2021 was another a tumultuous year, in both the US and around the world. Despite — or perhaps in part because of — myriad challenges, the venture and technology communities are thriving. Tremendous opportunities have emerged that are affecting positive change, driven by talented entrepreneurs across the globe who are reinventing the energy, mobility and retail sectors.
At WIND Ventures, we saw an increase in creative technology-driven solutions across sectors, and we expanded our portfolio into promising areas. In 2021 we made six investments including Grabango, Omnidian, Yotta Energy, H2Pro and two others yet-to-be announced with the mobility space.
As we begin 2022, we are optimistic of what’s to come. We’re seeing tremendous innovation through uncertain times, and people now more than ever coming up with ideas to make our lives safer, more sustainable, and more convenient. Below are some predictions from the WIND Ventures’ team on what the next year, and beyond, has in store for the venture and technology ecosystem.
Energy theme:
2022 will reveal the world’s first climate-tech startup “Dragon” (private startup valued at $12B+).
SPACs are taking many potential companies public. This paves the way for a new climate-tech “Dragon” with a ferocious growth rate, exceeding $12B in value prior to considering or coordinating an exit. It will be a very special animal indeed. Our guess is that this first climate-tech “Dragon” to join the ranks of other Dragons such as SpaceX and Instacart is one that has ubiquitous, global appeal that either: 1) takes advantage of “low-hanging fruit” relative to corporate and national carbon goals; or 2) is related to green hydrogen.
Grime, drafts, muck and the like will be hidden gold.
Grime, drafts, and muck will be “low-hanging fruit” opportunities that will help with decarbonization, as well as have high impact and generate tremendous ROI. Grime and muck, you ask? Even cleaning HVAC systems, especially the heat exchangers, can have tremendous impact and produce high ROI. In terms of drafts, reducing them makes HVAC systems and buildings more efficient and improves comfort.
Electric vehicle (EV) adoption will reach peak acceleration in 2022.
Lower battery prices, more EVs from different OEMs available to markets, and increased government support, specifically from the COP25, will drive EV adoption. Consequently, we predict EV sales will exceed 15% of global new car sales in 2022, which is >15M EVs sold in 2022, double the number of EVs sold to date.
Mobility theme:
Humble, overlooked parking lots but will become a critical piece of the evolving mobility puzzle. VCs will invest at record pace despite a lack of ecosystem/tech media hype.
Parking is essential for the future of mobility, and VCs are starting to realize it. In the last decade, 188 parking startups emerged, encompassing 505 deals and representing more than $3B.
There’s renewed interest in parking real estate, and not just for parking. Spaces are being used for EV maintenance, storage, and charging, as well as for multi-mode transit. REEF Technology, for example, went from managing parking lots to using them to launch “dark” or “ghost” kitchens used to prepare delivery orders. REEF raised $900M in 2018, and an additional $766M in 2020. Other deals in the space include top-tier investors like A16Z’s investment in AirGarage and Slow Ventures/3L Capital’s investment in Metropolis Technologies.
Sitting in an autonomous vehicle (AV) in traffic is not a significant improvement over the status quo. That’s why eVTOLs will out-scale AVs in the most congested cities.
Enormous amounts of money are being invested in the Advanced Air Mobility market with eVTOL being the segment with the bulk of the proceeds. eVTOL will be more expensive than ride-hailing in most instances, but it will be much quicker and more predictable, justifying the additional cost for many customers. eVTOL will be perfect for trips to the airport, commutes, and so on, when predictability is paramount.
While many see various types of new EVs and AVs as the future of last-mile delivery, people will recognize purpose-built eBikes are the ideal last-mile delivery vehicle.
Bikes are currently the most popular method of last-mile delivery. The transition to eBikes is a natural one for several reasons. Larger form factors like cars and mopeds require licensing and have much more limited accessibility whenit comes to parking and traffic. AVs are still not ready for prime-time deployment “in the wild.” Purpose-built eBike startups like Zoomo and GetHenry are proof of this as they rapidly scale with partners in the fast-growing markets of quick commerce (Q-Commerce).
Convenience / retail theme:
Q-Commerce will take off: You will be able to get groceries delivered faster than your Uber Eats meal, and 15-minute Q-Commerce delivery will become common in global emerging markets such as Latin America (LatAm).
Quick Commerce is a new model of eCommerce that delivers in under 15 minutes by storing product inventory in micro-fulfillment centers (dark stores) in centralized urban locations near the end consumer. This delivery model has proliferated in Europe and the US, with five unicorns minted in the past 2 to 3 years, including Gopuff ($15B valuation) and Gorillas ($3B valuation).
The same will occur in emerging markets like LatAm for several reasons. Q-Commerce growth is starting to approach maturity in Europe and the US. Several LatAm last-mile delivery startups are pivoting to Q-Commerce models and finding strong market traction. More venture funding has been invested in this sector, and established larger startups are expanding into LatAm Q-Commerce.
Dark Kitchens will come to light.
What do Mariah Carey, Mario Lopez, rapper Tyga, and Guy Fieri all have in common? They all launched restaurant brands through dark kitchens, a new business model of renting out kitchen space in underutilized real estate to prepare delivery orders.
The trend is set to explode in global emerging markets such as LatAm. Why? Until now, dark kitchen venture funding has been limited in Latin America, as VCs have focused on funding this business model in Europe and the US. That’s about to change as several top LatAm social media influencers have launched their virtual restaurants via dark kitchens and have promoted these restaurants to their 100M+ social media followers.
As a result, more dark kitchen startups are now operating, scaling quickly, and fundraising in LatAm, so we expect this space to accelerate. Top-tier VCs are starting to invest in dark kitchens in LatAm, including a16z’s recent investment in Foodology, a Colombian startup.
Last-mile delivery startups in Latin America will dwindle.
There has been a burst of new last-mile delivery (LMD) startups in LatAm since the start of the COVID-19 pandemic, as stay-at-home orders boosted consumer demand for eCommerce last-mile delivery. However, LMD is a business model that benefits from economies of scale, as companies with bigger fleets and more drivers can serve more customers, creating a positive feedback loop.
As we’ve seen in the ride hailing and food delivery market in the US, it is a duopolistic market with Uber and Lyft, and Uber Eats and DoorDash. A similar landscape will likely emerge in LatAm, as the better-capitalized LMD startups will either acquire the smaller competitors or drive them out of the market through competition.
It’s likely that we will begin seeing consolidation in this market in LatAm in 2022 as bigger startups acquire smaller ones or drive them out of the market. After a hot streak of multiple new last-mile delivery startups launching in LatAm during the COVID-19 period, last-mile delivery startups in LatAm will start to consolidate.