10 Urbantech Predictions for 2017

Before we get into what we expect from 2017, here’s how we did last year.

The biggest surprise of 2016 was a fear of government (FOG). “Government” remains a keyword that can result in a quick “no” from many investors. However, that seems to be changing. We added four new B2G investments to our 2016 Fund: One Concern, Citymart, Livestories, and MeWe. We’re seeing more interest from generalist funds.

We expected AI to interest to grow, but that might have been the greatest understatement for 2016. Logistics technology now looks like a sci-fi novel, from self-driving trucks (Uber and Mercedes) to a floating warehouse patent from Amazon (with countermeasures). While we were disappointed to see very little new activity related to water, we were happy to find one new opportunity in this space (Ecomo). Maybe 2017 is the year for water activity - YC just announced a call for water startups.

Here’s what we’ll be watching in 2017.

1. Proprietary Data. Jumps in voice and self driving performance hint at the capabilities of large datasets and new learning infrastructure. There is no reason to expect a slowdown but the collection of proprietary datasets appears to be an increasingly important differentiator.

2. From R&D to M&A. Tech companies have grown through a variety of corporate strategies. M&A is the most visible, but corp VC and new platforms building (like IBM Watson and Amazon AWS IOT) will make corporations more valuable to the Urbantech startup ecosystem.

3. The Cyber. From social engineering to commandeering IOT devices, online security will be a top priority. This is inevitable because of the rate at which at which we’re connecting new people and devices to the Internet.

4. Trust Infrastructure. Russia’s attempts to interfere in the U.S. electoral process and Germany’s move to counter fake news are some of the most visible signs that we need a new trust infrastructure. Some of this new infrastructure will be based on new tech architectures and some will be based on old-school brand building by consistently delivering on promises and putting user interests first.

5. Trump Effects. We began tracking how the Trump administration might impact Urbantech. Since November, a few things have become clearer. City governments will have a bigger role, . Infrastructure spending could be a boon, and it will likely be harder to build global tech brands.

6. Local vs Federal. In the United States, cities like NYC and states like California have signaled their intent to fight specific Trump policies, from immigration to the environment. Some have gone as far as planning for reduced federal support.

7. Infrastructure Spending. If this process devolves decision-making to local governments, it could be a great time for emerging infrastructure tech. However, if control of these projects just resides at the federal level, the program will likely favor large incumbents who have little incentive to innovate.

8. Banking Deregulation. This is also on the to-do list for the new administration. Founders know how tough banking discussions have been, especially those who manufacture. While some new funds have started to fill in the gaps, we expect risk-taking bankers to be back.

9. Climate Leadership. In the United States, we expect actions to be driven by businesses, consumers, and city and state governments. Outside the United States, the largest economies seem wholly committed, but this might have the most impact on regional tech companies.

10. Regional Urbantech. It will be harder to build global tech brands in some sectors. Governments have a lot of tools to hand advantages to core industries such as aerospace, communications, or transportation. So it’s harder to see global winner-takes-all opportunities, but it’s easier to see parallel regional opportunities, for example in the EU vs. the United States.

While trends shift each year, our overall goal remains to support startups that make cities better. We’d love to meet startups working on these Urbantech problems.

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