It’s the beginning of a new year and decade. Startup trends change fast, some are more durable and some change like the wind. Just a few months ago, the world looked completely different. I began analysing the new trends at the beginning of the year, and now mid-summer, still in the middle of a lockdowns, I can foresee tech trends changing radically. There is no doubt that this will change the startup investment landscape, not necessarily because the restrictions may last much longer (we just don’t know that right now), but because many will use this opportunity to push new business models and products. There predictions have been compiled thanks to a variety of industry opinions read over time as well as the performance of my clients.
Let’s see what the 2020-2021 investment market may bring us: what technologies will become more consolidated, what new hypes will emerge, and which new trends will start emerging in the next year, all in terms of early-stage investments. We can look at the industry expectations before and after the effects of COVID-19.
Startup investors usually go after big winners, and it is well-known that many invest in a promising sector or company out of Fear of Missing Out (FOMO). Not knowing how a technology will be adopted or how a company will perform in the future, investing early often means taking a chance on what can become big in the future. In the last couple of years, some of the most popular sectors have been: Cleantech, SaaS, Data Analytics, Robotics, AI, Blockchain, 3D Printing, Mobility, Quantum Computing, partly VR/AR. What will the new investment phase of 2020 and beyond hold in store? What is the general opinion on which trends are hot and which ones are not?
One major trend that we see is the increasing interest for B2B startups over B2C. There are certainly exceptions with regards to some new technologies and with developing economies, but in advanced economies more focus is being placed on marketing to enterprises and other businesses. Startups combining scalable technology with a working business model for paying businesses tend to be very interesting for investors as they can provide a higher customer LTV and more stable cash flows. In the last decade we have seen many social networking platforms, P2P marketplaces and sharing economy startups that expanded beyond what was imaginable at the time, but that despite achieving critical mass, still struggled with profitability. Business models aimed at enterprises and small businesses may instead be able to hit revenue and profit targets earlier once a high quality product or service has been established. In the next year or two, we will therefore see more investments going towards B2B startups. This trend is likely to remain valid once the economy startups up again, with the added advantage that we will see new B2B business services emerging.
The popularity of startups and the boom in large and small entrepreneurial activities have also lead to a new trend, which blurs the definition of B2B. The democratisation of tech has allowed many advanced working tools to be available to anyone, with the service scope and subscriptions for many SaaS companies ranging from a single occasional user to the enterprise version. We all use a variety of online tools for work or for our personal activities, or both: from productivity, advertising, video editing and graphics, security, hosting, finance, communication, remote collaboration and much more, we use many of these tools for a variety of reasons. The democratisation of tech will also mean that we will increasingly have tools that allow us to use complex software or apps and adapt it to our needs without any coding know-how. The market here can be vast, as both small entrepreneurs and enterprises can be targeted, which can lead to a variety of revenue models being implemented. Software as a Service companies are are likely to evolve further into productivity, machine learning and integration apps. The after-COVID era will likely lead to an even sharper increase in SaaS for small professionals, as more businesses move online. Additionally, the way we work may change: this trend has been shaping up for a few years: from large companies moving to coworking spaces, to the increase in remote work as well as the combination of work and travel. Remote work is here to stay, and so are services aimed at facilitating this move, but to what extend this will affect the use of offices or coworking spaces is still to be seen.