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VC Predictions: 5 Trends That Will Impact 2023

December 18, 2022

As we reflect on 2022, we’re grateful for our community of founders, operators, and investors who we get to work with every day. As we look ahead to what’s on the horizon, here are five trends we’re watching in 2023: 

Embedded fintech will lead to all-in-one financial platforms

In 2023, we predict that fintech companies will strive to become a financial operating system (OS) for the customers they serve. This will entail leveraging embedded fintech (or building in-house) to provide a variety of financial services including checking, lending, payments, business intelligence, financial software, and more all within the same platform. The result? Fintechs will then account for a greater share of the customer wallet, increase customer stickiness, and eventually expand gross margins to set the stage for a blockbuster IPO.

But according to GGV Managing Partner Hans Tung—along with GGV Venture Partner Huey Lin, investors Robin Li and Marcello Rossi, and GGV’s VP of Technology Rares Crisan—we’re still in the early innings of global financial service digitalization with many more large fintechs yet to be built.

"2023 will be a year where fintechs invest in product development and partnerships, transitioning their offerings from point solutions into all-in-one platforms. On the other side will emerge more solid fintechs with diversified revenue streams, higher margins, and loyal customers to set the stage for blockbuster IPOs two to three years from now."

Billions in untapped cloud spending may be 2023’s silver lining 

With more than two decades of investing experience in infrastructure software (including developer tools, data infrastructure, and cybersecurity), GGV Managing Partner Glenn Solomon sees a silver lining in the multibillion-dollar opportunity of cloud adoption.

Cybersecurity M&As can be an entrepreneurial restart

Even with Gartner predicting global spending on security and risk management to grow 11.3% in 2023, chief information security officers (CISOs) will undoubtedly face pressure to justify decisions and defend their budgets in the coming year. The result?

For some cybersecurity founders, seeking the mergers-and-acquisitions route can be a way to continue their entrepreneurial journeys: “Under the right leadership, startup founders can run a semi-independent product unit that will allow the smaller org to stay nimble and innovate while benefiting from the huge support of marketing and distribution of the incumbent,” writes GGV Partner Oren Yunger.

The modern data stack will be streamlined (and more effective)

The data stack has exploded over the past 10 years, improving how data teams operate but also creating noise in the market. “If you ask two data leaders what their stacks look like, you’ll likely end up with very different answers,” writes GGV investor Dan Cahana. “Vendors, more than buyers, have owned the narrative around how you should construct your data stack, creating confusion around where to start.” 

As we all learn to do more with less, this shift will force data leaders to separate the “must-have” data tools from the “nice-to-haves.”

SMBTech can help small biz owners survive—and thrive

For the SMBs that survived the pandemic and for the millions of new businesses launched in 2020 and 2021, the tools, technology, and financing options available have never been greater “for an entrepreneur to launch a website, e-commerce store, or digital experience to complement her/his Main Street storefront,” write GGV’s Jeff Richards, Tiffany Luck, and Chelcie Taylor.

These tech-savvy operators will have an advantage as they grapple with a “historic double whammy with labor and inflation.”