- Founding partner Alex Witt shared three venture capital predictions for the next decade.
- Witt says that managers who’ve launched less than three funds will get more attention.
- He also says that five key technologies and the African market will see more investments.
Since venture capital funds plummeted from 2021 to 2023, VCs are looking for ways to stop the pain and regain a sense of control over their future. Still, many VCs predict the industry will significantly decline in 2025 due to high interest rates.
Alex Witt, general partner at Verda Ventures and cofounder of the payment platform SWFT Blockchain agrees with recent predictions. Based on his 14 years of experience in finance and technology, Witt also gave Business Insider three more core predictions for the VC industry’s next decade.
He believes technological opportunity combined with changing demographics will shape the VC experience over the next 10 years, creating more investment space for emerging managers, five key technologies, and Africa.
1. Emerging managers will drive the highest returns in the next decade
As limited partners recognize that successful Fund 1s don’t necessarily translate into successful Fund 2s or 3s, the VC landscape will see a greater focus on new managers who’ve launched less than three funds.
“Emerging managers have been traditionally underfunded despite their success,” Witt explained.
For context, Witt explained that larger funds have a track record of underperforming: only 17% of funds larger than $750 million return over 2.5 times of capital. Yet smaller funds have been proven to consistently outperform.
“Funds under $249 million are disproportionately represented in the top decile and quartile of performers,” he said. Witt explained that targeting smaller, high-performing funds will be critical for future success.
2. VCs have an unprecedented chance to back five transformative technologies
According to Witt, we’re entering a new “industrial renaissance” fueled by breakthroughs in five key technologies he believes have massive VC potential.
-
Generative AI: Witt predicts that key players in this arena will be companies with unique datasets, such as Google with YouTube data and xAI with X and Tesla data. Generative AI will even affect the finance and pharmaceutical industries.
“Some impacts of generative AI to watch for include drug discovery with even faster trials and finance with real-time, data-driven trading.
- Robotics: Witt pointed to innovations like generative AI-driven physical AI — for example, Nvidia — and referenced Tesla. “Market leader Tesla is positioned to dominate this area with its ‘robots on wheels’ approach to manufacturing.”
- Autonomous electric vehicles: Witt said Chinese carmaker BYD stands out as a global leader in data access and scalable manufacturing. “In terms of cost impact, more than 70% of Uber ride costs are labor-related, and autonomous transport will significantly reduce expenses,” he said.
- Blockchain: Accessibility is an area to watch in blockchain. Witt said blockchain enables low-cost, borderless transactions, and more markets are using it. “For example, MiniPay, the #1 app in Kenya, surpassed Facebook and Instagram in downloads.”
- Biotech: As an emerging technology, Witt explained that gene-based therapies offer precision treatments for inherited or environmental genetic abnormalities. “As examples, Moderna’s mRNA success foreshadows the broader potential of CRISPR and similar technologies,” he said.
“This era is reminiscent of the early 20th century’s transformative, broad-based innovations like electricity and the internal combustion engine,” Witt said. For VCs, Witt believes the coming decade marks a rare chance to back category-defining companies in emerging industries — but he emphasized that success won’t come easy.
“VCs will face the challenge of identifying category-defining winners,” Witt said. “As history shows, industries tend to consolidate around one or two dominant players, with only a small fraction of companies emerging as leaders — think Amazon and Google among the dot-com era’s 500 IPOs.”
3. Africa and the Global South will lead in VC-backed innovation
Beyond technology, Witt stressed that demographics are a critical and often overlooked factor shaping VC trends. He projects that population dynamics will increasingly determine the locations where innovation thrives.
“Demographics are destiny,” Witt said.
He predicts that VCs will increasingly allocate capital to the Global South, particularly Africa, due to its “explosive” consumer and market growth potential.
“This shift will redefine traditional portfolio strategies, emphasizing demographic-driven investments,” Witt said.
As support for his prediction, Witt noted that Africa leads global population growth, and that all of the top 20 fastest-growing populations are in the Global South.
He added that countries with aging populations and declining birth rates, such as Korea, with a fertility rate of 0.68, face a shrinking workforce and reduced appetite for risk and technological adoption.
In contrast, he believes that regions like Africa, with a fertility rate of 4.18, offer a young, growing population and expanding market potential.
“This is why some VCs are betting on the Global South as the next frontier for innovation and growth,” Witt concluded. “Large populations equal large markets, and big markets mean that one or two successful companies can offset eight or nine failures, which is critical for VC success.”
If you’re a VC who would like to share your thoughts on the industry, please email Manseen Logan at mlogan@businessinsider.com.
Read the full article here
