Investing in tech has been a lucrative play for decades. A significant silver lining to the recent global pandemic has been the fueling of a boom in the technology market. Successful technological innovations are products of an evolutionary process of trial-and-error and continuous, iterative improvements.
Many of the fledgling technologies of the years, since the millennium, are now poised to reshape the market and the world. We have seen eCommerce, payment technology, cybersecurity, and more become prime commodities in just the past few years - boosted by the adoption of new trends (e.g., work-from-home, online banking, digital stores). These rising technologies appeal to investors primed to cash in on the tech market.
Looking ahead to 2022, what are three emerging tech categories in which investors will want to keep an eye?
1 - Applied Artificial Intelligence (AI)
Applied AI is a far cry from early attempts at integrating artificial intelligence into machines and computing processes. The new generation of AI is capable of algorithms that distinguish patterns and, more critically, to then interpret and act on those patterns. According to McKinsey, optimized AI helps computers make sense of real-world data such as video or images captured via computer vision, text (natural-language programming [NLP]), and audio (via speech technology).
How is AI impacting the world we know?
- Applied AI will improve both customer experience and satisfaction via more intelligent customer interfaces, with online product searches successfully executed based on images.
- Human-machine interactions will become more fluid and transparent, as machines are able to operate at optimal rates. Instructions through speech, text, and images are intelligently interpreted and acted upon, further driving productivity and reducing operational costs.
- CBN Insights reports that nearly 12K AI deals were pushed through from 1Q15 to 2Q21, across 19 core industries. Equity funding breached the billion-dollar mark in a number of sectors.
- The AI market is on a roll. Reputable market intelligence firm IDC predicts the market to grow an impressive 16.4% in 2021, ballooning to $554B by 2024.
2 - Zero Trust Architecture
Zero Trust architecture is gaining steam as enterprises shore up their cybersecurity protocols, to prevent cyber bad actors from accessing their networks.
Traditionally, an IT security network is based on the castle-and-moat concept where everyone inside the castle (network) are trusted users by default. Cloudflare states that the problem inherent in this setup is that once an unauthorized entity gains access, they are free to enter the network and wreak havoc inside.
Zero Trust architecture, on the other hand, trusts no one, whether they are inside or outside the network perimeter. While Zero Trust architecture is a set of cybersecurity principles, not a product or a service, numerous cybersecurity startups now provide sophisticated architectures that combine networking access and Zero Trust concepts. This development is sparking funding deals in the cybersecurity market.
Forbes reports that among the recognized Zero Trust startup providers recently involved in multi-million funding deals this year are:
- Transmit Security
- Illumio, and
By 2023, nearly 70% of enterprises will have implemented Zero Trust architecture. According to Firemon, this makes for a white-hot niche for investors to watch.
3 - 5G and The Internet of Things (IoT)
People and enterprises alike want faster connectivity across long distances. With 5G networks and IoT, businesses are set to enjoy unprecedented network availability and capabilities including digitization of manufacturing, wireless control of mobile devices, machines, and robots, and remote monitoring 5G broadband cellular network and IoT will deliver agile and fast connectivity, boosting business operational synergies. Consider these telling facts and projections related to this space:
- Potential use cases number in the hundreds across 17 commercial industries. Successful implementation of 5G and IoT in four of the most promising markets—mobility, healthcare, manufacturing, and retail—could increase global GDP by $1.2T, to $2T by 2030. (McKinsey, 2021)
- In 2020, IoT VC activity—5G networks included—managed to raise $11.1B in deal value and achieved an exit value of $14B across 61 exits. (Pitchbook, 2021)
- Investment in 5G is expected to rise substantially. Over 160 network providers have launched commercial 5G services. Experts say an estimated 580 million 5G subscriptions can be expected by the end of 2021.
- By 2022, many 5G and IoT use cases will evolve to incorporate time-critical communications capabilities.
At Finalis Insights, we can help you identify trends, find investors for your deals or assist you in industry deep dives. Get in touch with us.