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News Run: 2021

Monday, December 27, 2021

Startup Jedi

We talk to startups and investors, you get the value.

The end of the year concludes everything that has been done. And this time there’s been a lot. We’ve had 34 weekly news reviews. As we are about to share the next one, we decided to leaf through all the news for the year, noting and summarizing the highlights of 2021. In the final issue of the News Run we’ll talk about the brightest technologies of 2021, the trends that influenced us and the market, and, of course, the surprises of this venture year. Let's get started!

We should first note that technology is developing in close symbiosis with global events. The former affect the latter, but they do not appear in a vacuum, but rather respond to changes and demands around them. Throughout 2021, we have “reaped the benefits” of the coronavirus pandemic, which will have a lasting effect on the way we live. We will talk about this in more detail in the "Trends" section, but this is worth remembering in case you catch yourself thinking why exactly this technology was developed in 2021.

AI, machine learning and neural networks

A fundamental feature that AI has unlike all previous developments is the principle of machine learning, that is, its ability to learn from the data and experience received, thereby imitating human intelligence. An important type of machine learning is deep learning, which does not work on simple concepts, but on entire neural networks. Today, AI is able not only to reproduce an object based on what it sees, but also to recognize them among another set, including sounds and speech based on big data. 

We’ve seen news about GPT-3, a natural language processing algorithm from OpenAI, a machine learning company. According to the developers, today the algorithm can solve any problem in English: generate text, communicate with people and much more. This is another direction in the development of AI — natural language processing, which studies the mechanisms of the functioning of a language and tries to synthesize them.

There is more to AI today than just endless development of new neural networks. It’s also things that are close and understandable to the consumer. In e-commerce, AI provides personalized shopping recommendations based on browsing history, interests, and preferences — basically anything big data has access to. You can already communicate with voice assistants who process your request in real time and respond to it, which is also AI. In the past year, there was news about new tests of self-driving cars based on this technology, as well as much more that will very soon enter our lives.

Gartner calculated that 37% of organizations had already implemented AI by 2019. According to Statista, global revenue from AI software will reach $126B by 2025. And according to Servion Global Solutions, 95% of customer interactions will be driven by AI by the same year. 

Edge Computing 

Cloud technologies are no longer surprising: the market is dominated by a certain circle of corporations, with more and more solutions implemented every day. But few people have heard of edge computing yet, while it is becoming more and more widely used. 

It’s designed primarily to reduce network response time, which increases the efficiency of using network bandwidth, unlike with cloud technologies. Basically, using the cloud, an organization waits for information to travel over the network to the data center, often wasting not only time, but also money. 

Edge computing can act like mini data centers. Therefore, it is used to process time-sensitive data in remote locations with limited connectivity to the "hub".

The development of Edge Computing is an expected part of the growth of IoT. It supports the existence of smart grids — homes, automobiles or urban areas - and, for example, helps video streaming in cloud gaming.

According to Gartner, by 2022 about 75% of all data will need analysis and edge computing actions. And we can conclude from the Data Age 2025 study, that thanks to the growing role of this technology, the volume of data will exceed 175 zettabytes by 2025. 

VR and AR: augmented reality 

One of the central events of the second half of the year was the creation of the metaverse Meta, which confirmed that the technological world is looking more closely at VR and AR than ever. By next year, revenue growth in this area is expected to reach $209.2B. 

In 2021, these technologies became an even more integral part of our lives. Now it is not just about entertainment for gamers, it is also the possibility of imitating something in reality. Thus, it is increasingly being used to educate users of all ages and knowledge levels in a safe environment. Yes, the entertainment segment is still large, but the potential for technology is huge, from marketing to trauma rehabilitation. And if you combine them with previous technologies, you can imagine how far augmented reality will go in the new year. 

5G

While 3G and 4G technologies have enabled us to go online, use big data services, increase streaming bandwidth on Spotify or YouTube, and more, 5G services are expected to revolutionize our lives. They will expand services based on the already mentioned AR and VR along with cloud services. 

Virtually all telecommunications companies such as Verizon, Tmobile, Apple, Nokia Corp, QualComm have been working on 5G applications in the past year.

5G networks are expected to cover 40% of the world by 2024 and process 25% of all mobile traffic data.

Trends

What trends of the outgoing year are influencing us and the market? First of all, this is remote —  and it's not just about remote work, which 16% of companies worldwide have already switched to. This actually helped the global video conferencing market reach $7.87 billion last year, more than doubling from the year before. We saw the growth of startups that allow us to work more productively and comfortably away from colleagues and the office.

The pandemic has also influenced the growth of online learning. We not only now work remotely, but also learn. This trend is facilitated by, in particular, the development of 5G networks, which will allow people from different parts of the world to join EdTech projects. By the way, the latter only grew in the estimates and volumes of rounds, in connection with the trend towards “remote control”.

Telemedicine has proven to be convenient. And this is where AI comes in handy again together with the above mentioned 5G networks as both technologies allow you to optimize, accelerate and automate processes in the medical field. This applies to research, and the interaction of doctors with patients, and access to telemedicine services.

The way we interact with the world has inevitably changed. The next trend is the growth of contactless interactions. In a world where touching can be dangerous, food delivery, self-checkout and facial recognition security systems are on the rise.

Speaking of the latter, in 2021 we saw more than one personal data scandal. Regulators accused corporations of selling and commercializing user data, hacking messengers, and introducing new levels of end-to-end encryption into services. The more personal information is collected, the more questions arise: who has access to it and how is it used? Data today is a leading asset for both tech companies and political forces.

A crypto explosion occurred as a response to the privacy crisis. Blockchain as a decentralized technology that allows you to perform actions while maintaining anonymity has received the recognition and expected attention from various authorities this year. Bitcoin grew in price and broke records, we learned about NFTs, the market of which, despite the predictions, has not burst like a bubble yet, and we also heard about various threats from the governments to ban the circulation of cryptocurrencies, including those already put into effect.

Venture market 

Until the fourth quarter of this year is over, it is too early to sum up the results. But one thing is certain: 2021 became the year of venture records. At the time of calculating the results of the third quarter, market volume was $160B, with $159B in the second quarter, and $135B in the first one.

Big funding dominated, with $103B (64%) invested in 400 companies that had raised $100M or more in previous quarters. Overall, funding of $100M or more rose 97% year over year. Only in the third quarter 142 companies became unicorns.

The venture capital world is on track to hit record funding levels with $454B invested in the first three quarters of 2021, which contrasts with $332B in 2020 across all funding stages (according to Crunchbase). By the end of November, the global funding of the venture capital market in 2021 exceeded $580B, adding 48 new unicorns. 

As many growing companies are raising funding at an unprecedented rate, the IPO market is projected to remain strong until the end of 2022. Speaking of which, there is already a list of startups that are expected to go public. Among them is Revolut, founded in 2015 by Nikolai Storonsky and Vlad Yatsenko. 

Traditionally, the market leaders include FinTech, medicine and cybersecurity. But in 2021, other, sometimes unexpected, market segments also showed growth. For example, space construction. Let’s recall the November A round of $1.4B, that a space tourism company Sierra Space closed. Or let’s take investor interest in payment tools for content creation. In April 2021, the Patreon platform raised their F round of $155M.  

A global shortage of computer chips this year has fueled inflation and shocked global supply chains, with industries from automobiles to robotics to household appliances trying to produce goods without these components. According to Crunchbase, as of August, global venture capital investment in semiconductor-related sectors had already reached $3.7B, surpassing last year's record of $3.4B. 

What about CleanTech? It's not just solar energy and electric vehicles, it's also carbon-free energy. For example, Commonwealth Fusion Systems closed Series B worth more than $1.8B led by Tiger Global Management. This round was the largest in the history of fusion startups and will be used to build the world's first "commercially significant" fusion machine and the first commercial fusion power plant.

What’s next?

Onwards and upwards.

There are already new areas for investment with new technologies on the way. The era of 6G and IoS —  the Internet of the senses — is not far off. Technological advances are likely to turn a fully digitalized, automated and programmable world of connected people, machines, things and places into reality. All experiences and sensations will be available beyond physical and virtual reality, and people and machines will enter into intelligent interaction with each other and with autonomous systems.

But all of this is yet to come. And now we wish you a fruitful New Year!

27 Dec 2021

 

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