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Image Credit: Dr Michelle Deaker, Founding Partner & Managing Director, OneVentures

Eye-wateringly high valuations, a focus on ‘purpose’, and convergence between healthcare and tech: Venture capital predictions for 2022

Only two to three years ago, an investment round of $10 million would have generated huge headlines in Australia. Now, it has become almost commonplace to see companies raising venture funding of five to 10 times that amount. Deal volumes are at three times previous highs and estimated to be worth $8 billion. Valuations have also skyrocketed. The low yield environment, digital acceleration in the economy by five years, COVID-related stimulus, and investors seeking growth are factors fueling the tech sector, with many early stage companies fielding valuations of $100M+ just beyond seed stage. 

With its stable regulatory environment, Australia is a very attractive place to live, work and invest.  The level of investment in the tech and healthcare industries has flourished as sophisticated investors, including many large international players, furiously chase the best, highest quality companies representing the next Atlassian, Canva and Employment Hero. As one of the big 4 venture capital firms in Australia, we have more than $600 million in funds under management, and five funds, two of which are actively looking for investments in healthcare and technology. We are constantly trying to find a ‘gem yet to be discovered’ or company that was perhaps overlooked early on but has now found its product market fit and is advancing rapidly.

If the past two years have taught us anything, though, it is that it’s foolhardy to try and predict the future. Instead, here are a couple of trends that my team have been seeing and which we expect will continue well into 2022.

Techcare: Healthcare meets tech

Understandably, healthcare will remain top of mind in 2022 as countries around the world grapple with new strains of the virus and the lasting impacts of the COVID-19 pandemic. The pandemic is estimated to have cost the US government over $3 trillion, which has seen the US commit $65 billion to pandemic response with a major focus on new delivery technologies.  Companies like Vaxxas are at the forefront of this medical research, developing new technology which replaces traditional needle-based vaccine delivery methods with a patch applied directly to the skin. 

The intersection of technology and healthcare, particularly the use of artificial intelligence in drug development, discovery and diagnosis, will improve patient outcomes. AI, informatics, and genomics will accelerate clinical trials, help us to understand diseases better, diagnose more accurately, triage patients in hospitals more effectively, promote medical personalisation (medicines based on our genotype), and rapidly expand the number of high-quality therapies coming to market.  This intersection is set to be the next trillion-dollar opportunity.

We’re putting our money on Australian healthcare and technology companies with the potential to create positive and lasting social change—an approach that is very profitable for our investors and portfolio companies alike.  

The workplace is evolving and so too are employee expectations

Gone are the days of the 9-5 where employees are bound to their desks, and senior management need to physically oversee their teams’ work. The past two years have represented a historic shift in the dynamic between employees and employers to relationships based on greater trust, autonomy and balance. Many of our portfolio companies are already seeing the benefits of flexible working arrangements, including more productive and satisfied teams. Global organisations are reducing their physical office spaces and saving overheads in the process, while companies like Indebted have taken the approach one step further to offer a four-day working week. 

We’re in the middle of a so-called Great Resignation, and there are substantial lessons that businesses can learn from this period to attract talent, manage teams, and create a competitive advantage for the long term. Cloud HR systems like Employment Hero offer tools to manage the full employee experience from onboarding and payroll through to promoting employee engagement via rewards, recognition, training courses and ambitious goal-setting structures. Investment in technologies that allow teams to build connections remotely, celebrate staff achievements and reduce turnover in the process is and will continue to be a focus of ours in the future.

No longer a nice to have, ESG principles will become “table stakes”

Given its historic mining ties and less-than-ambitious 2030 carbon emission goals, Australia is the target of global chagrin when it comes to combating climate change. Australian technology companies with positive ESG credentials, however, are encouraged to take matters into their own hands and ‘be’ the change, helping to shift this perception overseas. 

At OneVentures, we see tremendous investor demand for sustainable companies and institutional investors looking to bolster their ESG credentials by backing VC funds. OneVentures recently announced a responsible investment and ESG policy, making us one of the first VC firms in Australia to formally commit to only investing in companies that demonstrate ESG principles. This is already helping to formalise the filtration of capital into startups with positive purpose and guiding the operations of our portfolio companies. Phocas, a fast-growing business intelligence platform in our portfolio, has recently become B-Corp certified and has hired a new Head of Sustainability, for instance. 

Positive ESG credentials are becoming table stakes and the investor’s bare minimum. In 2022, such changes will enhance a business’ corporate reputation, bolster sustainable growth, and open doors to global opportunities. 

Read more: What you need to know about capital raising

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Dr Michelle Deaker

Dr Michelle Deaker

Dr Michelle Deaker is Founding Partner and Managing Director at OneVentures. She established OneVentures in late 2006, coming into the venture capital industry as a successful IT industry business owner, entrepreneur and subsequently angel investor. Michelle holds a Bachelor of Science (Honours 1st class), Master of Science and a PhD (Applied Science). She is a member of the Australian Institute of Company Directors and Chief Executive Women (CEW).

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