Making a list and checking it twice: What’s on the VC wishlist for 2019?
Monday, December 17, 2018/
The New Year is nearly upon us, promising millions of dollars — perhaps even billions — invested into technologies untold.
This year has been one of fintech, drones and Software-as-a-Service, as well as one that saw a brief but powerful blockchain movement and a swathe of substantial ICOs, before Bitcoin took a tumble, dragging the cryptocurrency markets down with it.
But 2019 brings with it a new dawn, with new startups ready to pique the interest of Australia’s venture capital investors.
Mike Wilson, founder of TinyMe, says there’s no easy way to predict where VC cash will be headed next year.
“The good VCs seem to be the ones making bets in areas where there isn’t consensus on getting it right. I expect the good ones won’t be doling out cash based on shorter-term trend-spotting,” Wilson says.
“A lot of the opportunity is in combining and appropriating the advances in some of the broader macro trends in creative new ways. I’ve got a bunch of ideas myself and maybe we’ll get to them in 2020,” he adds.
Bernie Woodcroft, director of the University of Queensland’s iLab accelerator, says after 13 years of startups coming through the program, “the standard is better, and the quality is better, across the board”.
And, there could be more support on the way for early-stage endeavours. Shaveer Mirpuri, chief executive of Goat Ventures, predicts an increase in smaller-sized seed funds, bringing more opportunities for entrepreneurs who may have “previously found it difficult to get their ideas off the ground”.
Speaking to StartupSmart, several investors and founders take a stab at what they think will be the hot trends of 2019.
Mirpuri predicts a lot of capital going into developing artificial intelligence infrastructure, and that VCs will realise the opportunities here.
“At their core, AI startups that demonstrate measurable return-on-investment (not hypothetical ROI) will garner VC attention,” he says.
“However, in 2019, just adding machine learning algorithms to an opportunity and having some revenue isn’t enough long-term. VCs are looking to invest in startups that stitch together a defensible ecosystem,” Mirpuri adds.
According to Wilson, there are “a lot of creative ideas, new business models and products that can spin off from the rapid advancements in AI”.
And Kym Atkins, chief executive of fashion marketplace The Volte, agrees “those who use AI in new sectors to drive better customer experiences, such as in fashion, will attract the attention of VCs”.
According to Mirpuri, 2019 will also be a good year for “meaningful, world-changing opportunities with 10-year-plus horizons”.
“Audacious plays in aerospace, energy, life sciences and more will continue to be hot as VC funds are so big,” he says.
Justin Hales, founder and chief of camper-sharing startup Camplify predicts ‘green’ technology will be an area of interest for investors.
“Any way we can operate a more energy-efficient and lower production of goods will be very interesting. There’s a vital need to reduce the number of plastics and consumables used,” Hales says.
This trend is evident in the iLab accelerator, Woodcroft says.
“We’re seeing growth around social enterprise and specifically profit-for-purpose-style startups,” he says.
“Circular economy remains strong, environmental startups remain strong … there are even startups trying to socially affect the way society works, trying to change the way democracy works, for example,” he adds.
Marketplaces and the gig economy
Angus McDonald, co-founder and chief of Cover Genius, predicts increased funding into “the dominant marketplace platforms like Grab, Lyft and DiDi, as well as gig-economy platforms”.
“With the continued rise of big data, VCs will also invest more in businesses that focus on rich data to build personalised products for customers delivering world-class customer experiences,” he adds.
However, Woodcroft disagrees, saying he’s seeing fewer and fewer marketplace platforms coming through the accelerator.
“Things like platforms that share assets … that gets tapped out and it’s harder to find assets that are sufficiently under-utilised,” he says.
In the e-commerce space, Phil Suggate, co-founder of EasyShed, says VCs will be looking for scalability, profitability and supply-chain ownership.
“The obvious choice is established D2C manufacturers utilising emerging technologies in conjunction with strong e-commerce foundations to drive profitability and rapid growth, along with strong consumer engagement and brand loyalty through innovative products and experiences,” he says.
FitMyCar founder James Tinsley expects to see more interest in scaleable, direct-to-consumer brands.
“The key to this will be proven product-market fit, a scalable product offering, an innovative and defensible market position, and either a profitable growth path or a clear path to profitability,” Tinsley says.