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When most people think of startups, they think of tech. From software to social media, e-commerce to edtech, biotech to blockchain… tech startup companies are the quintessential building blocks of most venture capitalists’ portfolios.
And for good reason… these technology startups have the potential to scale rapidly, which can lead to high valuations (and high returns). Many tech startups are developing innovative new products or services that can disrupt existing markets.
So what are the hot sectors for tech investing right now? According to recent reports, private investors are particularly interested in artificial intelligence (AI), machine learning, blockchain technology, and electric vehicle (EV) startups—world-changing technologies that have the potential to change the way we live and interact with our world.
Let's take a closer look at why so much capital is being injected into these spaces—and how investors can get in on the action.
AI and machine learning
Artificial intelligence
Artificial intelligence (AI) is an arm of computer science that deals with the creation of intelligent "agents." Essentially, it involves systems that can reason, learn, and act autonomously.
AI-driven technologies like Amazon's "Alexa" and Apple's "Siri" have become a big part of our lives, and the possibilities of future innovations are seemingly endless.
On a much grander scale, advancements in AI are solving real-world problems like climate change, fraud prevention, and disease detection and prevention.
Mark Cuban, famed Shark and tech billionaire, recently told Inc. the following about the importance of the technology:
"Don't hesitate to explore this technology, even if the payoff isn't immediate. Forgo A.I., and you risk becoming a dinosaur."
The artificial intelligence market is projected to reach $360.36 billion by 2028. In 2021, the global AI market pulled in $51.5B. Much of the sector's recent growth has been fueled by big tech companies like Google, Microsoft, and Amazon (among others) pouring money behind the technology to compete with their peers.
And there has been no lack of funding for the space. In 2021 alone, AI companies raised $89.2 billion from VCs—the highest of all technology startups.
Machine learning
Machine learning is a branch of artificial intelligence that deals with the construction and study of algorithms that can learn from data. These algos can be used to build models that can make predictions or recommendations based on new data.
Machine learning is a rapidly growing space with many applications in areas such as image recognition, natural language processing, and predictive analytics.
Image recognition is used in several industries, from augmented reality to driverless cars to iris recognition improvement.
Natural Language Processing is artificial intelligence that gives machines the ability to read, understand, and interpret written or spoken human language. It allows the machines to carry out various tasks, including automatic text summarization, sentiment analysis, and speech recognition.
Some experts believe that machine learning will eventually lead to artificial general intelligence ("AGI"). AGI, sometimes referred to as “strong AI” or “true AI,” gives machines the ability to reason, learn, and solve problems like a human.
If AGI goes in the direction experts expect, it would be a significant breakthrough for humanity. Moreover, startups working on AGI are exceptionally well-funded, as investors believe that AGI could have a huge impact on the world economy.
In 2021, the global machine learning ("ML") market was valued at $15.4 billion. In 2022, it jumped to $21.17 billion.
Explore Republic's AI and Machine Learning offerings here.
Blockchain
Blockchain technology is a distributed ledger system that allows for secure, transparent, and tamper-proof record-keeping. It gets its name from the constantly growing set of “blocks” of data added to the “chain,” which is a log of every transaction made on a blockchain.
Blockchain startups are working on a number of innovative projects that have the potential to revolutionize several industries. Some of those innovations include:
Decentralized exchanges that allow for peer-to-peer trading of crypto assets without the need for a central authority
Platforms that enable developers to create and launch decentralized applications
Protocols that provide new ways to raise capital, such as initial coin offerings
Infrastructure projects that aim to make it easier for businesses to use blockchain technology
Music royalties tracking
Medical data sharing
NFT marketplaces
Supply chain and logistics monitoring
Exciting innovations like these have the potential to change the way we interact with the digital world and could have a profound impact on the way we live our lives.
The blockchain industry is growing at a rapid pace. In 2021, blockchain startups raised a record $25 billion (see chart below). And the market projections for blockchain are nothing short of staggering, with some estimates predicting the global market will be worth $1.43 trillion by 2030.
With so much money flowing into the space, it's no wonder that there are now thousands of blockchain startups trying to get in on the action. But with so many companies vying for attention, it can be hard to know which ones are worth a look.
Luckily for you, we make it easy to browse blockchain-based companies raising on Republic right now.
Electric Vehicles
One of the trends in transportation is the electrification of vehicles. Gasoline and diesel cars are being replaced by electric vehicles ("EVs") powered by batteries, which are much cleaner and more efficient. This shift is being driven by advances in technology, declining costs of EVs, and stricter emissions regulations.
There are a number of companies that have emerged in recent years to capitalize on this trend. These startups are working on everything from batteries and charging infrastructure to the complete manufacturing of electric vehicles.
We’re all familiar with the mega car companies that have joined the EV race, but there are also several startups that are entering the space. One such manufacturer is Aptera—a company that makes a three-wheeled electric vehicle that looks more like a small plane than a car.
According to Crunchbase, the California-based company has raised more than $60M from investors since its founding, including Google and NRG Energy.
Equally as important to the industry are the battery manufacturers. One of the rising stars in this category is a startup named StoreDot. Their battery consists of hundreds of EV flash battery cells, able to charge an EV in less than five minutes. The Israel-based company has raised over $190B to date.
According to a report from Crunchbase, a record $20 billion of venture capital was invested into EV startups in 2021—doubling the total from 2020 ($10B). The EV market is projected to continue proliferating in the coming years.
Check out Republic's EV offerings here.
In 2021, the global sales of plug-in cars reached 6.6M, 2x more than the 3M sold in 2020, while battery-electric plus plug-in hybrids comprised roughly 9% of the new car market in 2021, a ~5% increase above 2020 totals.
To put these numbers in perspective, ten years ago, only 130k EVs were sold worldwide, signaling a meteoric rise in the popularity of alternative vehicles.
If you're looking for a place to invest that will put you at the forefront of innovation, look no further than the tech industry.
Private investors flock to this sector for a reason—it's a place where successful businesses scale rapidly. And when businesses scale, investors have options.
