It’s been a banner year for venture capitalists, at least for those who bet on breakout companies like Airbnb, DoorDash, Snowflake, and Palantir. The surge in IPOs has been staggering – and has resulted in huge losses for Silicon Valley’s top investors. This will inevitably lead to even more investments in the coming years.
In the meantime, however, the economic environment should also improve. The big driver will be the introduction of the vaccines against the Covid-19 virus.
“The first signs are that 2021 will be a good year for startups,” said John Chambers, former executive chairman and CEO of Cisco and current founder and CEO of JC2 Ventures. “At the beginning of the COVID-19 pandemic, I was concerned about the impact on startups – but they are doing much better than originally thought. All startups in my JC2 Ventures portfolio have gone through the crisis management phase and are now back on a growth path. “
Keep in mind that the VC industry has seen some important changes. It seems like the days of needing personal parking spaces are over. This should make it easier for companies outside of Silicon Valley to get funding.
“Startup founders and VCs have climbed the ups and downs of remote networking and fundraising interactions and will stick with what works and what doesn’t,” said Russ Heddleston, CEO and co-founder of DocSend. “It is human nature to adapt and I think much of the virtual work behavior learned during the pandemic will be retained. ”
OK, given that VCs are capitalized and the economic environment is looking favorable, what opportunities are they targeting?
Here’s a look:
Liza Landsman, General Partner of Technology at NEA::
“Companies that focus on alternative energy will benefit from growing consumer preference as well as new government incentives, especially those that can create meaningful jobs in this emerging sector, and the sector will attract more risky dollars and into the public markets find a greater receptivity. “
Hiro Rio Maeda, Managing Partner at DNX Ventures::
“As the pandemic has forced brick and mortar stores to close their doors, consumers and brands have no choice but to trade online. Instead of offering their products on a static and unappealing shopping platform, live streaming functions of social commerce solutions can be used to guide participating customers through the personalized selection of goods to the payment process and to make the experience all the more personal and appealing. “
Scott Beechuk, partner at Norwest Venture Partners::
“For startups that develop AI-based products designed to solve specific business challenges for large companies, the closer and deeper they focus, the greater the likelihood of success.”
Paul Asel, Managing Partner at NGP Capital::
“Edge computing platforms will emerge with which distributed computing can connect and coordinate a large number of sensors. We are moving from a mobile-first to a data-first world, in which everything and everyone transmits a signal and intelligent systems provide real-time insights. This will trigger a digital transformation that enables businesses and disrupts industries. The internet had an impact of 15% of GDP. IoT will transform the other 85%. “
Kristina Serafim, managing director at Verizon Ventures::
“In the remote working environment that will remain here, there is still a lot of room for technological improvement. Mention should be made of security, compliance, remote process automation and collaboration tools that leverage AR / VR / XR. “
Eric Anderson, Venture Capitalist at Scale venture partner::
“With the rise of AI, data has become a company’s most important asset. After Snowflake’s big exit, the realization will come that data is now the main workload in the business and a whole host of tools will emerge to fill in the gaps and deliver on the data’s promise to the business. “
Noah Carr, partner at Unusual ventures::
“As widespread remote working continues into 2021, VC’s interest in startups with product-driven bottom-up or hybrid approaches to the go-to-market strategy will increase, while companies that rely solely on traditional top-down field sales will Will have difficulties secure financing. The adoption of the self-service model in SaaS was already increasing before COVID-19, but the impact of the pandemic on business travel has accelerated the shift to this more efficient option in a remote world. Companies that can drive adoption and build a community without having to give potential customers a face-to-face demo have a natural leg up. “
Kyle Lui, partner at DCM::
“Telemedicine will grow even faster in 2021 as it represents a real alternative to personal visits. Payers will recognize the benefits of cost savings and efficiency gains and will pass these on to their insured populations. We will see a verticalization with many startups targeting specific health areas and conditions. “
Jason Green, Co-Founder and General Partner of Emergence capital::
“The last 15 years was the era of software as a service. In the next few years there will be a significant increase in “Services as Software”, which provides providers with a platform where consumers can access their specialist knowledge on a large scale. Services as Software will bring the world’s greatest yoga teachers, therapists, doctors, educators and others straight to our homes. With the tools that reduce the friction of delivery, discovery, payment, and management of these platforms, so will the tools. “
Know So, a venture capitalist at Shasta Ventures::
“As more products built by startups have AI embedded in them, conscious AI ethics will be required. It’s not that VCs should start forging red flag-related risks and funding startups – most technologies were designed with the intent of making the world a better place. It’s early days, but how this works out is for VCs to ask how ML models could fail and what the backstops are. “
Derek Zanutto, General Partner at CapitalG, Alphabet’s independent growth fund:
“The rise of automation, no-code / low-code and self-service data analytics technologies combined with an ever-increasing shortage of IT talent will accelerate the democratization of IT in the company and the power from IT into the Hands of the end shift users. Increasingly, business and technical workers alike feel empowered to source their own tools directly rather than relying on IT – and sometimes they even source them without IT input. The double-edged sword that accompanies self-service and democratization will shift the core mandate of CIOs from the main implementer to the gatekeeper-in-chief, who focuses on establishing security barriers and governance controls to ensure the responsible and safe use of these self-service technologies and Protect and manage critical company data. “
Matt Goldstein, partner at M12::
“We continue to focus on cybersecurity, fraud and privacy. Every tectonic change in our work and technology reveals new lines of error – new attack vectors – and with these new lines of error, new challenges for cyber startups that it tries to solve. “
Tom (@ttaulli) is a consultant / board member of startups and author of Artificial Intelligence Foundations: A Non-Technical Introduction and The Robotic Process Automation Handbook: A Guide to Implementing RPA Systems. He has also developed various online courses, such as for the COBOL and python Programming languages.