By Gaia Freydefont
2021 saw a huge increase in the development and adoption of various types of technology, resulting in start-ups reaching record high valuations and increased exit activity.
Among others, the agriculture tech sector, artificial intelligence, climate tech sector and the insure-tech sector are all due for some exciting predictions that are bound to boost M&A deals, VC activity and increase development of innovative technologies further.
This year, the precision agriculture sector is predicted to reach record M&A activity.
The precision agriculture industry provides farmers and agronomists with the tools and technology required to keep track of and measure factors impacting plant health and crop yield, allowing for smoother and more precise farm management.
Managing a variety of tools may be complex, expensive and overly time-consuming for farmers.
The past decade has shown the success of agtech companies who offer a single platform which provides a collection of farm management instruments.
As a result, there has been a funding shift in M&A activity over the last decade, to fewer larger deals.
This shift has directed capital between a few vital providers and is preparing the precision ag industry for rising M&A deals going forward.
In 2022, venture capital funding for data preparation platforms is expected to overtake funding of model development tools.
Due to the lack of quality AI model training and the commoditisation of leading model designs, data-focused solutions are on the rise.
Open-source transformer models are starting to be used over domains including language, voice and computer vision.
This type of model is rapidly gaining momentum as it has shown to generate excellent results and brings down the need for data scientists to go over a multitude of models.
This is especially exciting for data preparation startups, which have achieved high valuation growth in 2021, helping to power some mega-deals in 2022.
Data preparation has become the technology best offered by startups, and a pipeline of companies that are ready to raise large rounds is expected to emerge in 2022, further motivating entrepreneurship going forward.
Incumbent acquisitions are forecast to charge a rise in insurtech M&A activity.
As insurance incumbents have increased their involvement with tech investments and engaged in more partnerships, more M&A activity is bound to bring these technologies fully in-house.
The COVID-19 pandemic has been a catalyst for the insurance industry to adapt to new technologies and open up digital initiatives, as they have been slow to embrace the digital transformation compared to other industries.
Insurtech companies developing enablement technologies that help with distribution, underwriting or claims, are expected to be M&A targets.
As we make strides to fight the climate crisis, carbon-negative technologies, and especially direct air capture technology will lead to a long-term trend that is expected to charge VC investments forward in 2022.
Direct air capture (DAC) technologies extract CO2 directly from the atmosphere and permanently store or recycle the captured CO2, as a way to arrive at a net-zero economy.
The market for DAC carbon removal technologies is gaining interest as large companies such as Microsoft, have committed to investing in DAC technologies in an effort to offset carbon emissions.
DAC technologies have been receiving more attention and investment from both private and public sectors as DAC is proving that technology is a necessary tool to fight the climate crisis.