessibility, accountability and affordability of care.

Home Healthcare — Optimizing the workforce

Home healthcare is $100B+ market in the US, and continues to grow based on global demographic trends. That said, the industry remains heavily fragmented, many agencies operate with low margins and the majority of aides lack benefits, income stability and job security. We believe there’s an opportunity to increase transparency across the home health industry for both agencies and aides through addressing key pain points like hiring, training, retention, billing and benefits provision through tech-enabled PEO models. We think these can increase efficiencies for home healthcare providers, while also engaging payers, who are eager to reduce costs and claims errors.

Medicare Advantage — Enabling seniors and brokers

The number of Medicare Advantage enrollees is expected to surpass total Medicare enrollment in 2023. Seniors have, on average, up to 43 different Medicare Advantage plan options to choose from — more than 2x the number of options available in 2018. At the same time, predatory marketing tactics and lack of transparency across offerings mean that only 10% of seniors choose the optimal Medicare Advantage plan. We believe there’s an opportunity to enable both brokers and seniors to more accurately distribute and find the most cost-effective plans while minimizing coverage gaps through tech-enabled brokerage solutions.

ICHRAs — Renewing focus on choice

2023 will be the first year we see a meaningful number of employers give their employees pre-tax contributions via ICHRAs to purchase insurance on their own as opposed to within a group policy. This can allow lower wage workers to get the healthcare coverage they need without having to be saddled by traditional high deductible plans that their employers have historically offered. We see opportunity to help both employers to more efficiently assess ICHRA eligibility across their employee base and employees to more efficiently navigate the market of available healthcare plans and solutions.

Healthcare Payments — Creating and reconciling claims

Revenue cycle management and healthcare payment reconciliation continue to be a large complex problem within healthcare and software based solutions should be better at catching coding errors, fraud, improper payments. We believe there are opportunities to support payers, providers and patients by helping them write, submit and reconcile claims and their associated costs through technology solutions. While it may be difficult to align these historically at-odds stakeholders, we believe software solutions can reduce costs and increase transparency across the board.

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We’re excited to double down on our core sectors in 2023 and would love to meet with those working on ideas across the themes we outlined in this post. If you’re interested in learning more about our theses or want to share your work, please reach out to Simran (simran@equal.vc), Adam (adam@equal.vc) or Chelsea (chelsea@equal.vc)!