I started my journey as both an angel investor and founder over 20 years ago.
A handful of successful companies and hundreds of investments later, I realized a few common themes throughout my portfolio. One in particular stands out: democratization.
Democratization, or making things more accessible to more people, has been a considerable factor in much of my decision making as a founder and investor.
I helped democratize travel when co-founding Hotwire, real estate with Zillow, and second home ownership with Pacaso.
The same rings true for my current investments, like Intro, a startup that provides access to industry and thought leaders to anyone seeking 1-on-1 virtual sessions, or Arrived Homes, which democratizes rental investment opportunities.
That being said, I’m constantly thinking about what’s next, and have noticed this democratization shapes many of the trends we can expect in 2022 and beyond. From accessible space travel to work environments - here are a few of my predictions.
The Metaverse and Web3 Take Center Stage
2022 is primed to bring the metaverse into the mainstream with major companies placing big bets (and big dollars) on this idea. Democratizing a wealth of information and communication for millions, if not billions.
Sure, Facebook's recent name change to “Meta” put this front of mind for many, but the metaverse is nothing new. The concept of people living their lives online in virtual and augmented reality has been a staple in entertainment since Neal Stephenson’s 1992 novel, "Snow Crash." Tech has also attempted to bridge this reality gap with products like Oculus and Google Glass, while gaming platforms like Roblox and Minecraft are built on this concept of virtual interaction.
2022 will see more integration across platforms, propelling us further into this new reality - a virtual world where we seamlessly interact, exchange ideas, shop, learn, and more (my son and I recently recorded a podcast on the subject) is on the horizon.
And successful startups are already claiming their stake in the metaverse. Wave, for example, is re-writing the future of concert-going by bringing artists and audiences together through live and immersive virtual performances. The company has partnered with celebrities like John Legend and the Weeknd - giving an interactive and one-of-a-kind concert experience to millions.
The metaverse may dominate the current conversation - but it’s not the internet’s only progress gaining steam.
Web3 Will Enter the Mainstream
Currently, Web2 (or, the internet as we know it) is essentially controlled by companies that provide a service in exchange for users’ data and their user-generated-content. This is the magic that powers social media platforms like Facebook, Instagram and TikTok. Web2 enriches the corporations which own the platforms with financial rewards and governance control of their sites.
On the other hand, Web3 aims to shake things up by giving the power and compensation back to the people in an open, intelligent, democratized and decentralized system. This decentralization will also allow users more control over the data they share and will make the internet even more integrated into daily life.
Web3 will run on blockchain technology, meaning that all transactions are publicly recorded for all to see. The user-generated content that drives economic value will benefit those users contributing to the network instead of the companies that created the network. These users will then be compensated via tokenization or crypto.
I can picture some killer apps in 2022 ready to compete with major companies currently relying on Web2 technology. Some startups, like the blockchain-powered wireless network Helium, and Hivemapper for mapping, have already adopted this decentralization and blockchain technology.
While the metaverse and Web3 go hand in hand as we enter this next internet phase - some of 2022’s forecasts land closer to home.
At Work and Home
Should employers require employees to be in-person or not?
The pendulum continues to swing as companies attempt to implement efficient working environments for both employees and employers. The struggle with in-person, work from home and remote/hybrid is a trend likely to extend into 2022 and beyond.
The right balance that harbors both positive company culture and employee satisfaction will look different for every company. But one thing is certain - it will likely never be business as usual.
Luckily, new companies have stepped up to the plate to alleviate some of the stress - especially in the world of HRTech. Companies like Syndio (an investment of mine) values fairness and transparency for employees with their pay equity software and strive to make workplaces better for all. Another investment, Kona, helps boost company culture through effective and positive communication.
Adding to the conversation (and confusion) of in-person vs. remote/hybrid is the continued trend of employees packing up and out of a commutable radius.
Untethered from the office at the outset of the pandemic - many workers uprooted and moved locations. Employees will continue to disperse to different work bases as hybrid or remote environments remain.
This relocation trend also led to rising consumer interest in second-home ownership. My company Pacaso, democratized this market through co-ownership (more on this later!) and allows many people the opportunity to experience the best of both worlds while working in a hybrid environment. This leads us to the next trend...
Further Consumerization of Digital Real Estate
Even with some well-intentioned, centuries'-old regulations still hindering the home buying experience, digital real estate has transformed drastically over the last 25 years. And we can expect even more change in 2022 and beyond.
Consumers have made it clear that they want things to change - and instead of a one size fits all solution, we will continue to see an entire universe of solutions emerge to address the multiple and specific problems faced in the life cycle of a real estate transaction.
A brief history: Gone are the days of the Web1 pay-to-play era of online classifieds and paywalled information. Zillow and Trulia changed that game in 2005 when they turned on the lights and set otherwise restricted information (home valuations, pictures, mortgage rates) free. This created a new business model long craved for by the consumer.
As the above illustrates - change is constant, and democratization is key. In 2022 and beyond look for even more accessible information and transparency with innovations in user-generated content (reviews), better maps, more 3D tours, and tools to provide purchasing a property sight unseen.
2022 will also see the continued rise of the digitized transaction and reduced friction in the home buying/selling process. DotLoop (founded by my Pacaso co-founder, Austin Allison, and acquired by Zillow) was an early leader in reducing friction and digitization with its transaction management software. Many legacy companies now incorporate dotloop or similar software - providing consumers an easier way to follow along the transaction process.
iBuying companies like Offerpad and Opendoor are major players in frictionless transactions. With these companies, homeowners sell their home to an institutional buyer who then refurbishes and resells it for a fee.
All the while, a fresh crop of innovators are providing solutions for other aspects of the transaction. Companies like Flyhomes and Ribbon bridge a homeowner’s equity gap between selling and buying a home, providing cash offers in competitive markets. Doma has digitized the title, escrow, and closing process - streamlining the transaction for all parties. Appraisals have been digitized by Aloft and mortgages by Tomo - greatly reducing some of the most stressful aspects of the giant transaction that is buying or selling a home.
This exciting trend of democratization in real estate is powerful and unstoppable. Though democratization comes in many forms - it always has one thing in common: making previously inaccessible areas of real estate available to many.
In the rental market, investors no longer have to have several hundred thousand dollars in the game to benefit from real estate appreciation. Companies like Arrived Homes, one of my portfolio companies, is a startup that buys homes through crowdsourcing and acts as the landlord. Consumers can put in as little as $100 as a shareholder and are currently seeing 11%+ returns annually.
Separate from the rental market is an area of real estate close to my heart - second homes. Democratization in the second home market was ripe for disruption. Pacaso, a company I co-founded in 2020, solved this by helping people buy a portion of a second home and managing the home and calendar for the owners. It’s been incredibly successful in the US - and we just listed our first European property in Marbella, Spain.
Evolutions in Funding Rounds, Valuations and SPACs
The sky's the limit in 2022 when it comes to valuations and round sizes in venture capital.
Any fears surrounding the pandemic’s effect on venture investing were luckily unfounded. The recovery has been sharp and continues to explode - and there is nothing to stop it.
High net worth individuals, foundations, and endowments are allocating higher percentages of their assets towards private investments, including venture capital. This increase will continue - giving venture funds much more power, and driving larger and larger rounds and higher valuations.
While things are on the rise for VC funding rounds and valuations - we’re about to see a divergence in another arena raising capital and going public: SPACs (Special Purpose Acquisition Company).
I’ve written about my SPACs a few times - and still believe that for certain companies in certain situations, SPACs are a great path to the public markets. But 2022 will see the bifurcation between the good and bad SPACs.
Once a SPAC is formed and - they have a limited amount of time to find a likely target company to acquire via merger and bring public. Previously, a benefit of SPACs vs. IPO was the speedier timeline it took to bring an acquisition public.
Recent regulations and reviews have slowed the acquisition process for SPACs, which is negatively impacting the SPAC market, potential investors and SPAC valuations. A lot of these SPACs are nearing the end of their deadline to identify a company, raise capital, and merge to go public. Some will succeed - but many hundreds will not.
What started as a way to democratize the traditional IPO path, 2022 will continue to see a split between the few successful SPACs and the rest.
To the Moon
2022 will also be filled with milestones in the democratization of space travel - as the commercial space race continues.
The private sector heavy-hitters - like Bezos’ Blue Origin and Musk’s SpaceX (where I’m an investor) - are still grabbing headlines as the two companies edge closer to making their reusable rockets a reality.
But they are not the only players on the field. Many startups are joining the race - like Relativity Space (another 75 & Sunny portfolio company) - which in June 2021 raised an additional $650M in a Series E round and a valuation at $4.2B. Last month, the company successfully completed stage 1 testing for its 3D printed rocket - the Terran 1. And in 2022 Relativity Space plans to launch the Terran 1 into orbit.
Outside of technology, satellites, and rockets - we’ll see new sectors of new economies emerge, like space-for-earth economies (where resources and services are produced in space for earth) and space-for-space economies.
We can expect Kennedy Space Center, Cape Canaveral and other launch sites to be pretty booked in 2022 and beyond.
… And Beyond
The above list is non-exhaustive. I’m also looking forward to the continued trends towards inclusive and diverse work environments - creating and allowing space for even more innovations and ideas to flourish.
From the future of urban mobility and telehealth to cryptocurrency and NFTs - 2022 (and beyond) is primed for disruption and game-changing technology.
And I’m so excited to be along for the ride. What are your predictions?
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