My top 5 things that won't happen in the 2019 tech startup market
Yes folks, it’s that time of the year. Not only are we being bombarded by black Friday deals and Christmas jingles, but we’re going to see an onslaught of “I’m so smart, here’s what I predict will happen next year” posts. Never satisfied with being left out of a smart conversation, I’m jumping on the bandwagon and offering my top 5 things that won’t happen in next year’s startup/tech market.
Without further ado:
#1 - The flow of funding to startups won’t disappear next year.
Yes, you did in fact hear me correctly, next year will not only continue with a healthy startup funding market, but funding amounts may in fact increase. Sounds counter intuitive I know, but let’s be real, if mega funds like Softbank’s Vision Fund can invest $100 million in a growth round, they’re going to have to have somewhere to actually invest that money. This may in effect displace other money meaning more deals all around. Even the famous Mary Meeker is planning on raising a $1.25 Billion fund on her own. The National Venture Capital Association notes that venture fund raising is topping $30 Billion and exits ($21 Billion) are set to outpace every year since 2014 (an outlier because of a $22B WhatsApp acquisition by Facebook). That all adds up to a frenzy that I think will push the bubble to a popping point in 2020/2021 as people burn through cash like it’s water. Yup, you heard it first here, so who will be the first Webvan of our era?
#2 - We won’t see many small deals next year.
Given my first prediction, this second one makes a ton of sense. In my experiences in-house at a VC with two $120 million-ish funds, investing in seed and even A rounds doesn’t make sense. It’s almost impossible to manage that many investments because seeds (even in today’s environment) are less than $2 Million, and A rounds are typically $10 or less, which you’ll likely have to share with a few other people. Who really wants to sit on that many boards, and are you really going to be able to effectively help those companies do anything? Between the Mega-funds that are new, and the many funds with under-deployed capital, it’s going to be a fat year, but only if you’re in the market for $30 million and above. Enter the “private IPO”, the SJ Business Times just pushed this slideshow out to show the latest mega rounds. When you’re rich, would you buy 100,000 homes in upcoming small towns, or would you buy 5 resorts, 3 office buildings and a casino.
#3 - There won’t be any significant investment in startups aimed at fixing the problems silicon valley creates.
Ok, this is an obvious one, but I’m including it for a different reason than you might think. While I understand I’m not saying anything particularly shocking, it still needs saying. We talk a lot about the problems of the world, from hunger to homelessness, yet as an industry of smart, problem solving types, we have yet to aim some of that firepower at the problems of humanity. I would LOVE for someone to prove me wrong on this one, and in fact, I’ve included it precisely so people can prove me wrong. Show me that the tech industry cares. Pulling water out of thin air, now that’s something to really get excited about right? Just do it.
#4 - Startups/Tech will not rescue the economy, in fact it may worsen it.
Perhaps an odd choice for me to include, but we often look to technology to “fix” things, and the economy, while currently hot, will begin to slow and dim in 2019. Why? Well, for starters there’s that whole $100 Billion dollar deficit that the republican tax plan created. Then there’s the fact that to take advantage of all the tech money that’s around, you need to be pretty educated/skilled. Tech money has done nothing but widen the gap between haves and have nots, and next year won’t be an exception. More founders and tech workers, will make high salaries and continue to profit off of exits, but that money is not going to be redistributed. In fact, much of it will serve to gentrify the areas where those companies exist (like say, Queens, NY).
#5 - 2019 will not be the year of the individual.
Data startups, from visualization to AI to personalization will reign supreme in 2019, and while it may seem that they are thinking about you the individual, they are not. In fact, 2019 will see the breakdown of the individual and be the year of the cohort. While not new, I believe that 2019 will see the beginning of a realization that our “digital DNA” is just as important as our physical DNA. In fact, what we say and do are as much “who” we are, as our eyes, body or brain. People in the know understand that we don’t even “own” our own thoughts anymore. In fact, we have given up those rights just to have our own blogs and instagrams accounts. Perhaps I’m being paranoid, but pretty soon we may not own much of anything. I mean, we used to own a piece of software, but now with SaaS we just lease it. Not to be the tin foil hat wearer in the room, but I just noticed this VR app from the Electronic Frontier Foundation, something to think about.
That’s all for now, we’ll have to wait a year and see how I did, but please pass on and see www.truth.ventures to understand a bit more about me.