Startups to watch

The 10 biggest startup opportunities in 2016

The New Year promises to usher in a new set of tech startups looking to capitalize on the rise of enterprise wearables, counterterrorism, finance and payments tech, and even private space exploration.

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Startups to watch

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The year 2015 was all about drones, virtual reality, 3D printing, and the Internet of Things (IoT).

This year, venture capitalists and industry observers say the tech world should expect more of the same. "Most hot startups in 2016 won't be trying to lead revolutions or usher in whole new industries," says Igor Shoifot, an investment partner with TMT Investments. "Instead, they'll be enhancing existing technologies, products, services, or transactional ecosystems by saving users time, money, effort, and helping them make better choices more easily."

However, the New Year has a few potential technology surprises in store, including the "Uberization" of manufacturing and mobile ecommerce in emerging markets. Here are 10 of the hottest technology startup categories, trends and opportunities (ranked in no particular order) experts expect to see in 2016.

1. Wearables in the enterprise

Today’s consumers already embraced wearable technologies, such as Fitbit and other activity-tracking products. In the enterprise, however, the wearables market is still "nascent but shows promise," according to Ludo Ulrich, head of startup relations for Salesforce.

"As one of the hottest technology segments, wearables can be a true strategic tool that improves business performance," Ulrich says. "Wearables are becoming more present in the workplace and stand to benefit multiple industries and disciplines such as field service, retail, healthcare, sales, and marketing." A 2015 Salesforce Research survey found, for example, that 79 percent of early adopters think wearables are or will be strategic to their company's future success, and 86 percent plan to increase spending on wearables during the next 12 months.

2. Consumer IoT and 'smart home'

"Smart home" devices, including Google's popular Nest thermostat, aren't new. However, lingering consumer concerns about the security of IoT devices in the home hindered the adoption of such gadgets, especially after BuzzFeed featured some high-profile hacks in a story titled, "7 creepy baby monitor stories that will terrify all parents."

"People were scared to connect smart home devices in 2015," says Shaun Arora, cofounder and general manager of hardware accelerator Make in LA. "As consumers have more widely adopted devices, including wearables, the connected home has become less of an issue. People want everything from their cars to their blender to connect to each other and monitor efficiency in the same way it has become common to track heartbeat and steps."

Amazon's Echo smart home assistant, dubbed "Siri with a speaker," is a successful example of the intersection between voice-based OSes and IoT devices, a trend that's expected to gain deeper traction in 2016, according to Chris Haroun, a partner at VC firm ARTIS Ventures. Advances in voice-input technology in mobile devices and automobiles "will be particularly interesting to watch" in 2016, Haroun says.

"Why do we need to see our OS? Why can't OSes be audio-based and follow us from one location to another?" Haroun suggests "the dominant OS of the near future will be voice-based and will run concurrently on our smartphones via Apple's Siri, Google voice products, speaker systems like the Amazon Echo, or on our computers using Microsoft's Cortana."

3. Consumer privacy protection

As the adoption of smart home technology increases, consumer concern about what happens to the data their gadgets collect grows accordingly, according to Stuart Bailey, founder and chief scientist at network security service provider Infoblox.

"Even as consumers strap more wearable fitness trackers to their bodies and install smart appliances, thermostats and multimedia centers in their homes, they're also demanding more control over who has access to the information they permit those devices to collect," Bailey says. "Meeting the challenge of helping companies collect that information while also guaranteeing users' privacy creates an excellent opportunity for tech entrepreneurs in 2016," especially those who introduce "new approaches" to proactively guard consumer privacy.

4. Counterterrorism technologies

The September 11, 2001, terrorist attacks in New York City led more startups to build safety and evacuation technologies, according to Moshe Hogeg, cofounder, managing partner and chairman of private VC fund Singulariteam. The recent terrorist attacks in Paris and San Bernardino, Calif., in late 2015 will similarly motivate startups to provide "solutions for counterterrorism activities" in 2016, he says.

"Governments will be looking to support technology that can protect them from such attacks," according to Hogeg, and startups poised to help with security will thrive in 2016. "You can already see a trend with smart cities that are looking for command control systems" to help prevent terror attacks, he says. 

The battle against terrorism will also increase interest in "robots that can spare human lives" in hostage situations, according to Hogeg. "The relevancy of current affairs is making waves, and the urgency for governments to protect their citizens will set the trend" and influence where the 2016 VC money goes, he says.

5. Cybersecurity services to protect enterprises

Malicious hackers and cybercriminals "are continually getting more sophisticated, requiring new ways for companies to protect themselves," says Theresia Gouw, cofounder and managing partner with Aspect Ventures

As soon as new security solutions emerge, hackers begin to find ways around them. "The problem with the cybersecurity industry is that hackers always seem to be one step ahead," Gouw says. "There will never be a silver-bullet solution, which means lots of opportunities for innovation."

In 2016 and beyond, the security world will continue to transition away from on-premise security appliances and products, which can be expensive and too complex to maintain, according to Gouw. Instead, a movement will take place toward "cloud-centric security offerings that simplify the network architecture, making it easier to deliver security across an increasingly distributed and mobile enterprise," she says.

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