As 2022 draws to a close, we look at the year that was and look forward to the year that will be.
From a tech perspective, we take time to look at the trends that shaped the market and the headlines that shook industries — FTX collapse, anyone? — as we adjust to a world two years removed from the height of a global pandemic.
But our focus, as always, is on the next big thing that will one day become a part of our everyday lives, both here in Kentucky and from a much larger perspective.
Before we unveil the collective predictions for 2023, for fun, feel free to take a look at the predictions that we gathered a year ago from local investors and tech community leaders. Skimming through them, one can find lots of mentions of artificial intelligence (AI) and automation. Where do those topics stand heading into the new year?
To add to the conversation, here’s a take from me: We will continue to see consumers drive the need for brands to create a personalized journey, much like hospitality suites at a professional sports event. This includes the increased use of official brand-sponsored non-fungible tokens (NFTs) that allow users special privileges and experiences — as well as a traceable supply chain via blockchain where consumers can see not only the ingredients in the product but the exact coordinates of those ingredients’ origins, such as a farm. Brands that do adapt to this trend will lose significant market share.
Enough from me. Let’s hear from the experts:
John Shumate, founder, chairman and CEO of Venture First
“More Pervasive AI Adoption: Novel machine learning and data science programs are likely to become more pervasive in the business world, bringing broad-based AI adoption into the mainstream. 2023 may be the year that separates the 'haves' from the 'have-nots' — and businesses that embrace this change may develop an “unfair” advantage over their competitors in years to come. Ventures providing accessible, affordable and scalable data infrastructure solutions in the market are likely to accelerate this broader trend.”
Chris D. Redd, angel investor, co-founder of Network N’Chill
“In 2023, we will see continued growth in the technology sector particularly in the area of artificial intelligence. There will be increased venture capital investment going into this sector as technologies continue to emerge and mature.
“I also believe private equity will play a major part in the tech industry in 2023 as there will be a consolidation of companies due to repricing and capital constraints from the last year. I believe many of these firms will start creating platforms with these technologies streamlined together.”
Garrett French, founder of ZipSprout LLC and Citation Labs, investor
“I think broadly we’re going to see ChatGPT/AI get even bigger. Local startups are likely already experimenting with it, so that will be fun to watch.
“On the personal side, I’ll be unable to invest in local startups at my 2022 levels through 2023. I think this is representative of broader trends, so it will be a good year for startups to raise money the old-fashioned way — sales!”
Patrick Henshaw, managing partner, Render Capital
“As far as 2023, I think what we predicted for 2022 held true and will again for 2023. I would add, I think as the public markets continue their rise into [the second quarter of] 2023 and then stabilize towards the later part of this year, this will give many public companies the purchasing power/cash to be able to buy revenue and/or market share by increasing their acquisition activity.
“2022 held a leading indicator to this, as corporate venture groups have participated alongside traditional institutional VC’s (like Render Capital) at their highest levels in the last decade. This is great news both for the value of Render Capital’s portfolio, as well as future investments with more and more deal flow coming into Render because of the positive and growing acquisition market.
“Render Capital 2022 prediction: Telehealth and health tech as a whole will continue to be amazing companies as the pandemic has forced us into this whole new world. Also B2B [business-to-business] enterprise and cloud-based SaaS [software-as-a-service] solutions as the corporate workforce is now 'allowed' to work from home and oftentimes encouraged to, but they still need to stay connected. And finally, direct-to-consumer as a whole will thrive as big box stores and brick and mortar now more than ever understand the necessity of e-commerce and talking to and delivering direct value for an individual consumer or household.”
Will Metcalf, associate vice president for research development and strategic partnerships, University of Louisville
“There will be big investments into and adoption of automation and data tech in both healthcare and manufacturing in 2023. This will be driven by the continued workforce challenges. I expect that demand for automation and operational efficiency will continue to grow over the next decade as one in five U.S. citizens will be over 65 by 2030. This means there will be far more demand than supply of workers and health care costs will increase.
“Leading companies will adapt by implementing changes made possible by interconnectivity and smart automation. This will include cyber-physical systems, internet of things (internet of medical things and industrial internet of things), cloud computing and artificial intelligence tools. An example would be flexible scheduling tools that utilize algorithms to match clinical staff skills to patient needs or medical monitoring to continuously measure things like blood glucose or respiratory monitoring connected to portable durable oxygen concentrators.
“With the combination of machine learning and computational power, machines will carry out highly complicated tasks ranging from diagnosing diseases to supporting compliance. The key themes will be the ability of devices, sensors and people to connect and communicate with each other giving access to comprehensive information and improving problem-solving.”
Ian McClure, associate vice president for research, innovation, and economic impact, University of Kentucky
“My prediction for 2023 is that, in Kentucky, we will realize the development of a concentration of EV [electric vehicle] companies and component manufacturing activity in the state, incited by the impending opening of the Ford/SK Innovation plant, and initiatives around the state to catalyze that new sector opportunity for the Commonwealth.
“Nationally, we will see growth in AI research and development, sparked by increased funding authorized in the CHIPS and Science Act. We will also see new densities of microchip and semiconductor research and manufacturing talent in new regions across the Midwest — also sparked by the CHIPS and Science Act, domestic chips manufacturing and the R&D [research and development] push.”
Josh Rosenthal, partner, 6ixth Event, and co-founder, managing partner, Narwhal Ventures
“Keywords for tech in 2023 as it relates to entrepreneurship will be “'transition' and 'bifurcation,' which are really two sides of the same coin. Transition, as founders and investors attempt to place tech into an evolving landscape of changing economic contexts (e.g., a ‘re’-re-correcting federal policy), large-scale tech stocks as volatile risk-on assets and an ongoing search for new business models supporting content and media not beholden to black-boxed aggregators (e.g., FAANG). Bifurcation, as founders and investors increasingly separate traditional generalist tech from emerging decentralized tech and their corresponding business models (i.e., subscription and advertising versus co-creation, co-ownership and distributed computation and 'work') with both founders and investors increasingly specializing in one or the other, or using both for a counterbalanced (i.e., barbell) approach.
“For general and traditional tech, funding will remain tight at 'reduced' valuations, but likely start loosening into the latter half of the year, corresponding to the anticipated Fed’s action. For decentralized tech, timing is everything. Crypto winter and epic blow ups are real and make for great headlines and easy dunking, but historically that’s precisely the point to double down. At least, that’s been our direct experience as both repeat-exited founders and investors in traditional and decentralized startups. There are two ways to beat a market: Get in early on something big, or bet against it. If you’re going to bet as a founder or investor in 2023, here are three trends to keep a close eye on:
“1. Bifurcation within distributed finance models with increased regulation for centralized actors (and a corresponding inter-agency struggle for control) and an emerging priority of decentralized (a.k.a. self-custody) systems and protocols.
“2. On-chain proof of physical geographic coverage and physical work, with tech integrating computational processing and business models specifically within energy, telecommunication and real estate-based infrastructure.
“3. Social networks with decentralized governance and decision-making — cough, Twitter, cough — and integrating payments with the underlying protocol, where those protocols support distributed social graphs that empower users to migrate their social networks across social platforms."
