Founders and investors Equally hard to prepare for 2023 as the economy shows few signs of recovery. But there are many questions in the air: Will truckloads of VC dry powder make it to market? If the pressure on valuations continues, will there be more layoffs? What awaits artificial intelligence?
However, we can answer some questions: some trends, such as interest in artificial intelligence, are likely to remain, and cryptocurrencies will continue to be scrutinized even as the market looks to the future. There are other aspects of the venture capital world that likely won’t change, such as the lack of funding for minority and women founders.
To find out how minority investors plan for 2023, we spoke with three active black investors. For Xfund Vice President Jadyn Bryden, the maker economy is one of the hot spots worth watching in the coming months. “I expect to see continued momentum in the maker economy as more people rely on new tools to build their brands and create content and monetize,” he said.
Alexis Alston, principal at Lightship Capital, feels the future will be bright for companies that build technology to help others do business and cut costs: “As the tech darlings begin to cut overhead with fast growth, I think we will see strong growth. “A shift towards companies relying more on sales optimization and content creation tools as a replacement for teams that were already highly redundant.”
But investors were pessimistic about improving the allocation of capital to black founders next year.
Equal Ventures general partner Richard Kirby hopes more diverse founders will receive funding next year, but he doesn’t expect a big change. “I think a lot of the narrative that a lot of investors put out about investing more in black founders has been mostly just talk and not a lot of substance or actual dollars flowing to black founders.”
We spoke with:
Alexis Alston, Principal, Lightship Capital
Which sectors will you be monitoring and which trends do you expect to grow in the coming year? Why?
I have always been interested in the growing applications of artificial intelligence, including generative artificial intelligence, natural language processing, and deep learning. I look forward to seeing how AI can help scale previously human-led areas of business such as sales, social media, marketing and content development.
As fast-growing tech darlings begin to cut overhead, I think we’ll see a strong shift toward companies relying more on sales optimization and content creation tools as replacements for teams that were already heavily redundant.
What is the most important political issue you are investigating and how does it affect you as an investor? Would you support a startup that addresses any of these issues?
There is already a deep buzz around the expectations or lack of political oversight for tech and financial startups. With everything from crowdfunding to digital currency, there is a lack of deep oversight that is now starting to have a ripple effect on many of our consumer and institutional investors.
As an investor, the lack of oversight has led to extremely high valuations and unrealistic expectations of exit potential in these nascent markets. Finally, the everyday angel investor (who tends to be more representative of the general population than institutional investors) gets the short end of the stick every time.
Given that the percentage of venture capital for black founders rarely exceeds 1%, do you feel next year will be different? Why and why not?
I’m not sure next year will be any different. If anything, I’m very concerned that this number will drop in 2023 as institutional funds either tighten their wallets or start looking for criteria for founders that often exclude black founders.