Venture Capitalists Placing Investments on Industry Changers
A few successes were made in the startup industry in 2017, including NomadicVR, an immersive VR arcade; Forward, a futuristic medical practice; and the self-driving car map builder DeepMap, just to name a few.
Venture capitalists are looking for the next Uber or Facebook to invest in. According to Wired, VCs are favoring a few sectors including blockchain technology, AI technology, pop-up stores, voice-centric devices, digital media startups, and animal-related technology.
Pop-up stores like food trucks, for instance, are changing the food industry by letting the products come to the people themselves. This booming sector of the food industry is even expected to grow from $6.5 million to $2.7 billion in five years, says Mobile Cuisine.
Fifth Wall Ventures is shifted its focus on pop-up shops when it partnered with Appear Here, an online marketplace for retail space. Through its partnership, Fifth Wall Ventures gave pop-up shop entrepreneurs access to several retail spaces which they could take for flexible rates. This strategic move by the venture capitalist helped pave the way for future pop-up shops to flourish.
Blockchain technology, on the other hand, is revolutionizing currencies and online transactions. The global blockchain market is expected to grow to $20 billion by 2024. Considering the growth of Bitcoin last year, it should be no surprise that blockchain technology is gaining more traction from venture capitalists.
As a sector, blockchain technology is also showing signs of progress. Global Blockchain Technologies Corp. (TSXV:BLOC.V, OTC:BLKCF), for instance, recently announced that it got an additional 75 MW of low-cost power through its acquisition of Coinstream Mining Corp.
Global Blockchain is an investor in blockchain-related ventures and startups. With its acquisition of Coinstream, it has acquired more mining rigs that increases its capacity to get more cryptocurrencies. This recent venture will give Global Blockchain’s investors more access to cryptocurrencies.
Digital Media and Technology
The digital and tech sector is also a hotspot for capitalists. Seeing as today’s generation is more inclined with technology and its digital aspect, there are various companies looking to revolutionize the sector too. For venture capitalists, it opens up a lot of investment opportunities but the risk of making poor profit is there as well.
The problem that most angel investors face is that they have to wait an average of 10 years before assets mature to liquidity. For startups and budding entrepreneurs, this means the chances of getting support through investment is decreased as capitalists are afraid to make major investments. However, there are other ways to give both investor and startup a fair chance at making it big.
The PAI model’s flexibility allows investors to have access to liquidity in as early as 24-months. Moreover, the PAI model mitigates the worry that the initial investment will dilute into smaller shares.
Compared to accelerators and incubators, the PAI model doesn’t give the startups mentoring for a set period of time. It does, however, give a budding entrepreneur more chances of being backed up by an investor.
Overall, the PAI model provides advantages to both the investor and the startup. It could be a good model to go with for venture capitalists as the growth of various sectors remains unpredictable up until now.
There are a lot of startups launching every year and at least 3 startups are launched per second. The chances of these businesses completely revolutionizing an industry is pretty slim considering the competition, that’s why it’s safer to invest in a plan that provides a return on investment in a few years irregardless of the startup’s success.