TV 2022 Predictions

A lot has changed in the VC community and the funding environment over the past six-months. Valuations have dropped, layoffs have started and there is a significant drop in VC funding going to start-ups compared to the year prior. Titanium Ventures partners share their views on trends they are watching and an outlook for the VC industry during the next 6 to 12 months.  

Enterprises are rethinking how to provide security to distributed workforces
– Marcus Bartum, Partner

As the remote working trend continues, forward looking enterprises are working to adopt strategies and technologies that unify web, cloud services and private application access. Enterprises that lack in cyber-security sophistication are going to struggle to keep up with fast-moving work trends and secure their IT environments. In response, we will continue to see cyber-security vendors execute on M&A to extend their base capability and try to match this unification.  

Blockchain is down but not out
– Saad Siddiqui, Partner

Over the last 24 months there has been a massive increase in the number of blockchain projects, giving rise to tremendous speculation in this sector. The way we think of these currencies is akin to commodities like natural gas or oil. The more cars there are on the road, or the colder it gets, the demand for these commodities increases. Similarly, blockchain projects should increase in value, at least in theory, the more the underlying protocols are used.  The difference here is the “cars” that use blockchain  still need to be built and used by the general population. We are long term bulls in this sector but also realize there may be volatility in the short-to-medium term.

Data science continues to embed in every industry
– Mark Sherman, Partner

Data science was first adopted by the  internet, software, high tech, manufacturing and finance industries.  Over time, logistics, general manufacturing, retail, health care and others will join the fold. For example, our portfolio company Airspace is a logistics-tech platform that specializes in transporting  high-value, time critical goods – everything from human organs and airplane parts for downed aircraft to critical semiconductor components. The company’s data science technology analyzes over 12 million flight options to determine  the 10,000+ optiminal  service routes for its customers. No other time-critical logistics company comes close to their numbers. 

With friends like these who needs enemies? Energy independence drives climate resilience
– Albert Bielinko, Partner

There is an urgent need to reduce the approximately 51 billion tonnes of CO2 equivalent emissions p.a. to nil by 2050. The transformation of all aspects of the physical world over the coming decades to decarbonise will be on par with the changes brought about by digital technology and be far more significant than most expect. Renewables like solar and wind will accelerate even further and become huge energy sources for those countries with the land, natural resources and political will to invest in them. The extremely sad war in Ukraine has highlighted how crucial energy independence is. We expect this to drive a dramatic desire for decentralised and self-produced energy production via renewables to avoid reliance on coal and gas imports from other countries. We can only hope that other technologies like nuclear and hydrogen get the help they need, too, despite the countless political challenges. Numerous innovative companies will be created as this transformation occurs.

It’s time to kill “Innovation to nowhere” projects
– Steve Schmidt, Partner

We’ve had a solid 15 years of low interest rates, prosperity and growth.  With such a low cost of capital, unfortunately, many stupid projects got funded. Unfortunately, many of these new projects got baked into the business operational framework and have now become sacred cows. “Innovation to nowhere” projects need to be shut down and more stringent approval processes to tangible ROI’s established.  This is not to say that innovation must slow down.  It shouldn’t.  There’s a treasure trove of strong startups that can help companies make cost-effective step changes across almost every facet of business (Crypto, AI, gamification, GitOps, Collaboration, e-Commerce, Cyber, etc), all with shovel-ready ROI propositions.  These should be explored and compared against heavy capex / opex DIY projects.  Business is about making things and selling things, and that will never change.  However, the next 12-24 months are likely to present some of the most critical business decisions since the global financial crisis.  Partnering and leveraging the vision of the best technology companies will be more critical than ever.

Short term, regulations establishing much-needed crypto transparency and FDIC-like insurance will be welcomed
– Yash Patel, General Partner

With regulations in place, stablecoins – backed by hard assets and fiat currencies – will be able to function as intended, removing the gut-wrenching pricing volatility that business and crypto transactions face. In the medium term, they will command a growing percentage of overall crypto holdings and world currencies. 

The winds of change are blowing
– Matthew Koertge, Partner

Over the last 10 years,  the number of funds increased by 3x and the amount raised almost quadrupled. Going forward, LPs are going to want to do more direct investing in portfolio companies on a no fee / no carry basis to decrease their average fees. LPs will limit the number of new GP relationships they create. Many LPs will use a “1-out / 1-in” methodology whereby they upgrade the weakest performing GPs in their portfolios. GPs will have to work harder to differentiate themselves but they may not be enough to raise their next fund.