10 trends for startups to watch in 2022 and beyond (Trend 6)

Power plays and power vacuums

It’s been a turbulent year, with the pandemic dominating world headlines. An increasingly polarized geopolitical landscape, along with a pandemic-hit global economy and rising income inequalities, presents serious risks to global growth and stability, including flows of goods, people, ideas and capital. The benefits of globalization have not been distributed equally and rising global connectivity has made this visible to billions of people worldwide. At the same time, the limits on movement imposed during the pandemic have highlighted the potential fragility of global supply chains and led nations to think about reshoring essential goods and services.

Partisan politics in the U.S. and rising nationalism in Europe are creating leadership and power vacuums, even as power plays by Russia in Ukraine and by China in East Asia ramp up the potential for wider conflict. Russia and China have started talking about greater military cooperation to counter U.S. power in their immediate spheres of influence. China is also in a race with developed nations to control the technologies of the future.

Pandemic-hit economies and jobs, growing income inequality, and discontent over immigration have turned many European voters towards more extreme right-wing political parties in the hopes of positive economic change and stricter immigration policies. These nationalist parties, in particular in Denmark, France, Austria, Finland, the Netherlands, Switzerland, and Serbia, now wield power that would have been very unlikely several years ago. A new wave of people power is also evident in separatist movements, for example in Spain – and most obviously in the departure of Britain from the EU.

Religious conflict also continues in many regions. Growing extremism and divisions within Islam in the Middle East, Africa and Asia threaten both Muslim states and the West, with the debacle of the Taliban takeover of Afghanistan damaging the reputation of Western military forces, particularly the US, as the world’s “policemen.”

The result is inward-looking Western nations, riven by nationalist and protectionist debates, that seem unable – and unwilling – to come together in finding solutions to grave geopolitical threats and global challenges, even as China and Russia look to increase their spheres of influence. Citizens globally lack trust in their governments. The global economic and political order is fragile and it will be increasingly important to focus on developing economic opportunities for people in all nations to access jobs and secure livelihoods.

What does this mean for startups?

• Trust and values matter: As the fight for values and beliefs rages across the world, cynicism is rising. People today trust much more in their peers than institutions, including business. Startups therefore need to be clear and transparent about the difference they want to make in the world and the principles by which they operate. Communicating purpose and values will help them build the essential trust and willingness to engage among prospective customers.

• Regtech offers opportunities: As the balance between political and people power shifts, there will be opportunities for startups focusing on improving the efficiency and impact of government processes. Governments around the world are also going digital and outsourcing some services. In addition, increased data protections and a focus on the power of tech giants may offer scope for startups.

• Money will be available to improve economic opportunities: Governments, despite their faults, do understand that reducing inequality and offering economic and educational opportunities for their citizens is critical. Expect more public money and support to be made available to businesses that can help with this goal. So startups should actively look for grants and support regionally and nationally.

• Collaborating on global challenges will be led by business: From climate change to next generation technologies, the lack of effective intergovernmental cooperation means that businesses will likely take the lead in developing solutions. Startups should be open to collaboration to help make a difference.