What’s in Store for 2022?

Looking forward into the next year, we’re excited about what seem to be endless opportunities for retail and FinTech to come together. The growth of emerging marketing, sectors, and trends all converge with a need for frictionless and elegant commerce capabilities. In 2022, we believe:

  1. 1 in 5 Americans will own crypto in 2022
  2. Web 3.0 propels FinTech to surpass 30% of all U.S. venture capital dollars
  3. Platforms will battle it out to win and retain creators — and their revenues
  4. FinTech challengers will set their sights on premium credit cards, not just debit
  5. Major luxury brands will embrace the secondary market and launch resale offerings
  6. Major C-store chain will acquire one of the ultra-fast delivery platforms
  7. Series B and Series C companies will acquire, not (acqui-)hire, to hack growth
  8. The “digital tigers” rise; total VC dollars in high growth emerging markets will double and more new unicorns will be minted in non-U.S. geos than in the U.S.
  9. Commerce infrastructure will be THE key enabler in the metaverse going mainstream
  10. The race to the great American “super app” will intensify

FinTech

1 in 5 Americans will own crypto in 2022

This year we saw the general public gain more interest in cryptocurrency investing. Consumer-oriented platforms like Coinbase, Robinhood, and Square have moved the needle for mass awareness in the last year and we believe the coming year will see a meaningful shift from awareness to adoption — aided by the easy ability for financial players (banks, neo-banks, brands, etc.) to provide access to crypto through secure, regulated digital asset infrastructure platforms that are delivered as-a-service

Web 3.0 propels FinTech to surpass 30% of all U.S. venture capital dollars

High valuations have characterized the boon of FinTech startups in the past five years. We don’t see this growth dropping any time soon. In fact, as the internet transitions into its third evolution, with a focus on new concepts of ownership and monetization, we believe that FinTech will touch more sectors and startups than ever before — making for unprecedented growth in investment volume for the space.

Platforms will battle it out to retain creators — and their revenues

Today the creator economy has an estimated market size of over $100B. With growing followings and opportunities to monetize, creators are rejecting onerous revenue share structures imposed by incumbent players. More and more, creators demand opportunities to create recurring and diversified revenue streams outside of traditional social media platforms. The question is: which platforms will be able to grow by adapting to an evolving set of creator needs and which will fall to more nimble, emerging challengers?

FinTech challengers will set their sights on premium credit cards, not just debit

Incumbent issuers have retained high-income, premium customers for long enough. We believe disruptive FinTech challengers will disrupt the existing landscape, and scale, with a new approach to the premium card experience. This will include more competitive rates and digital-first offerings but will center on reimagining the benefits and loyalty provided by incumbent issuers.

RetailTech

Major luxury brands will embrace the secondary market and launch resale offerings

The major success of resale platforms like the RealReal, Poshmark, and Depop has slashed into brand revenues; in 2022 luxury brands can’t afford to avoid the reCommerce revolution any longer. Our portfolio company Trove, which powers reCommerce capabilities and white labels the consumer interface for brands and retailers, is a case study for this watershed moment in luxury retail (read more about the reCommerce revolution here.)

Major C-store chain will acquire one of the ultra-fast delivery platforms

Ultra-fast delivery platforms (GoPuff, Jokr, etc.) are redefining convenience as consumers are able to get groceries and necessities delivered in less than 30 minutes. Rather than build the capabilities from scratch, major c-store chains will likely try to acquire one of the emerging players to gain digital and delivery expertise.

Market Moves

Series B and Series C companies will acquire, not (acqui-)hire, to hack growth

Historic levels of venture investment have made it easier than ever to launch a startup. The increase in the availability of capital has not just transformed the early-stage market. It has also enabled later-stage companies to raise ever-increasing rounds of capital. This has a two-pronged effect — funding for more early-stage and greater capitalization for more later-stage companies — will lead to an increase in start-ups acquiring start-ups. For younger companies, this presents a quick path to capture potentially meaningful upside at larger, well-funded players. For later-stage companies, the influx of capital will enable (and in some force) alternative paths to acquire growth.

The “digital tigers” rise; total VC dollars in high growth emerging market will double and more unicorns will be minted in non-U.S. geos than in the U.S.

Following the path of the Tiger Economies, we are now seeing the rise of “Digital Tigers” crowning new unicorns across emerging markets. To some extent, this is not a new phenomenon. We have seen markets like Indonesia, India, Nigeria, Brazil, and Mexico give birth to multi-billions companies — especially in FinTech. However, we believe we are still early innings of these markets rising to dominance — driven by massive addressable markets, highly attractive demographics, and rapid (but still early) digitization of core sectors.

Commerce infrastructure will be THE key enabler in the metaverse going mainstream

From gaming to virtual shopping to even concerts, users want to spend more time in the metaverse with the capability to transact in a frictionless and intuitive way. We believe that the metaverse will be adopted by a broader demographic in 2022 and that commerce capabilities will underpin a new set of transactional experiences unique to a fully virtual ecosystem. This includes alternative ways of paying and financing that do not rely on traditional structures — including card rails, interchange, FX, or credit.

The race to great American “super app” will intensify

In October, we shared our vision for the future of “super apps” in the United States. While 2021 saw many players like PayPal, Apple, and Square move closer to “super app” status, we believe that 2022 will be the defining year to achieve super app status. This will be partly driven by an effort to tightly integrate this year’s acquisitions into a coherent value proposition for users (e.g., Square & AfterPay). It will be further fueled by a likely increase in +$1B acquisitions across frontrunners looking to broaden their offering and deepen connectivity across consumers and businesses alike.

Our Wish For You

From our Commerce Ventures family to yours, we wish you the happiest of holiday seasons! This year has brought our industry both record-breaking achievements and serious challenges, but through it all, we’re grateful to have counted you as friends, colleagues, and partners. As we turn the page on 2021, we look forward to a happier, healthier year ahead, and we wish you and your loved ones only the best in 2022!

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Commerce Ventures

Commerce Ventures

Early-stage venture capital firm investing in technology innovators in the retail and financial services eco-systems.