There were a lot of reports in 2016 that funding has slowed down, with many hyper-funded startups like PepperTap, TinyOwl, AskMe, Dazo, etc., shutting their doors.
Funding has indeed slowed down in 2016, because there were a lot of unviable businesses that took a lot of money from the market. Startups which were operating in foodtech, hyperlocal, cloud-based kitchen, e-commerce, etc.m with poor business viability, sucked out a lot of money, which slowed down real businesses.
The good thing is that, since those guys are wiped out of the market, that same money is available now for startups with robust business models. This slowdown has made entrepreneurs think deeper on the kind of business problem they are trying to solve.
The focus will shift from market share-led thesis to product-based thesis. For example, if you can grab x per cent from a billion-dollar market then, you can get good valuation. Jabong, Urban Ladder, etc., got funding because they had a potential to become the largest player in their own domain. But today we focus on whether the concept can create a disruptive business in the market, as this is the right thing.
In terms of investment, it may take one to two quarters for the market to adapt to changes and pick up, but it is going to be a great year for startups. Domains like e-commerce, payment gateways, healthcare, hyperlocal, digital wallet, and the like, are already crowded, so 2017 is definitely going to see new trends in the market.
Here are top 5 startups trends to look forward in 2017:
Artificial intelligence, machine learning and internet-of-things
A recent study said that, “India is the third largest cluster of AI startups in the world next to US and UK, and we are not very far from UK.” Ten years back, we were asking startups whether they are present in cloud. Today we don’t because we take it for granted. Five years back we were asking about mobile presence and today we don’t. Likewise, AI and ML will surely reflect a similar trend in next one to two years.
Applied AI and advanced machine learning will give rise to a spectrum of intelligent implementations, including physical devices, apps, and services. These will be delivered as a new class of smart apps and things and they will also provide embedded intelligence for a broad range of mesh devices, existing software and service solutions. This would lead to transformation of smart machines to ‘smarter’ ones.
The sheer volume of data across the world which currently accumulates today is another driving force behind AI’s rise. IBM estimates that “every day, the world generates 2.5 quintillion bytes of data, with 90 percent of data in the world created in the last two years.” Businesses need AI/ML to learn their customers’ trends and patterns, build automation for greater efficiency, and help employees to become more intelligent in their work, by usage of this data. With the help of AI, they can even capture “Dark Data,” which cannot be captured and analysed otherwise.
Cyber security is another hot space to look for in 2017, thanks to Apple’s iOS encryption skirmish with the FBI and other tales of ransomware attacks against varied businesses.
With every new attack or vulnerability exposed in 2016, a new cyber security company emerged to fill the gap and those companies to beef up their security defences have started invested in these startups.
Security is complicated and hard to manage, while enterprises have invested heavily in security products, many are not getting enough desired value from these technologies. In 2017 and beyond, we will see the role of managed security service providers in helping organisations for reducing the risk of a security breach.
Chatbots are automated services that interact with, and offer information to, humans, through a chat interface. Artificial Intelligence and Machine Learning are among the technologies that are helping to make chatbots mainstream. Businesses will increasingly look to chatbots as an aid for reducing time and money spent on customer service.
Gartner and TechEmergence reported that “More than 85 percent of customer interactions will not include a human being by 2020, and chatbots will be the No. 1 consumer application of AI in the coming next five years.”
While Facebook is the dominant platform in chatbots, we can also see Google, Apple, Microsoft, WhatsApp, Kik, WeChat, and other globally relevant messaging platforms betting on chatbots. We will also begin to see chatbots integrated with companies’ backend systems, changing the way businesses communicate with it’s customer.
Augment reality and virtual reality
The launch of Pokémon Go in 2016, gave an enormous wave to Augmented Reality (AR) and Virtual Reality (VR) space.
ICD predicts that “30 percent of consumer-oriented Global 2000 companies are expected to experiment with AR and VR in their marketing initiatives. AR/VR will reach mass adoption levels by 2021 when more than a billion people worldwide will regularly access apps, content, and data through an AR/VR platform.”
But AR/VR won’t simply be just a technology for entertainment; we also will see startups adopting AR/VR in domains like healthcare, e-commerce, etc.
2016 saw the mass adoption of wearables devices, and there are a lot of companies like Apple, Fitbit, Samsung, MI, etc., betting on wearables. According to CCS, “The global appetite for wearable devices is expected to grow around $34 billion by 2020, with roughly 411 million of the smart devices being sold.”
We can expect the smartwatches of the future to incorporate more sensors, increase in their functionality, and become more autonomous. Going forward, your smartwatch may act as a hub for other sensors in your body. Devices of the future will go beyond fitness tracking to more health care-related functionality, from disease management to mindfulness, stress management, etc.
With the Make in India campaign becoming popular there are couple of wearable startups like Blink, which can compete against global brands.
2017 is indeed going to be a great year for startups.
Have a great journey ahead.
Adhish Verma is CEO & Founder at The Co-Founder, a India-based magazine focused on startups and entrepreneurship.
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