2018: record year for VC investments in the world
2018 was a record year for the venture capital market not just in Italy but globally. According to Kpmg, VC investments have reached 254 billion dollars worldwide – a sharp increase when compared to the $174 billion of 2017. On the other hand, the total number of VC operations has never been lower in the last 6 years, with 15,299 transactions in 2018 compared to 17,314 in 2017 and the maximum peak of 20,172 deals in 2015. However, this is not bad news: it means that deals are larger than in the past. Indeed, in Q4 2018, over $1 billion mega-deals generated investments for about $22 billion, which is about one third of the overall capital that was collected in that quarter.
The leading sectors in 2018
The most VC-funded industries of the year were urban mobility (from $26billion to $45 billion YoY), artificial intelligence applied to healthcare ($2.34 billion in 2018, from $1.25billion in 2017) and agtech – companies developing new technologies for agriculture – which grew from $1.93 billion in 2017 to $2.15 billion in 2018.
… and in 2019
In our opinion, the 5 trending industries of 2019 will be the following:
- AutoTech. Mobility is changing profoundly: the most promising areas for innovation are those related to self-driving and alternative fuel (electricity in particular) vehicles. These businesses lay in the hands of giants such as Tesla and Italian-French microchip manufacturer StMicroelectronics. But startups can make a difference when it comes to solving bottlenecks (such as the problem of non- efficient battery).
- Healthtech. The western population is getting increasingly older and its healthcare systems need to change accordingly. One of the major health trends will be the combination of personalized healthcare with the use of medical devices that can perform diagnostics and treatments, even at a patient’s home. More generally, healthcare digitization is becoming more and more important. In Italy, the Healthcare Digital Innovation Observatory by Politecnico University calculated that this industry is worth 1.3 billion euros and estimated that potential savings could amount to 5 billion euros per year (provided that 80% of the Italian population uses the Internet to collect clinical documents, request information, make reservations and pay for visits and exams).
- FinTech. In the context of FinTech, which expresses ever more interesting numbers in Europe and in the world, the attention of VC will probably focus on cybersecurity, as platforms – whose core business implies, in all cases, the transit of money – will enhance this technology in order to avoid fraud and money laundering. In Europe, the GDPR legislation has helped convincing companies that investing in cybersecurity is necessary to avoid incurring greater expenses that would be caused by intrusions and data theft.
- It’s been called the new FinTech, more precisely it is the digital transformation of real estate. AirBnB, Nest, WeWork, Zoopla: each in a different segment of PropTech, from sharing properties for short-term rentals, to connecting homes, to looking for and managing coworking spaces, up to looking for properties to sell or rent long term. In Italy, where PropTech is in its early childhood, the first PropTech Monitor was published last year by Politecnico University of Milan. It found 35 Italian PropTech start-ups, among which the most “ancient” (dating back to 2005) is Immobiliare.it, a platform for property sale and rental. There’s still a massive space for growth.
- Artificial intelligence will be monitored very carefully by VC in any industry it will be applied to. It is a game changer: it will change the way people live and work, as it can mechanize many human activities, both physical and intellectual. For instance, intelligent machines are able to recognize and eliminate a defective piece on a production line, but they can also archive and catalog documents based on criteria that are functional to customers. With AI and machine learning we could accurately diagnose other machines and people. In the world of startups, retail is one of the main industries that are undergoing the disruptive force of AI: indeed, e-commerce giants have established their position in the market as they have managed to combine commercial skills with the use of consumer behavior data, in order to offer better-tailored services. Start-ups using AI and machine learning to refine their marketing strategies, however, operate in the most diverse sectors: from pharma to consumer electronics and cosmetics. The hunt is on.