by Magdalena Vukovic and Jakov Novakovic, Junior Analysts - Azafran Data Team
Capitalizing on an Unprecedented Boom of Unicorns Being Minted in Early-Stage Venture Rounds
While 2021 has been a record-breaking year for venture capital in many regards, early-stage dealmaking has been producing unicorns at a rate never seen before. According to Crunchbase data, of the 600 unicorns that were minted last year, 18% (104) were companies that reached that milestone after Seed, Series A, or Series B funding rounds, representing a 395% YoY growth.
So why are companies hitting such high valuations so early? Part of it can be attributed to the sheer volume of capital being poured into the space; 2021 saw $230 billion invested in early-stage rounds, over 2x the average number in the 5 years prior. We’ve seen big crossover funds with so much money writing large checks and pushing valuations sky-high at a rate that many predict is unsustainable. Due to this, companies risk the possibility of rounds at a lower valuation than the previous, which can have devastating ramifications for attracting or even retaining investors. Another contributing factor has been the willingness of investors to gamble on quickly emerging, but not totally proven sectors such as crypto, Web 3.0, and even the metaverse.
Competing
Despite the significant risk associated with early-stage investments, investors are seemingly eager to bet large on the upside of the future big winners. This pace of investing coupled with the amount of capital available will make it challenging for small and medium-sized funds with a more generalist focus to make the value they bring clear. On the other hand, a smaller and more defined area of focus can help fight off investment competition and bring to the table added value through expertise and the use of data. Furthermore, an increasing number of investors are turning to the use of data science in finding investment opportunities to capitalize on the volume of companies in a given space. This clear focus and an increasing trend in the use of data science across the VC world are reassuring to us as this has been Azafran Capital Partners' strategy for years now.
Forecast 2022: AR and VR on the Verge of Transforming Medical Technology
Although virtual reality (VR) and its more intensive sibling, augmented reality (AR), have quietly crept into the area of medicine in recent years, it wasn't until 2021 that the dam broke and a torrent of AR and VR flooded the market. The COVID-19 epidemic gave becoming virtual a whole new meaning, and the past year has seen many of those far-fetched ideas finally become a reality, thanks to a slew of venture capital funds and regulatory approvals.
If 2021 was the year that immersive technologies finally established their footing in Medtech, 2022 will undoubtedly be the year that patients, doctors, and tech developers began to take advantage of the benefits of AR and VR.
The odds are very good: According to a recent market research analysis, the market for virtual reality in healthcare would expand approximately 35 % yearly between 2021 and 2026, reaching more than $40 billion by the end of the period. That's a far cry from the $2.7 billion markets that virtual reality carved out in medicine in 2020.
Ophthalmology is one of the medical specialties where virtual reality and augmented reality are already causing significant changes.
The field of robotic surgery, on the other hand, maybe even more ripe for VR and AR revolution. This year, Activ Surgical and Beyeonics have received multi-million dollar investment rounds for their immersive technology that guides surgeons through surgeries and definitely transforms the industry.
These and other firms have cleared the path for virtual and augmented reality technologies to take center stage in 2022, and many more have begun to describe how they plan to do so in the following year.