If the last few years have taught us anything—predictions are a thing of the past.
2021 was a standout year. We saw a continued trend of high valuations, more emerging companies than ever before, and a rising generation eager to bring innovations into the world. We asked some of our team members to look back on the year and reflect on which of their 2021 industry predictions came true (a sizzle), what didn’t pan out as expected (a fizzle), and their outlook on the year ahead (a hot take).
Nicole Farb, Venture Partner, San Francisco, US
Sizzle: COVID was one of the biggest hit-you-with-a-truck events that could have happened to independent brick and mortar retail, but I remained confident in retail's resilience. Shops didn't shut down, they transformed themselves. We saw them embrace innovation and transform into omni-channel businesses. Brick and mortar retail still makes up ~84% of total retail.
Fizzle: I thought more women would jump into Web3. Right now, 16% of men invest in crypto but only 7% of women do. I hope this investment gap closes in 2022 as the wealth creation opportunities in Web3 are tremendous.
Hot take: Love em or loathe em, NFTs have exploded and they will become even more relevant in 2022. NFTs will become a luxury goods category. We are just seeing the beginning of the use case for NFTs and in 2022, brands, artists, celebrities, musicians, and athletes will embrace this category and create goods for fans.
Mathias Schilling, Founding Partner, San Francisco, US
Sizzle: I thought that the SPAC trend would implode in 2021—and it did. I didn't feel the SPAC market was aligned at all, and I think I was right on that.
Fizzle: I felt that we've got to have private market rationalization, and I think we have in the public markets, but people have not realized it in the private markets. So I was wrong, yet again.
Hot Take: I do believe we will see a very volatile macro environment in 2022. Inflation is here to stay and probably runs deeper and is more complex than is being reported. Ultimately, it will require swift and significant interest rate increases to control it affecting stock markets and assets. Our business is long term, and we are used to cycles, but in a volatile environment like this companies need to grow and be built in a capital efficient manner. Valuations will rationalize as the effects trickle down. Many high-valued companies with high burn rates (because they have "bought" their growth) will be in tricky situations. At the same time, historically, some of the best companies have been built in down cycles – we are excited to see what's to come.
Romero Rodrigues, Partner, São Paulo, BR
Sizzle: Near the end of 2019, even before the pandemic, I realized mental health had huge market potential: 50% of the population worldwide suffers from mental health issues, from burnout to depression to anxiety. While I expected 2020 would be a good year to invest in mental health companies, it wasn't––2021, however, was completely different. So, at first I was wrong, and then I was right.
Fizzle: I didn't see vertical social networks—which connect people who share specific problems, interests, or experiences—take off as they should, especially for people who live in condos or gated communities in Latin America. Several cities in Brazil are very vertical, and people don't know their neighbors, but there’s no Nextdoor. When COVID hit, I thought that was the moment for something similar, but it didn’t pan out.
Hot take: I still believe vertical social networks that tie people together because they have the same profession, or because they live in the same region, or because they have the same disease, will take off eventually in this region.
Taylor Brandt, Investor, New York City, US
Sizzle: More Gen Z founders and consumers are entering the market, bringing marked differences compared to Millennials like myself, which can be hard for investors to understand. They care more about trends such as sustainability, work/life balance, betting on wealth creation in Crypto and NFT's, and more willingness to make digital friends.
Fizzle: I was surprised by the continued growth of the public markets in 2021 in seemingly uncertain times for many. Additionally, I was fairly skeptical about the recovery of NYC. It has rebounded faster than ever and become a new tech hub.
Hot Take: I think we will see a decrease in digital health companies. After the initial impact of COVID, we saw a quick rise and success of many, but believe that there will be a cap on the entrants in this market and consolidation will start to happen in 2022 amongst a few key players.
Nicolas Von Blottnitz, Investor, Working and Surfing from Bali, Indonesia + Kauai, US
Sizzle: I believe software as a service businesses aren’t going anywhere. Today, consumers aren’t willing to download apps like they were 10 years ago, and it’s tougher to build app companies as a result. This year, decentralized finance exploded; there are a steady stream of new companies and massive growth in web traffic.
Fizzle: When I joined the venture capital industry four years ago, everyone believed the valuations were so high. Since then, the average round size, and therefore valuation, is at least two, if not three times larger, which is something that probably everyone would like to have known back then.
Hot Take: I believe there's going to be a bit of a changing of the guards in a lot of the venture firms, therefore investing styles are going to change. People who didn't live through major crashes will probably have more check writing power than ever before, which will trigger a very different philosophy that could be less risk-averse.
Genevieve Crawford, Investor, San Francisco, US
Sizzle: API-first businesses are transforming the economy with new innovations that we never thought possible before. 2021 was only the early innings of this paradigm shift in the evolution of modern technology. The API-ficiation of everything is coming.
Fizzle: Investing in consumer became substantially less fun as privacy changes have made customer acquisition harder and significantly more expensive.
Hot take: Berserk pace of fintech investing to continue its record streak, but private market valuations really need to come back to earth (ideally, sooner rather than later!). Otherwise, Seed truly becomes the new Series A, and the world will continue to get exponentially crazier.