February 22, 2017 | 4-minute read (717 words)
One of the questions that comes up often in the startup ecosystem is where is the money going and what can we expect to be developing? As market professionals working with 1 in 5 startups nationwide, as well as supporting the financial needs of many newly launched investment funds we have insights and observations to share. The year ahead holds some promising and exciting developments in terms of scenes maturing and a ramping up of technology entering more facets of our lives.
Location Hits & Trends
To start with let’s talk about locations. Everyone knows that San Francisco has been the huge market for talent and development when it comes to startups. It is the benchmark in the US for all other cities. What is impressive to see is how Southern California, particularly LA, is catching up and building out.
While not that long ago northern California venture capitalists would have turned their nose up at south California, the scene there has grown. From 2012 to 2016 we have seen a six-fold increase in startup funding. One of the tremendous success stories to come out of there is Snapchat, which is expected to go public soon. Along with going public they are lining up media deals and seeking ad spend commitments of $100-200 million each from talks with several big advertising firms.
NY has also reached a milestone and achieved much. In 2016 funding to the digital health sector in NY beat SF with the funding of NYC-based startup Oscar Health, which raised $400M. Year to year growth in the sector was up more than %150 in Silicon Valley, while in NYC YoY growth was over %1000. With hits like this expect to see more follow.
Another location development to watch for 2017 is to see what upheavals and intensified focus may come from the dealmakers at the top in regards to changing politics. In response to the surprise win of Trump the National Venture Capital Association sent a letter agreeing with Trump’s focus of not leaving behind the middle states.
They stated areas they already see increased development in Missouri, Ohio and Pennsylvania and illustrated how since 2012 they have committed to broadening US startups across the country. In the letter, they pointed out how nearly half of all startup funding has been outside of the usual triumvirate of California, Massachusetts, and New York.
Frontier Tech as a field is just getting started and poised to change everything. Frontier tech is the umbrella term covering technological developments in drones, space, augmented reality and virtual reality. These fields are changing how we interact with our environments in both personal and commercial ways.
We see large scale commercial and governmental implementation and development. Counter terrorism uses will attract a particularly large amount of interest in response to our current political climate. While there hasn’t been a definitive winner in the field there has been no shortage of billions pouring into exploring how to push it further. When autonomous cars and space exploration start to fully click there will be no shortage of drastic change and upheaval in all related endeavors.
We expect to see many new startups defining and bringing new products to the market in consumer oriented Internet of things (IOT) and the security needed for it, especially as internet attacks last year demonstrated a huge market opportunity poised by the open door they can create. Smart and safe homes will be an area of heavy activity in the years ahead with focus on consumer privacy protection and standardization driving the innovation.
Wearables in the enterprise will become more commonplace, changing how management is done. Cyber Security for enterprises will continue being a major growing field as well. Other burgeoning areas of development will come from Financial tech especially in the emerging markets, the ‘Uberization’ of manufacturing, the continued merging of big data with big health and with legalization spreading we fully expect cannabis and related offerings to thrive in the year ahead.
If you and your startup are entering any of these fields expect great things to be possible. And as always if you liked this post or have questions on how to organize your startup’s finances to attract investor interest shoot us an email or schedule an introductory session.