A startup’s life can be messy, and you may not always know where you’ll end up. Just a few years ago, if you were in the IoT sector, there was a good chance you were in for the ride of your life. Nowadays, that wave is in decline and is giving place to new technologies, industries & trends. The former success stories are now platforms for new ones to solve problems the world is facing: security, food scarcity and data among others. We’ve looked into last year’s startup and accelerator trends to see what we can expect in the upcoming years.
THE DECLINE OF THE IoT WAVE AND RISE OF INDUSTRY SPECIFIC STARTUPS
While many may still be dreaming of creating the next Facebook, Amazon or Uber, these internet service & mobile application startup waves are now firmly in the past. They’ve now become the platform & infrastructure, which tomorrow’s success stories are built upon.
Much like those initial start-up waves, the IoT market is maturing, as the initial hype around the early adopter success stories dies down. Rising security concerns, adoption & integration complexity and increased competition from well established companies, such as Cisco, make the road ahead tough for newly founded IoT startups.
In between rising risks of failure & loss of public, client and investor interest within the industry, there is an uphill battle to fight. Hope, however, remains.
Those that will now rise to the occasion answering their clients concerns and fixing flaws inherent in their young technologies while steadily growing their market share, will have a real shot at becoming well established companies within their specific segments.
IoT startups within specific market segments, such as manufacturing & resource management where ROI is easily calculable and provable will fare better.
Our advice to those reading: Keep an ear to the ground, listening to your clients & general market concerns. Adapt your offering in line with these concerns, prove your clients ROI, and hold on.
THE CRYPTO TSUNAMI
The aftermath of 2017’s initial hype wave in cryptocurrencies and blockchain technologies can still be felt by many, even with 2018 mostly past. For a while it seemed like everybody & their grandma was investing in some new coin or another. But while this fiery entry into the general market seems especially violent, it is important to think back. Think back on the entries of the internet, smartphones, big data etc. each just as prominent in the media and maybe, just maybe, we can attribute our perception of the cryptocurrency hype to recency bias.
The fact of the matter is that now, when the initial hype starts to decline, the real value of emerging technologies such as blockchain can be found.
New, highly specialized, applications within industries such as security, marketing, insurance, medicine etc. will each have their own mini hypes and slow declines around them, but now is the time to innovate, to create new ideas around specific applications for blockchain and other technologies, to find your early adopters, willing to risk money and time for the latest, coolest tech.
Therefore we can see, that despite the decline in general hype, the startup ecosystem is still flourishing, albeit in a different, highly specialized, way. Luckily, the sheer amount of new startups, which has come with such waves has resulted in a market shift. These large numbers of startups have made specialization of accelerators, incubators & other industry standards possible. They’ve now become, as they taught so many of their past startups, market-oriented by following the needs of the market.
Our advice: Accelerators have specialized as the industry has matured. Find the one which fits your startup best.
ICO’S DONE, WHAT’S NEXT?
In the past year, we’ve witnessed a rapid increase in ICO’s, followed by a very steady decline. Startups were able to raise a lot of money on a promise in a white paper. ICO’s have allowed them to forge their own path, instead of going to experienced angels and VC.
Through the ICO frenzy of 2017, Slovene blockchain startups alone managed to raise more money through Initial Coin Offerings than startups in the region raised with public financial support in the last decade (South Europe Startup Report 2017).
Many young startups jumped on the blockchain and cryptocurrencies wave, acquiring early funding and now face their next big challenge: how to succeed in the long-term run.
It’s now the job of accelerators to equip these startups with the knowledge & support that they need to achieve these goals and to continue thriving.
WHAT AN ACCELERATOR OFFERS
If a startup has traction, an accelerator will connect them with new mentors to guide them, provide lectures, will teach them marketing, management, analytics and more.
Traction remains a decisive performance indicator to ascertain startup progress. Startup’s must therefore know how to set up successful sales funnels, locate and evaluate, and strategically tackle emerging market opportunities, how to hire the right talent, manage it, resolve team conflicts while establish efficient operational processes & how to legally protect their innovations.
These startup trends show, that it is necessary for accelerators to introduce specific and customizable programs, if they wish to successfully help their startups grow. Local & global connections are needed to support the startup with mentors & investors, while giving them a path to expand into different geographic regions.
On the other hand, accelerator’s corporate partners are one of the best ways for startups to get mentors and investors, which can provide insight and expansion opportunities through their experience, industry knowledge, connections and existing market share.
CHANGES IN INVESTMENT TRENDS
The Global Entrepreneurship Network’s (GEN) Startup Ecosystem Report 2018 shows investments at an all-time high in that the year 2017, with more than $140B invested. But the trends show that there’s a decline in social media apps, digital media and IoT companies. Those, which have created the platforms & services necessary for new startups in 2019 and on. The industry shows positive growth for Fintech, Cybersecurity and Blockchain technologies, paving the way for startups to disrupt global industries, large enterprise & consumer markets with better, safer, and more personalized experience for their users.
The steady growth of startups in manufacturing & robotics, agriculture & new foods, A.I. & big data, is reflected in accelerators’ batches (Startup Ecosystem Report 2018). These startups are looking for solutions to the greater problems we now face, such as energy accessibility, food scarcity, security and pollution.
In Q3 2018 alone, there have been 3.408 deals, worth more than $53 billion globally, according to PwC and CB Insights Money Tree Report Q3 2018. More than 1.300 of them were made in Asia worth $19 billion, while the US have invested $28 B into 1.300 deals. On the other side of the pond, Europe invested $4,9 B into 638 deals. The CB Insights Report also shows increased corporate participation in these VC backed investments, which rose to 31%, 2% higher than the previous quarter. From this we can conclude that large corporations are increasingly looking into startups and startup made solutions to solve their existing and future challenges.
These shifting startup trends will begin to require people with knowledge of and experience in the specific industries. We advise young startups to find such mentors & investors or to find programs, which can help them with such endeavors. We, for one, can’t wait to see what the future will bring!
Startup Genome. Global Startup Ecosystem Report 2018. https://startupgenome.com/