“The pandemic has been incredibly positive for the technology industry,” says Per Roman, CEO and Managing Partner of tech industry advisory and investment firm, GP Bullhound. “People who weren’t digital citizens before have now become digital citizens.”
From that perspective, Europe’s technology startups and scale-ups should be looking ahead to 2022 with a fair degree of optimism. But as Roman points out, while Covid 19 has been instrumental in changing consumer behaviour and encouraging hitherto slow-to-change industries to embrace digital transformation, fractured supply chains represent a much less positive elephant in the room.
I’m talking to Roman a few days after the release of GP Bullhound’s Annual Tech Predictions Report. Drawn up with input from the firm’s network of founders and investors, the study highlights what the firm sees as the ten key trends that are set to have the biggest impact on the digital economy over the coming year.
As Roman sees it, this year’s report is published against a backdrop of unprecedented progress in the European tech ecosystem reflecting a realisation that the continent – including the UK – is home to a growing number of globally significant businesses that have successfully navigated the journey from startup, to scaleup and then beyond. He cites the financial services industry in particular. “You have companies such as Sweden’s Klarna, the UK-based Revolut and Holland’s Adyen that are now operating on a global scale,” he says. “At the same time, Europe has a vibrant funding system.”
Looking To The Future
But what of the future? After all, the purpose of the GP Bullhound report is to throw a spotlight on next year’s key trends, rather than telling us about the success stories we perhaps already know.
In some respects, we’re still on familiar ground. It’s perhaps no surprise to hear that the delivery of healthcare services is set to be driven by ever more sophisticated Artificial Intelligence and Machine Learning technologies Indeed, the impact of deep tech looms large, with the report also saying that A.I. and M.L. will be playing a part in supercharging societies and driving diversity and inclusion across the private and public sectors. In another prediction, GP Bullhound says the A.I. revolution will, at least in part, be powered by increased use of efficient but relatively inexpensive ARM-based microchips.
Beyond A.I., there are some emerging hot sectors. For instance, the report welcomes the arrival of the metaverse concept (in other, words, 3D immersive environments) into the consumer marketplace.
Now if you’ve been following the various statements and videos that Meta – the company formerly known as Facebook – has been putting out, you might think the metaverse is five or ten years away.
Roman says that timeframe might hold true for Mark Zuckerberg’s vision of a massively ambitious virtual and augmented reality-driven world, but in smaller ways, the metaverse is already with us. “The metaverse is really part of the move towards digitisation,” he says.
Roman cites two illustrations of the metaverse becoming part of everyday experience. “A good example is the America’s cup – advanced visual overlays are now part of the race. We are also seeing the metaverse in surgery, surgeons are using digital twins of the real person,” he says.
Around The Block
Arguably, the concept of the Metaverse spills over into another of GP Bullhound’s coming technology trends – namely greater use of distributed finance, as enabled by blockchain. Essentially, distributed finance will allow entrepreneurs to set up businesses such as marketplaces without banks and other incumbent providers playing a mediating role. Roman acknowledges were are still on the outer edge of any blockchain-for-everyone revolution. “We are at the Klondyke phase and there are a lot of scams,” he says. “But change is coming.”
And when three-dimensional world’s peopled by avatars become normalised, the chances are that commerce in these parallel dimensions will be underpinned by distributed ledger technologies. Ownership of digital assets will particularly important. Roman cites the example of Non Fungible Tokens (NFTs). “You can use NFTs to buy a piece of art and then share ownership,” he says.
Room Foor Startups
But here’s the question. With Facebook/Meta spending billions of dollars on the metaverse, is there room for startups with limited resources. Indeed, is there room for startups in areas such as Fintech, a field in which established challenger banks have significant resources at their disposal. They are perhaps not incumbents, but their product development is well funded.
Roman says startups can compete. In his view, startup businesses have access to unprecedented amounts of processing power, software development tools and analytics through third parties. “Startups can operate beautifully today,” he says.”They can access all their processing through the cloud.”
The Supply Problem
This brings us to the elephant in the room. The pandemic has disrupted supply chains and there is a global shortage of microprocessors. In the first instance, this has affected car companies and suppliers of a wide range of digital devices.
Roman believes that prolonged shortages will also push up the price of cloud services, which could have some impact on innovation. How much is not yet known. Roman’s belief, however, is that cloud pricing will remain affordable for new companies, given that costs would be rising from a relatively low base.
Nevertheless, the bright 2022 that GP Bullhound is predicting may be tempered by shortages and their economic fallout, countering the acceleration of digital transformation. What the pandemic giveth, it also taketh away.