State of Startups 2015: Analysis and predictions for #tech2016

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First Round Capital has just released the State of Startups 2015, which tries to answer:

What does it mean to be a startup entrepreneur in 2015?

 

What could be best than asking 500 VC backed startup entrepreneurs to answer?

Even though the survey is US centric, I think there are many insights that are valid all around the world, and from which we can learn to better understand what startup entrepreneurs will go through in the coming months.

First, and as 73% of founders, lots of voices in the Silicon Valley are thinking that we might be in some sort of bubble, or how Jerry Neumann from New Venture Capital puts it, an “irrational pricing decision” . While the startups valuation seems to have become a hot topic in the US, I believe that the problem exists a little bit everywhere, but at a lower threshold.

At the very end of 2015, we are in what appears to be sort of a soft landing of this over valuation period… at least until the first unicorn really dies. Then it might become a whole lot messier.

Most probably due to investors trying to find better opportunities and fairer valuations, a whopping 95% of founders think it won’t get any easier to raise funding and a majority of those founders see the power shifting on from entrepreneurs to investors when it comes to negotiating deals.

" Until you can prove that you can generate cash flow, you don’t have a sustainable business. No matter which of these unicorn boardrooms you walk into, everybody thinks it’s perfectly okay to burn tons of money. "

Bill Gurley, Partner at Benchmark Capital Venture

And all of this makes perfect sense

We probably are in what we can call the end of the startup gold rush, where absurd burn rates and tourist VCs will likely suffer in the months to come as people are finally looking at tangible results form their investments. While this can be seen as a concern for some, it appears that the majority of founders perfectly grasps this as their major 2016 challenges, which are to generate more revenue, acquire more customers and hire good people for their companies.

Lastly, the heat is unevenly spread across the tech industry. While everyone agrees that wearables and bitcoins are totally overhyped, mobile and autonomous vehicles are apparently under hyped. Bill Gurley adds that health care is also another opportunity. There is therefore still room for a lot of new players next year.

" Silicon Valley has a formidable culture of innovation that will not go away, even if many startups go bust. "

Idriss Al Rifai, CEO of Fetchr

Better companies, better products and more innovation for 2016

So, yes, we’re probably going ahead of the end of a gold rush, but founders seem well aware of the challenges that they will face in the coming month, probably for the better. This will very likely lead to better products, better companies, more tech and more innovation in 2016.

About the author

Fred had been working on IT and operational projects in the finance and software industry in Switzerland for 10 years before co-founding Arcanys in 2010. He carefully negotiated with and managed outsourcing suppliers as a corporate buyer on the one hand, and led delivery teams as an internal provider to operational departments at an executive level of listed companies in Switzerland, on the other. With nearly 20 years of experience in the industry in Switzerland, Hong Kong, and the Philippines, Fred is now leading the worldwide sales and marketing efforts of Arcanys.

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