The last year has been extraordinary. A sustained bull market across all asset classes, including venture capital. Rather than the mini-boom in later stage funding predicted 12 months ago, it has been a maxi-boom at almost all stages of raising investment.

Going into 2022, the market continues breaking records. Here are two trends to watch:

  • Inflation / Interest rates  Bull runs always seem unstoppable, until they are not. Venture capital has been a significant beneficiary of ultra-loose monetary policy boosting the supply of available capital. Inflation appears to be gathering pace which, if met by higher interest rates, could mark the end of more than a decade of incredibly cheap cash. The impact on entrepreneurs raising investment is unlikely to be felt immediately since funds have considerable dry powder. However, keep an eye on the time taken to close new funds and their ultimate size to get a health check on the future direction of the industry.
  • The Squeezed Middle Typically a reference to middle-income families struggling to get by, this applies equally to the middle of the capital structure where Series A funds operate. With more funds than ever chasing after companies that have early revenues and strong signs of product-market fit, the upwards pricing pressure this year looks set to continue. This will be painful for investors, but continue to be a great market for entrepreneurs.

When it comes to sectors that look set for a strong 2022, here are the top six areas that investors will be keenly watching as the impact of the pandemic continues to be felt.

  • Future of Work
  • Education
  • Climate
  • Health care
  • Automation
  • Supply Chain

Read the full article about venture capital and technology trends by Chris Smith at Forbes.