As we continue through 2023, the private market is seeing a number of trends that could continue to have an impact on investors, startups, and the overall industry. Here are ten private market trends to watch in the year ahead:

1. Increased interest in ESG investments

Environmental, social, and governance (ESG) investing has been gaining momentum in recent years, and that trend is likely to continue in 2023. As more investors prioritize sustainability and ethical considerations, companies that prioritize ESG factors could see increased interest and investment. Additionally, there may be a greater focus on measuring and reporting on ESG performance, as investors seek to evaluate the impact of their investments beyond financial returns.

2. Continued growth in fintech

The fintech industry has seen growth in recent years, and that trend is expected to continue in 2023. With more consumers turning to digital financial services, and startups innovating in areas like cryptocurrency and decentralized finance (DeFi), the opportunities for investment in this space are available. However, with increased competition and regulation, it could be important for fintech startups to differentiate themselves and stay ahead of the curve.

3. Emergence of new industries

As technology advances and new business models emerge, we can expect to see the emergence of new industries that could present investment opportunities. For example, the rise of the metaverse and virtual reality could lead to the creation of new businesses and investment opportunities in the gaming, entertainment, and advertising industries. Similarly, advances in healthcare technology could lead to the emergence of new sectors focused on personalized medicine, telemedicine, and digital health.

4. Increased use of AI and machine learning

Artificial intelligence (AI) and machine learning are becoming increasingly important in a wide range of industries, and the private market is no exception. Investors may look for startups that are leveraging these technologies to help create new products and services, improve efficiency, and enhance decision-making. Additionally, we can expect to see increased use of AI and machine learning in investment management, as firms look to automate processes to help gain a competitive edge.

5. Greater focus on cybersecurity

As the threat of cyberattacks continues to grow, investors may prioritize cybersecurity when evaluating potential investments. Startups that specialize in areas like threat intelligence, identity and access management, and data protection could see increased interest and funding. Additionally, we can expect to see greater emphasis on cybersecurity due diligence during the investment process, as investors seek to help minimize risk.

6. Rise of alternative assets

With interest rates remaining low, and traditional asset classes like stocks and bonds offering relatively low returns, investors are increasingly turning to alternative assets like real estate, private equity, and venture capital. In 2023, there could be continued growth in these areas, as investors look for higher returns and diversification. However, with increased competition and valuations, it may be important for investors to carefully evaluate opportunities and help mitigate risk.

7. Increasing importance of data privacy

As data breaches and privacy violations continue to make headlines, investors may want to pay closer attention to data privacy when evaluating potential investments. Startups that prioritize data security and privacy and can demonstrate a strong track record in this area, could help  attract investors. Additionally, we can expect to see greater scrutiny of data privacy during due diligence, as investors may seek to ensure that companies are compliant with regulations and best practices.

8. Greater adoption of blockchain technology

Blockchain technology has the potential to transform a wide range of industries, from finance to supply chain management to healthcare. In 2023, we could expect to see increased adoption of blockchain technology by startups and established companies alike. However, as with any emerging technology, there are challenges and risks associated with blockchain, including regulatory uncertainty and scalability issues. Investors may need to carefully evaluate blockchain-based startups and ensure that they have a solid plan for overcoming these challenges.

9. Growing interest in impact investing

Impact investing, which aims to generate positive social or environmental impact alongside financial returns, is gaining momentum as investors seek to align their investments with their values. In 2023, we could expect to see continued growth in impact investing, with more investors prioritizing social and environmental considerations when evaluating potential investments. Additionally, we may see the emergence of new impact-focused funds and investment vehicles.

10. Shift toward remote work and distributed teams

The COVID-19 pandemic helped  accelerate the trend toward remote work and distributed teams, and that trend is likely to continue in 2023. Startups that can effectively manage remote teams and create a strong company culture despite physical distance may have an advantage in attracting top talent and helping attract investments. Additionally, we may see increased investments in technologies and services that support remote work and collaboration.

11. The rise of generative AI

Another trend we could see is continued growth in generative AI, with more startups exploring the potential of this technology to help transform industries such as entertainment, advertising, and design. For example, generative AI could be used to create personalized advertising or product design, or to generate realistic virtual environments for gaming or training simulations. However, as with any emerging technology, there are risks and uncertainties to consider. The potential for generative AI to create realistic deepfakes or other misleading content raises ethical concerns, and there may be challenges around intellectual property and copyright. Investors who can identify startups that are leveraging generative AI in responsible and innovative ways may be well positioned in the years to come.

Final Thoughts

Overall, the private market is likely to see growth and innovation in 2023, as investors seek out new opportunities and startups leverage emerging technologies and business models. However, as always, investors may need to carefully evaluate potential investments and help mitigate risk in order to achieve their goals. By staying informed and keeping an eye on these trends, investors can help position themselves to find opportunities.

Are you looking to invest in private market investment opportunities? Sign up for a MicroVentures account to see what opportunities we currently have available!

Want to learn more about investing in private companies? Check out the following MicroVentures blogs to learn more:

• The Future of Private Equity Investing
• The Rise of Private Market Investing
• The Impact of COVID-19 on Private Equity
• Private Markets 101

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The information presented here is for general informational purposes only and is not intended to be, nor should it be construed or used as, comprehensive offering documentation for any security, investment, tax or legal advice, a recommendation, or an offer to sell, or a solicitation of an offer to buy, an interest, directly or indirectly, in any company. Investing in both early-stage and later-stage companies carries a high degree of risk. A loss of an investor’s entire investment is possible, and no profit may be realized. Investors should be aware that these types of investments are illiquid and should anticipate holding until an exit occurs.