After a record high in startup investment in 2021, this year saw a hard reset to a more normal era. As we head into 2023 as recession fears come to a head, here are some of Crunchbase News’ top predictions for what the new year has in store, based on our report.
Search less. Close more.
Grow your bottom line with an all-in-one prospecting solution from the leader in private company data.
1) The IPO market will continue to be sluggish, but if there are companies going public, it could be these companies. Market conditions remain tough, but there is also a huge backlog of late-stage startups that will have to find an exit at some point. With that in mind, we’ve provided ideas for 15 companies, from logistics unicorn Flexport to grocery delivery app Instacart, that could be open market contenders should the IPO market reopen.
2) Expect more M&A as companies buy bargains. Speaking of exits, dealmakers predict there could be more mergers and acquisitions in 2023. Rising interest rates make capital more expensive, but as startup valuations fall, there are plenty of deep-pocketed buyers who already have money to spend and can look for bargains, said senior reporter Chris Chris. told Metinko.
3) Cybersecurity ratings are back on earth: Even the well-funded cybersecurity sector is not protected from reputational damage. Cyber an industry expert who spoke with Chris about his startup’s prospects for 2023 said he expects funding and valuations to continue to soften. That’s despite 2022 being his second-best record for VC funding to cyber companies.
Four) Fintech continues to grab attention despite the cryptocurrency crash. Fintechs were the largest beneficiaries of venture dollars in 2022, despite an overall decline in VC funding this year and the bankruptcy of prominent crypto companies. Investments in fintech companies, particularly in the B2B payments and business services sectors, are likely to continue next year, but crypto funding is expected to retreat following the FTX demise, said senior data editor Gené. Teare reports.
Five) Investors may be losing appetite for plant-based meat. Investment in plant-based meat startups has stagnated, reports Keerthi Vedantam, noting that funding for the sector has fallen from about $2 billion in 2021 to about $800 million this year. I’m here. The challenge could continue next year, as startups try to find ways to make plant-based meat products affordable to consumers who are mostly not vegan or vegetarian. Still, the alternative meat industry ended the year on a good note, with the FDA in November approving California-based Upside Foods’ lab-grown chicken as safe for human consumption.
6) Biotechnology offers rare bright spots: What areas are likely to continue to invest even in a downturn? For companies involved in biotechnology, especially so-called ‘omics’, think genomics, transcriptomics, metabolomics and proteomics. As Keerthi points out, “Many of these start-ups have gone far beyond actually manufacturing and selling drugs simply by licensing their platforms to other biotech companies and adopting a pay-per-service model.” You can make a profit before”.
7) It’s novelty, but there are copycats out there: Expect fewer startups to position themselves as “Uber for X” or “Shopify for Y” next year, writes contributor Joanna Glasner. In the days of easy money, VCs tended to flock to subsequent startups riding hot trends, but those days are probably over. Instead, “startup investors will want the newness of the companies they back,” predicts Joanna. “I quit business plans, too. With anything that’s quirky or differentiated enough to stand on its own.” And what about those startups? startups to defense tech unicorns, we offer several options.
Stay up to date on our latest funding rounds, acquisitions and more on the Crunchbase Daily.
