With The Roaring Twenties right around the corner, we decided to ask our team and our advisors to look into their crystal ball and deliver us some predictions on what we might expect in 2020 within the world of startups.
Financing gets strategic
As funding rounds increased in size over the last decade, companies decided to stay private longer. While this can be advantageous for some companies (focus on long term growth, test product feature and functionality) eventually the initial investors will be searching for a return. The challenge here is whether or not the private company paper valuation can be matched in the public markets. For this reason, I believe in 2020 you will continue to see more and more strategic financing; majority recaps, traditional private equity coming down market and more M&A activity. – Joe Raczka
Niche is king
We’ll see significant progress of cloud based businesses and social networks verticalizing in niche areas as well as having paid content and communities. You can see this in the major cloud infrastructure players with IBM and Oracle beginning to tune their messaging, features and functionality towards niches in the market (like enterprise finance) where they can still win against AWS and Microsoft. Additionally, with social networks, we’re on the verge of having some of the first successful transitions to paid communities that have niche areas of focus. This is apparent with Twitch Prime for game streaming and Facebook beginning to experiment with subscriptions and donations for content creators. It won’t take long for this to take other forms in different industries with significant followings. – Mike Veilleux
Creativity is cool again
What’s old is new again. And when it comes to building modern brands that are meaningful to people and financially valuable to companies, what’s old –the importance of real consumer insight, creative problem solving and powerful ideas- has never been more important in the world of ‘too’- too much competition, too many marketing messages and too many sources of information.
The marketing industry has always been obsessed with new and in 2020, enlightened marketers and business leaders will reground in the fundamental belief that creativity is the ultimate business advantage. – Pam Hamlin, President, York Creative Collective
Turning a profit
I believe we will continue to see a greater emphasis on startups demonstrating a path to profitability and sustainable business models from the venture community. Whilst this raises the bar for funding, it will also drive a path to bootstrapping and building equity up in the business prior to giving away majority stakes in the cap table. – Paul Heywood, Senior Vice President, International Sales at Puppet
VR hits the mainstream
VR will make the leap from cheap parlor trick to table stakes when it comes to media consumption. With the release of Oculus Quest, the public will have it’s first high-quality, modestly-priced, standalone VR headset. That means no need to tether yourself with wires to a desktop computer or a souped-up gaming console. This is the first step in making VR as accessible and portable as the other killer technologies that came before it, such as the laptop or smartphone. As VR continues to remove its reliance on hardware, and becomes more embraced by traditional media (movies/TV), it will steadily become another way that people will choose to engage and consume. Some things to look forward to? I anticipate all entertainment companies looking to up the ante with experiences that place you in the middle of the action (court side basketball games, personal movie theaters), and more traditional businesses to use it to close the gap in virtual communication and remote workforce. – Dan McAuliffe, VP, Digital & eCommerce at YORK Athletics Mfg.
Optionality is sexy
M&A consolidation will continue in technology as juggernauts and private equity firms alike battle for strategic acquisitions. The difference? The market will get intensely more focused on what it means to be a healthy company – one that has a large market, a strong operational foundation, and has legitimate profitibility or a believable path to it.
The rewards are few and numbered for those who’ve raised an outrageous amount of capital, commanded hard to justify valuations, left early investors crammed down and illiquid, burned an obscene amount of money for growth at all costs, left themselves in pre-IPO nowhere land, and played the “win or go home” game only. There is a market correction coming that has and outsized and distinct benefit to the responsible, the predictable, the scalable and the sustainable startup who maintains optionality for ultimate monetization of their asset. We’re just seeing this come back around to the real world and it’s a good thing for businesses of the next decade. – Kyle York
Listings go direct
I think 2020 will be the year for the broader adoption of direct listings. 2018 and 2019 created the initial momentum, but with the list of well capitalized startups looking to go public in 2020 and traditional stock exchanges like the NYSE proposing ways for companies to raise capital through a direct listing process, I believe we will see multiple high profile direct listings. – Marshall Everson
Beat that drum
Currently there are about 700,000 podcasts, which jumped from about 550,000 the year before. That’s a lot. In 2020, I see that number continue to rise but the collective audience will dwindle. New podcasts will have to be very niche and targeted. The most creative companies will be looking for the “new” podcast, which was really the “new” blog. But the best companies will realize these are all just mediums and will instead spend more of their time on their actual message and storytelling. The better those are the easier they are to pass through any medium. Beat. That. Drum. – Adam Coughlin