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The Past & The Future of New Businesses.

Angelika Burawska, Chief Operations Officer SFC Capital's COO since 2014, uses her extensive business education and experience to drive operations, growth projects, and strategic implementation.
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Startup trends: the story so far and what to expect in the near future

Over the past 20 years we have seen a boom in startups following the same trends and in similar industries. This was a result of opportunities arising from the changes in society, new discoveries and the adoption of new technologies that became available to a wider public.

E-COMMERCE, MARKET PLACES AND SAAS

The Internet era really took off at the end of the 90’s and the beginning of the 00’s. Easy access to this new technology stimulated the digitalisation of services that so far were only available in the traditional ways. This is how e-commerce started. Amazon, eBay, and Photo Box are the best examples of businesses that were taking ‘offline’ activities into the online world and providing customers with better and faster solutions. During these years having an online store was often a good start to the entrepreneurial journey. Then, building an online market place started to be an even better business and can be considered as the second generation of ecommerce. Popularity of programming, creation, and adoption of new programming languages helped entrepreneurs to digitalise other services and sell them in a form of a SAAS (software as a service).

BIG DATA

A new opportunity arose soon after these developments. Growing Internet traffic and online activities provided big quantities of precise data. This gave ‘big data’ entrepreneurs their chance to enter the market and begin opening ‘big data’ startups. They came in all shapes and flavours, but generally had a form of software collecting, analysing and managing information. For long time ‘big data’ was a buzzword that not everyone understood, but that was very attractive and secured investment in many businesses. Some ‘big data’ startups made it, but many of them struggled to monetise and failed. Today ‘big data’ is not hot any more, but collecting and using data is considered a standard way of developing businesses.

APPS

The next big thing came with the wider use of smartphones. These devices quickly became powerful and started to assist us in daily life beyond just calling and texting. This is when the app era started. Budding entrepreneurs everywhere were coming up with hundreds of ideas for new apps. Apps made many people wealthy! Finding iOS and Android developers started to become a problem, but getting quick investment was fairly easy. Not any more. Today no one wants to invest in apps. The market is saturated and it’s clear that getting people to download yet another app is a big challenge and would require giant marketing budgets. Moreover, people expect apps to be free or to be an integral part of various services they get outside of their smartphones.

SHARED ECONOMY

The trend that is already passé, but had huge impact on social changes, is called ‘shared economy’. It all started with airBnb and stimulated a new generation of startups that were trying to build platforms of other things that can be ‘shared’ – not only homes, but parking spaces, storage, tools and even clothes and food. It’s not an easy space to make money on. Only few survived and grew including big names like Blablacar and Uber. The next one might be HiyaCar: an app that enables car owners to hire their cars without handing over the keys!

Although there are not that many ‘shared economy’ businesses, the few that made it, have had a huge impact on business and contributed to the growth of startups providing supporting services.

INTERNET OF THINGS

Adding Internet to the telephone turned out to be a good idea, leading many entrepreneurs to believe that there was no reason why other devices couldn’t be connected too– This is how IoT (Internet of things) was born. Today everything can, and should, be connected to the Internet. From home cameras, microwaves and washing machines, to home garden and doors – connecting our lives to the Internet is becoming standard. There is still some room for new businesses that want to make money in this space, but it has already started to be crowded and more challenging.

AI and MACHINE LEARNING

Now that our devices are connected to the Internet and many services can be done online, we expect them to be smarter and smarter. This was the start of the today’s trend: to apply machine learning and artificial intelligence. To put it simple – these are highly sophisticated mathematical algorithms programmed in a way that can acquire, interpret, analyse and save data. This type of intelligence can automatically add and create new information and add to the basis of what already exists using pre-programmed logic. There are hundreds of applications of AI and machine learning. One of them, trending now, is bots. The role of bots is to collect data and use it in a sophistically programmed way by giving the precise and quick output consumers expect. Bots are meant to help with flight bookings, recruitment, and even insurance and will improve as they continue to be developed. AI and machine learning will have a purpose in almost every aspect of life and can take on various forms. From apps like Siri, to Facebook chat bots, and devices like Alexa and Google Echo- It’s very difficult to see when the saturation point for AI will come. The space for improvement and further development is limitless.

AUGMENTED REALITY AND VIRTUAL REALITY

Another trend we are currently seeing is new startups using improved AR (augmented reality) and VR (virtual reality) technologies. These technologies are getting better, but the big change will come with their integration in various sectors.

Augmented reality is an extra layer of information visible in the real world thanks to specially designed hardware and software. It will include glasses, apps, watches, and gloves- but there is no limit to what it can be, particularly if we think that all our devices are going to be ‘connected’ and smart.

Virtual Reality is supposed to take us into totally different worlds. Startups developing in this space will provide better devices (lighter, smaller, more efficient) that can emulate all senses. At the moment it mainly uses pictures and sound, but soon it will include smell, touch, feel of movements etc.

Other startups will use VR to built software. Not only will it be games, but also interview simulators, software to practise various skills and artificial worlds where we are going to meet other people.

AR and VR is the long-term future that has already started.

BLOCKCHAIN

Finally, a wave of startups using blockchain technologies is coming. Blockchain provides a reliable, quick, and cheap infrastructure that allows users to do various actions. Additionally, block chain technologies like smart contracts, can automatically trigger new actions based on previously programmed assumptions as they are met. Blockchain is still mysterious and sometimes seen as a buzzword (see ‘big data’!) but is a proven technology. It’s mainly connected to bitcoin and other cryptocurrencies, but these are only the very first applications. There is no doubt that fintech is and will be the main sector where blockchain entrepreneurs will try to make money, but blockchain is going to revolutionise other sectors including legal and logistics.

To summarise – we expect that new trends will develop in the following areas: AI and machine learning, AR and VR and blockchain. The first group will be companies that are improving the technologies and making them more efficient and easier to use. The second group will be startups applying these technologies in various sectors. With these new trends we will see hardware and software that is seamless, smarter and easy to incorporate into daily life. Startups that will fit into these trends will be more likely to find market and obviously, investors!

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