Beringea’s investors look at the trends shaping 2023
The past year was one of the most challenging in recent memory for venture capital ecosystems on either side of the Atlantic. Despite the headwinds of persistently high inflation, recessionary threats and an ongoing pandemic, the Beringea investment team continued to deploy capital and guide quickly-scaling business toward growth and success in their markets.
Now, several of our U.S. and U.K. investors look ahead to 2023, and the sectors, trends and macroeconomic conditions they’ll be monitoring closely this year:
Ben Bernstein, Principal: As hybrid and remote working environments prove to be a permanent post-pandemic change, enterprises of all sizes are now more susceptible to cybersecurity threats as the burden shifts to the remote workforce to follow proper security protocols. Cybersecurity solutions will need to meet the end-user where they are more than ever; therefore, the solutions need to be more palatable and user friendly for a non-technical user base. Companies integrating artificial intelligence and gamification into their cybersecurity solutions may see increased interest from the VC community in 2023.
William Blake III, Partner: Investment in natural language processing (NLP) technologies will continue to pour in from VCs, growth capital providers, and existing technology leaders in 2023. This will further the push of NLP into the workflows and technology stacks of large enterprises, facilitating the change of stale operations while advancing widespread adoption. Sector-specific NLP applications, as Beringea U.S. portfolio company Authenticx has created for healthcare clients seeking to mine patient data for insights, will become more prevalent as the technology becomes more ubiquitous.
Piotr Bukanski, Investment Associate: Many would agree that the events of 2022 can be seen as a tipping point for energy transition, especially in Europe. New legislation, more public investment, and bigger commitments to energy independence are further accelerating the change, which will lead to more complex, distributed systems and generating exponentially more data. That, in turn, will unlock notable opportunities for digital solutions within the energy tech ecosystem, similar to what COVID-19 did for digital health adoption in 2020.
2023 could be a pivotal year for energy tech; companies that have been toiling for years will finally find their product market fit and become a critical part of the new systems, which will be reflected in notable funding rounds. We will also see a surge of new market entrants, resulting in a busy global energy ecosystem.
Eyal Malinger, Partner: In 2023, we will see an incredible piece of fiction-based video content, possibly as long as 20 minutes (but more likely short-form of 5–7 minutes), that has been completely created using AI — both the story and the animation. As we can already see with OpenAI’s new model, generative adversarial networks (GANs) are here to change the game in many areas where we used to believe humans have an advantage. It seems we are rapidly losing this advantage…
Karen McCormick, Chief Investment Officer: For me, bootstrapping will be ‘rediscovered’ in 2023. It’s been almost a decade now where companies have expected to raise a Pre-seed round, then Seed, Pre-A, A, A+, B, B+, etc. Many U.S. and European successes historically came from bootstrapped companies who simply raised ‘funding’ when the managers were confident that that the raise would be a net positive for them. I think there is a flight back to founders appreciating being masters of their own destiny rather than dependent on capital markets to keep their company alive.
Mark Shepherd, Investment Manager: My prediction is that in 2023, “community” will become more powerful than ever and be a key driver of success for a wide range of companies. Community provides much more than people just “getting together for a drink”, a successful community provides a platform for networking, sharing challenges, learning and support. From lowering CAC costs, to driving up lifetime value and retention, community in all forms is a very powerful tool that all companies can embrace. Communities are also, in themselves, becoming far more valuable as an investment target; for example, Chief (a community for senior executive women) recently raised $100 million at a $1.1 billion valuation.
As we leave the COVID era, where community was hard to come by, and potentially move into a recessionary period, where everyone is facing increased challenges, community will become a more central driving force and there remains a huge opportunity for companies selling products across a wide range of markets to build a natural community around their product, to drive loyalty, word of mouth and ultimately sales.
Harry Thomas, Investment Manager: I think we will see a move towards more proximate manufacturing as the environmental, political and economic fall-out from COVID-19, the war in Ukraine, Brexit, and other challenges have laid bare the risks of long supply chains. We can expect to see both on and near-shoring over the short term, which will in turn drive significant interest in the development and adoption of disruptive technologies in spaces from manufacturing to last-mile delivery. These may include shared-buying platforms, data-derived actionable insights, and localisation of energy generation and storage, amongst others. While unit economics will likely drive most adoption of new technologies, environmental, social and governance (ESG) issues are likely to drive further demand for more localised supply, with a greater focus on sustainability and transparency.
Carrie Babcock, Investment Manager: Despite being a multitrillion-dollar market globally, the healthcare industry has struggled to innovate at the pace of finance, retail, media, or advertising. And yet, health — both physical and mental — has become the predominant concern of consumers around the world as we emerge from the pandemic.
In this context, I find it absurd that consumers cannot access the depth, quality, and transparency of information on their healthcare as they might in retail, travel, or even recruitment! Imagine if you could easily access the breadth and detail of information on where, how, and who you might choose to treat your medical conditions as we now expect from Amazon — I believe this presents a vast global opportunity. I’m therefore expecting the first innovations to come within customer insights — so watch this space for an investment from Beringea soon!
For information, please visit beringea.com. If you would like to know more about our U.S. investment activities, please email info@beringea.com and contact us at info@beringea.co.uk for our U.K. investment team.
In the United States of America, Beringea operates as an SEC-registered investment advisor, Beringea, LLC. This communication is intended solely to provide information regarding Beringea’s potential financing capabilities for prospective portfolio companies and does not constitute an offer of investment management or investment advisory services by Beringea or any of its affiliates.
