If you’re into technology, you’ve probably been fascinated by OpenAI’s chatbot service, ChatGPT. Its woefully accurate AI-generated answers show promise for some of the technologies and innovations the world can expect, despite its current downfall.
NFX General Partner Gigi Levy-Weiss said: “New AI platforms such as OpenAI and Stability AI are unlocking new possibilities, from gaming to marketing. are two areas of
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NFX General Partner Gigi Levi Weiss
(Photo: NFX)
As the world heads into 2023, he provided his thoughts on what the sector can expect. “Sectors that have burgeoned due to COVID, especially food delivery platforms and work-from-home technology, are likely to slow down. Many of those companies will suffer as consumers return to in-person activities,” he said. Told.
Fund Name/Fund Name: NFXMore
Fund amount: $1.1 billion
partner: Gigi Levi-Weiss, James Currier, Pete Flint, Omri Amiraf-Drolley, Morgan Beller
Notable/Selected Portfolio Companies: Lyft, C2i Genomics, Mammoth Biosciences, Walnut, Yo-Egg, Triple Whale, Firefly, Moov, Papaya Gaming
NFX attended CTech to discuss how technology and how we interact with it will change in the coming year.
If 2020 was the year of the pandemic and 2021 was the year of record, how would you define 2022 in the VC sector?
I believe 2022 will be the year things come back to earth. Massive economic stimulus due to the pandemic has caused private and public investment and valuations to skyrocket to unsustainable levels. Interest rates will continue to rise until the end of he 2022, so I think people will look back on this year to fix the tech/startup landscape.
Who will be the big winner in 2022 and why?
A startup that manages to maintain a balanced growth-to-spend ratio is a clear winner and attractive. Also, companies that help people save money are good bets. This is especially strong during a recession when interest rates and inflation have a severe impact on the economy. Gaming is pretty resilient during downturns because people stay in it and save money.
Who are the big losers of 2022 and why?
During COVID, an industry that helped people adjust to life in a pandemic exploded into unsustainable ratings. Food delivery services and telecommuting software are good examples of this. While these categories remain valuable, these ratings are no longer justifiable now that the pandemic has passed. It feels like a loss for a while, but it’s really a fix to a more sustainable business.
What to expect from the VC sector in 2023?
We are optimistic about 2023, especially for early stage investors like us. A lot of VCs, including NFX, have a lot of dry powder that we’re trying to roll out.
Some of the world’s largest technology companies were founded during a recession when new problems and inefficiencies became apparent. I see no reason not to do so this time. We are on the lookout for these types of companies and are prepared to make large and bold investments in category-defining companies.
Late-stage VCs may struggle in 2023. We really need a big IPO to open up the market. But this is something early stage startups and VCs shouldn’t worry too much about. It will take 5-10 years before a fix is made. New funds without a strong track record may struggle to raise capital as LPs want to invest their money in proven management teams.
What global processes will affect the Israeli market (both positively and negatively)?
The first factor is whether there has been a global recession. Then there are some big headwinds like US interest rates, stabilizing the Chinese economy and war in Ukraine.
How should different companies prepare for the coming year?
Companies of all sizes should consider streamlining their operations, cutting costs where possible, and focusing on profits rather than just growth.
This is a time for businesses to figure out how to maximize their primary revenue drivers, but they should also pay attention to how to creatively and affordably add additional revenue streams.
What will happen to the dozens of unicorns born last year?
As before the pandemic, a high ARR ($100 million or more) is key for a company to achieve unicorn status.
Many companies will lose this position as the market readjusts, and that’s okay. Many late-stage companies are seeing valuations slashed to perhaps more realistic levels.
Founders don’t just want to raise valuations, they need to focus on reducing burnout and increasing revenue. If you turn a profit or make a profit in this down market, you will definitely get a higher valuation.
In which sectors will VC investment accelerate and in which sectors will it slow down? The reason for this is also?
For one thing, we think Generative Tech will be a big sector next year. New AI platforms such as OpenAI and Stability AI are unlocking new possibilities, from gaming to marketing. Longevity technology and food technology are two other areas where he takes advantage of recent breakthroughs in biology and life sciences.
As we mentioned earlier, COVID-boosted sectors could slow down, especially food delivery platforms and work-from-home tech. Many of these companies will suffer as consumers return to in-person activities.
HR: Do the layoffs, what has happened and what is yet to come, help in any way to solve the pain companies have been going through in the last couple of years?
More layoffs are likely. The job market is still strangely strong given the state of the economy, but I think it will probably get worse. This is an unfortunate part of the business cycle. This is because in good markets, companies launch to meet demand, and then in tough times, that demand fades.
The silver lining is that layoffs from big tech companies often free up tons of talent for start-ups. Many people who are laid off may end up joining or becoming founders of startups.
Triple Whale, Landa, ImagenAI – NFX’s Notable Portfolio Companies
triple whale
Ecommerce: A simple, mobile-first dashboard that connects all the tools your ecommerce store uses
Founder: Max Blank and AJ Orbach
Founded year: 2021
Number of workers: 110
Explanation behind the investment: A group of young, aspiring entrepreneurs who started out as e-commerce sellers and built the dashboard they wanted. The last year saw immense growth and product fit for his market.
Landa
Proptech – Allowing Anyone to Invest in Real Estate Through Fractional Ownership
Founder: Ishai Cohen and Amit Asaraf
Founded year: 2018
Number of workers: 30
Explanation behind the investment: Investing in the real estate market is becoming increasingly difficult for the average person, but Landa makes it possible for anyone to invest for as little as $5.
Imagen AI
AI – Personalized Lightroom Editing Assistant
Founder: Yotam Gil and Toav Chai
Founded year: 2019
Number of workers: 15
Explanation behind the investment: Photo editing can automate a lot of the work, but it’s still an incredibly time-consuming process.