Anna Edwards: Early-stage venture capital fund Northzone has invested in more than 170 companies ranging from technology to entertainment. So what is the landscape looking like this year? Here to talk about their 2022 post-pandemic outlook, his General Partner Pär-Jörgen Pärson, very nice to speak to you! And let’s start with the broad outlook for technology. I suppose at this point, you operate in the VC space, we spent a lot of our time here talking about listed tech names, particularly in the United States, maybe the ones that aren’t all that profitable just yet, and how they work. They might struggle in 2022, as we see a higher interest rate environment from the Federal Reserve, is that something that bothers you in the VC world as well, the higher rates environment, what does that do to your tech outlook?
Thanks for having me here. I think in the short term it probably has implications on some of the private companies anticipating to go public, since the quality threshold has really drastically improved or increased over the past three to six months. But I would certainly also say that the venture capital community and the fast-growing private markets are operating under slightly different timelines than the public markets. And there is an abundance of capital in the early stages, and also in the later stages to build companies to support the enormous amount of entrepreneurial activity. That’s sort of happening left, right and centre in Europe, and also in the US. And we saw over the past couple of years an unprecedented rise in entrepreneurship in the digital sector, and where Europe now has actually been the best performing geographies in the venture market globally.
Good morning PJ, as you say you operate in a slightly different time span. But I’m curious about what you think will be the real kind of exciting VC sectors in 2022. In Europe, as you said, in the last couple of years, it’s been particularly around tech and digital. Is that still the case? Or is there some other area that VC is also getting excited about for the year ahead?
Yeah, I think it’s fair to say that there is still quite a lot of disruption still to be made in the name of digitalization: just consider the fact that the healthcare industry currently is about a $5 trillion global industry. It’s largely operating with the same logic and with the same infrastructure as it did 30 or 40 years ago. And there’s a massive amount of entrepreneurial activity and money being thrown at that problem. Healthcare, I think, is probably the biggest opportunity. Fintech is still an amazingly important one, not only for the fact that it’s a huge market but most of the incumbents actually have difficulties in adapting to this new world. This is actually giving free rein to startups to come in and eat their lunch.
Anna Edwards: I know that you’ve been excited by your going about the metaverse in the past and in your notes ahead of our conversation today, you say that NFTs are opening new opportunities in the gaming space. We certainly heard from GameStop in the United States about how they’re recently getting into NFTs and the involvement of games companies was crucial. One of our columnists here at Bloomberg was saying that many gamers actually resent sales of virtual goods within games and that this could risk a backlash amongst the gamer community is that it give us your insights into how that one plays out?
Well, I think there is a lot of hype in the NFT. But there’s also a lot of substance that’s about to unfold. And for instance, today, one of our portfolio companies Homa Games is announcing a collaboration with Sorare, which is one of the premier players in the NFT space. That goes to show that still very much the early innings of how NFTs will motivate gamers to not only spend time and be entertained in these gaming platforms but also collect and take a significant part of the value creation that currently is being entirely captured by the gaming platforms. It’s a new dynamic that is incredibly interesting. And also that can lure new players into this environment. There are a lot of examples in the world where actually players are now making money on a serious scale and can have that as a profession. And I think the NFT movement is sort of paving the way for that.
Can I follow on that? You kind of say that it’s not just hype. There’s a lot of substance there as well, but the dynamic you describe sounds like a new angle for hype, it doesn’t really sound like there is genuine product building genuine value creation, it’s more about just new angles for hype and I believe that we could be at the early stages the hype, but where’s the substance?
The substance is that NFT is a way to guarantee that there is only one digital copy. And that unleashes a lot of commercial opportunities that you didn’t have without NFTs, as you didn’t know if your product will be duplicated in millions and millions of copies. NFTs is about securing that there is just one digital copy, it’s a very similar experience as selling a Hermes bag and is truly exclusive.
Thank you for spending time with us this morning, Pär-Jörgen Pärson.