Your head start for all tech, sustainability, and vc trends in 2023

Metaverse, Web 3.0, Artificial Intelligence or DeFi – we have already written about these technologies in our review article for the year 2022. In our Build team, we spent the first few weeks of the new year thinking about what will happen to some of these buzzwords and the technologies behind them this year.

Probably nothing or still something? The metaverse in 2023

First, let’s talk about the Metaverse. The Metaverse is a term used to describe a digital space that is accessible to everyone, where people can interact and collaborate in a shared environment. Already in the first half of 2022, this tech trend shaped not only talks between colleagues, but also our insights here at neosfer. The Metaverse is a rapidly growing ecosystem, with many experts predicting that it will become a multi-billion dollar industry in the coming years. According to a recent market research report by Reports and Data, the global Metaverse market is projected to grow at 34.5% this year, reaching a market size of $48.5 billion by 2027. This growth can be attributed to the increasing adoption of virtual reality and augmented reality technologies, as well as the growing demand for immersive and interactive experiences. The following chart highlights the rapid growth of the metaverse ecosystem, including hardware, software, and services, exclusively in the North American market and provides a first glimpse of the technology’s growth momentum.

In 2023, we can expect to see companies start to take this concept more seriously, and begin developing products and solutions that are specifically designed for the Metaverse. This is an exciting opportunity for businesses to explore new revenue streams, improve customer engagement and retention, and foster collaboration within a company. However, it’s important to note that developing products and solutions for the Metaverse is still a relatively new and uncharted territory. Companies will need to be thoughtful and strategic in their approach. Nonetheless, the upside potential, especially for B2C-focused companies is enormous!

With more and more people spending time in the metaverse already, but especially in the coming years, new opportunities are emerging for brands to engage with consumers in immersive and engaging ways. Companies can sponsor virtual events such as concerts or gaming tournaments, among others, and reach large, engaged yet focused audiences. Further, with the emergence of virtual influencers and characters, companies can also target this emerging market to advertise and sponsor them, reaching numerous individual audiences. This allows brands to create new and immersive brand experiences.

In addition to the exemplary revenue streams, some companies will have the opportunity to add new business models in the metaverse to their existing ones. For example, subscription models in which users pay a monthly or annual fee for access to certain areas or content in the metaverse. Or “freemium” models, where basic access is free, but users can pay for additional features and content. Overall, the metaverse offers a variety of opportunities for companies to generate revenue and develop new business models.

Ai – just a trendy topic or the new megatrend shaping our future lives?

Another trend that is expected to gain momentum in 2023 is the use of AI. With advances in technologies like ChatGPT, DALL-E, and Stable Diffusion, individuals have begun to realize the revolutionary potential of AI. Our first two blog articles on the basics of AI and a focused B2B article will give you all the basics you need to know about AI and how to apply it in business.

One of the key ways that AI can drive economic growth is through automating repetitive and mundane tasks, which can free up human workers to focus on more complex and value-adding activities. This can lead to increased productivity and efficiency, as well as cost savings for businesses. Additionally, AI-powered systems can process large amounts of data much faster and more accurately than humans, which can lead to improved decision-making and better outcomes in areas such as finance, healthcare, and logistics.

To prepare for the future of work, it’s important for businesses and governments to develop policies and programs that promote skills development, job retraining and lifelong learning for workers so that they can adapt to new technologies and the changing job market. Additionally, collaboration between the private sector, government, and education providers to support the development and implementation of skills development programs is crucial in preparing the workforce for the future of work.

As we move into 2023, the venture capital landscape is shifting in some interesting ways. In the past year, venture capital investors have accumulated a significant amount of dry powder, with 34 new funds being raised in Germany alone, totaling a cumulative fund volume of $5.6 billion. This represents almost twice as much capital as was raised in 2020 and 2021 combined. However, as these funds start to be allocated, we can expect to see some changes in the venture capital ecosystem in the coming year.

One major factor that will likely impact the venture capital industry in 2023 is the rise in interest rates caused by inflation. As “traditional” asset classes, such as bonds, begin to yield more, it is likely that fewer new VC funds will be raised in 2023. This is a trend that has been observed in the past, during periods of economic uncertainty such as the dot-com crisis in 2000 and the financial crisis in 2008, where investments by limited partners in VC funds also collapsed.

Financing startups in 2023 – investor’s heaven?

We can expect to see some changes in the way that venture capital is allocated to startups. In 2022, late-stage funding rounds were more affected by valuation corrections and smaller round sizes, while early-stage rounds remained largely unaffected. However, we believe that this was only a time lag, and expect to see these effects reflected in early-stage rounds in 2023 as well. Venture capitalists have already become somewhat more risk-averse in startup investments in 2022, which is likely to continue in 2023. This means that startups will need to demonstrate relevant traction and product-market fit to secure funding, and will have a harder time getting funding if they are pre-revenue or have not yet been able to convert their proof-of-concepts into paying customers.

As a result, we can expect to see startups raise external capital at a later stage in their lifecycle, and first validate their business model through bootstrapping before raising venture capital. This will also result in venture capitalists doing deeper and more careful due diligence, and there will likely be a shift in the “balance of power” away from startups and towards venture capitalists, with more investor-friendly terms being offered in participation rounds.

In terms of specific areas of investment, we can expect to see a continued focus on solutions that bring cost savings or efficiency gains and have a direct impact on the core business of the customers, rather than “nice-to-have” solutions. While areas such as crypto may continue to experience a downturn, investments in climate tech are likely to remain strong, as the climate crisis becomes increasingly precarious and takes precedence over other acute crises such as recession, inflation, and war.

Good teams still will persevere in 2023

In conclusion, while the venture capital landscape is shifting, it’s important to remember that good founder teams that are solving relevant problems will continue to receive funding in the short to medium term. However, the terms on which this funding is provided will likely become “normalized”, with venture capitalists being more risk-averse and requiring more validated business models before investing. Additionally, the climate crisis will continue to be a big area of investment, as this difficulty becomes more pressing, and startups should keep that in mind when trying to fundraise from venture capitalists.

Sustainability has been a buzzword for a few years now. But in 2023, it will become more than just a trend – it will be a necessity. Climate change has accelerated at an alarming rate, and it became clear that business as usual is no longer an option. Companies that don’t adapt to this new reality will be left behind.

Climate tech and ev’s in 2023

One bright spot in this gloomy environment is climate tech. Technology has always been a powerful tool for driving change and this year it will be used to tackle one of the most difficult challenges of our time: climate change. Climate tech includes everything from renewable energy to electric vehicles to carbon capture. Climate tech will be a major focus for venture capitalists in 2023.

One specific area of focus will be on hybrid and electric technologies. Lately, electric vehicles have been gaining popularity, but in 2023 they will expand beyond just passenger vehicles. Trucks, planes, and boats will all be seeing electric and hybrid versions. This will not only reduce emissions in the transportation sector, but it will also help create jobs and spur economic growth.

It is no secret that our footprint on the globe is increasingly large! One of the main contributors to our carbon footprint is agriculture and the food system overall. The way we produce food contributes to a significant number of emissions as can be seen by our graphic above. To tackle this problem, VCs will look at something that is often overlooked: fungi and soil. Scientists and researchers see the potential of fungi and soil to capture and store carbon. This year, we will see more investment in this area, as well as a growing number of farmers and food companies using these techniques to reduce their emissions.

Fission energy – just hype or our future?

Maybe you have heard about a paradigm shift in energy creation, that has the opportunity to disrupt our way of thinking about energy. Fission energy is the process of splitting atoms to generate heat, which is then used to produce electricity. It has the potential to be a clean and abundant source of energy, but it has been ignored due to concerns over safety, waste, and cost. But now, the technology seems to have advanced quite a bit. Hopes for green futuristic energy have emerged, and so has the interest of investors as well! We expect to see the first larger investors turning to fission energy in 2023.

Trust and transparency: the needed components for green tech

To combat climate changes as efficient as possible, the new generation of climate technologies will need to embed trust and transparency into their design and development. This can include things like third-party certification, independent testing, and open data sharing. Companies that adopt these practices will be more likely to gain the trust of consumers and investors, which will ultimately lead to more widespread adoption and greater impact.

Additionally, on the regulatory side, governments will push for more transparency and accountability on the carbon footprint, energy, and water use to establish robust regulations to tackle climate change and create a level playing field for companies.

Transparent, trustworthy technologies are also more likely to attract investment from public and private sectors that will fuel the scaling of these technologies, as well as make sure they are inclusive, accessible, and fair to every stakeholder. Additionally, if consumers can build a trustworthy relationship to a new technology or product, the adoption speed increases and so does the value for the company providing the offering.