If 2020 has taught us anything it’s that predictions can be spurious at best, but with covid-19 vaccines beginning to be rolled out and the prospect of societies tentatively reopening next year the market is expected to continue to be bullish. With social distancing measures to continue for at least the first part of the year, ongoing trends are also set to continue for a while. Let’s look at which parts of the startup space look primed for activity and which companies are candidates for a big 2021.
A continuation of the IPO rush
As we come to the end of 2020 the IPO market is hotter than ever, and despite concerns over offerings being priced incorrectly, it looks like almost any tech company going public right now is sure to see a pop. Airbnb, DoorDash and Wish all floated in the past month with substantial degrees of success, and several more companies are reportedly preparing their own offerings, with the likes of robotic process automation technology provider UiPath, crypto trading platform Coinbase and digital health insurer Oscar having already confidentially filed for IPOs set to value them each at well over $10bn.
Leading IPO candidates: Instacart, Oscar, UiPath, Deliveroo, Roblox, DataBricks.
Automation
Every now and then there’s a phrase that works its way into almost every funding announcement for an 18-month period – recent candidates including, big data, cloud computing, artificial intelligence and machine learning – but the next step in that progression looks set to be automation. The industrial, logistics and enterprise software sectors have been the leading recipients of late, but robotic process automation and natural language processing are set to help progress the capabilities and reach of automation technology into ever more areas. If the technology can progress far enough, the biggest one will be transport.
Funding candidates: Automation Anywhere, ActiveCampaign, Zinier, Olive, Hyperscience.
Digital payment platforms
One of the big growth areas of 2020, as discussed yesterday, was digital payment, as Plaid and Credit Karma were the subject of huge acquisitions and the likes of PayPal and Stripe increasingly threw their weight around as investors. Stripe is also set to lead the way on the funding side, reportedly chasing a valuation between $70bn and $100bn in its next round, but as more and more business moves online, and technology makes cross-border transfers, point-of-sale finance or card issuing easier, this looks like a sector with a lot of room still left for growth.
Funding candidates: Stripe, Klarna (reportedly also an IPO candidate), AvidXchange, Marqeta, Flywire.
Micromobility
Bicycle sharing services never quite took off and ride hailing remains in the hands of a relative few, but the future seems to revolve more around hybrid services that encompass electric scooters and bicycles in addition to cars or ordinary bikes. Users are likely to be warier of being driven by strangers for a while, and the demographics of cities point toward these kinds of solutions in the long run in any case. Bolt (see below) recently raised money at a valuation topping $4bn, but after months of low revenue that shouldn’t be an automatic expectation in this sector.
Funding candidates: Bolt, Tier, Bird, Lime, Bounce.
Artificial intelligence in the medical sector
Although increasing numbers of startups are utilising antibody drug conjugates and messenger RNA in their drug development, some of the best funded companies in the healthcare sector were those applying technologies like big data and AI to the drug discovery process as well as elements like medicine production and population health management. With the level of challenge involved in the worldwide healthcare space right now, this still small sector looks ready to explode.
Funding candidates: Resilience, Verily, Recursion, Insitro, Encoded Therapeutics.
Home fitness
Peloton rapidly overcame one of the most notorious advertising campaigns in recent times to become one of the frontrunners in the 2020 share price race, its product emblematic of a time when gyms became harder to go to and people were forced to rely on exercising at home. Mirror was meanwhile the subject of a $500m acquisition. Expect to see more of this next year, whether it’s other cloud-based exercise machines, personal training apps, online fitness communities or health trackers (which themselves fit into the current digital health boom).
Funding candidates: Zwift, CureFit, Tonal, Keep, Whoop.
Freight management
Automation technology and the preponderance of artificial intelligence software that can more efficiently fill trucks and allocate routes looks set to revolutionise an industry that’s already huge before you get into maritime shipping. The entry of the world’s largest container shipper, AP Moller–Maersk, into corporate venturing to join a host of parcel delivery services already there can function as a pointer to where things might go.
Funding candidates: Flexport, Manbang Group, Convoy, Loadsmart, Outrider.
Cloud and virtual kitchens
The decline in the worldwide restaurant industry has proven a win for food delivery services such as DoorDash and Deliveroo. The combination of that forward thrust and increasing empty commercial space in urban areas looks likely to fuel the rise of cloud kitchens: restaurant-level kitchens set up entirely to serve the online ordering industry, sometimes entirely through virtual brands. If you’re an incumbent in the food delivery sector it also makes sense to cut out the middleman, while companies like Reef Technology are springing up to take care of the real estate side.
Funding candidates: Rebel Foods, Kitopi, Kitchen United, Yummy, Reef.
No-code application development
Advances in artificial intelligence have helped strengthen no-code app platforms, which enable users to build and deploy software applications with a minimum of traditional coding skills, democratising the process. The biggest prospect is Unqork, which was valued at $2bn following a $207m series C round featuring Alphabet, Broadridge Financial Solutions and HPE in October, particularly as Japanese counterpart Yappli went public this week, but it’s a space in which we’re seeing more and more action.
Funding candidates: Unqork, Tulip, Accern, EasySend, Unit21.
