In 2019, the tech landscape will continue adjusting to market and regulatory changes, says Scott Stevens, partner at Grays Peak Capital LP. Following suit, tech startups will also continue pursuing opportunities that help them achieve rapid go-to-market strategies at a lower cost. However, unlike in the past, where tech startups created entire ecosystems, in 2019, expect to see more partnerships that interconnect multiple ecosystems. Cloud, AI, and blockchain will be major driving technologies in this regard. Enterprises, too, will continue to look for strategic alliances with tech startups as they shore up their competitive advantages. Here, Grays Peak Capital LP and Scott Stevens identify three specific areas tech startups will focus on in 2019.
Typically, tech startups go after opportunities that have the highest potential for growth. In 2019, expect cloud computing, AI, and blockchain to fall under this category. What will fuel these three areas is the increasing need enterprises have to embrace and integrate leading-edge technologies to stave off competition. While in the past they went after new technologies as a cost-cutting measure, increasingly, enterprises are looking to such technologies to leap-frog the competition. In 2019, Grays Peak Capital LP says to expect tech startups to take advantage of this trend by focusing on pursuing opportunities in cloud computing, AI, and blockchain.
Predictably, as tech startups focus on these three areas, one of the key outcomes will be an increasing number of strategic alliances. As mentioned, startups in the past worked at creating entire ecosystems, but today, partnering with established businesses appears to be the preferred approach. Grays Peak Capital LP shares that this is happening for two reasons; one, enterprises need to integrate new technologies without investing in creating those technologies, and two, startups need the advantages that enterprises have (distribution, customer base, etc.) to scale rapidly and cost-effectively. On the back of these two reasons, says Scott Stevens, expect tech startups to adopt strategic alliances as a winning strategy in 2019.
Scott sees three areas that may act as major hurdles for tech startups in 2019: regulatory pressures, privacy concerns, and cybersecurity. GDPR, the European privacy law, set a precedent that may influence other countries to create similar laws. For instance, Grays Peak Capital LP shares that India is working on a similar law that would require all data created in India be stored in India. Privacy concerns continue to beleaguer tech startups as users will continue demanding tighter privacy controls, which could slow down innovation. On the cybersecurity front, tech startups will continue grappling with challenges posed by hackers and other cybercriminals as data is increasingly becoming more valuable.
The tech startup landscape in 2019 will continue to evolve as it has in previous years. Underlying trends like the on-demand economy and everything-as-a-Service (XaaS) are also likely to influence the growth and dynamics of the sector. From an investment perspective, says Scott Stevens of Grays Peak Capital, expect to see more mergers and acquisitions, as well as an increasing focus on enterprise-focused startups. Enterprise venture capital will also play a crucial role as enterprises vie for startups and innovations that they feel will enhance their competitive advantages.