With the year 2016 drawing to a close, it is time to pick up some key trends that will shape how next year may look like. Sentiment in the startup space is bullish, but not unnecessarily euphoric. With that in mind, some broad themes that one can expect to play out next year:
1. Valuation is not the name of the game – It became clear somewhere towards the end of 2015, that the valuation game had to end. Lofty valuations and raising $1 million in seed rounds, which had become normal mid-2015, gave way to rational thinking. In 2016, the emphasis has been on business metrics like revenue and profitability. In fact, 2017 will be the year when startups had to raise money at a more realistic valuation, driving home the fact that this year’s euphoria and hype is not sustainable.
2. Going Digital is not a choice – When the fixed telephone line or what we call as the landline first made its presence in India, having a telephone connection was considered a luxury. There was a 10 year waiting period to get a connection and the service was appalling. With the telecom sector opening up, the mobile revolution swept through India and we bypassed landline connection to embrace cellular connections. Mobile opened our world to new innovations and products and now the phone is an integral part of our life.
Ever since the government launched its ambitious Digital India programme, it was clear that people in the corridors of power realize the importance of going digital. In a large country like India, digital is the only way to get services and amenities to a large section of the population that has been neglected till now. Digital is no more a luxury meant for only a few but has gone mainstream. Similarly, digital is no more only the playbook for tech enterprises. In 2016, more than ever before, digital has become the way of business.
Mainstream adoption of technologies like SasS and Mobility solutions in Small & Medium Enterprises will be reality in 2017
3. “C” is citizen and not consumer – Many did not notice, but slowly and surely some startups have moved their focus to addressing challenges faced by the citizens of the country. Built on top of platforms like Aadhar and India Stack, these startups have a paradigm change in their target audience. While every business focuses on its consumers, startups in the year 2016 have decided to focus on the society as their customer base. Next year I suspect there will be focused startups that will emerge to address changing government rules and regulation and to support citizens in getting things done. Creating platforms for GST readiness and compliance such as easemyGST will be great opportunity for startups
4. Innovation around Healthcare, Retail and Fintech – The health care piece is so large that we saw plenty of action in the space and we will continue to see activity next year. While innovation is not around finding a new molecule for a new medicine, advancement in the space has been centered on new devices and using technology to bring in a new dimension to care giving. Similarly, startups and innovations around retail has moved from ecommerce to using artificial intelligence, personalization and on-demand customization of fashion to come up with the next set of solutions. Also, an increasing number of startups this year focused on brick and mortar retail stores and tackling inefficiencies in the physical format, a trend that I think will strengthen next year leading Retail ERP provider to extend solution to accommodate future of Retail.
In the new Demonetized world, access to capital will become key for SME leading to Fintech ventures which can help credit assessment in near real-time basis for faster lending.
5. Wallets, IoT and Virtual Reality are real – Digital wallets have been around for some time now and it was thought they were often considered as a good alternative to have. However, after November 8, digital wallets have found a new lease of life with people beginning to understand the utility and importance of a digital wallet. Today, with the entire cashless transaction drive, one can expect wallets to be a sector of keen interest in 2017.
When it comes to IoT, the most popular application has been in the wearables space where fitness bands like Fitbit and GOQii has carved out a space. IoT has seen increasing applications in the sphere of smart cars, appliances and next year we are bound to see some exciting stuff happening around us. Hardware is a difficult space to crack, especially in the consumer arena and that is one reason why progress in the IoT space has been a tad slow. Similarly, virtual reality has made rapid strides since Oculus Rift made VR a household name with its headsets. Today, VR is used in healthcare, entertainment, automotive, space among others. Next year, one can expect a more mainstream application of VR and not just limited to gaming or the sectors mentioned above.
Ashish Mittal is Founder , TurningIdeas Venture and Guest Columnist on Startups with Economic Times.