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.

Startups to watch

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6. Financial tech in emerging markets

In 2015, financial tech, a.k.a. "FinTech," startups such as peer-to-peer money transfer service Transferwise changed how people move money across borders, and startups including Stripe enabled merchants "to easily accept new forms of payment," according to Ethan Pierse, a France-based managing partner at Hong Kong VC firm, Nest. This year will bring "many new services to the world's unbanked" in developing regions such as sub-Saharan Africa and parts of the Middle East and Latin America, "as well as new disruptions in lending and payment solutions for the United States and Europe." 

In Africa and Asia, advances in financial tech far outpace other technologies, according to Pierse. "You have Africans who may not have reliable electricity, a bank account or a physical address as we know it, ordering and paying online through mobile phones," he says. "Entrepreneurs in these geographies are rapidly building cutting-edge telecommunications networks from scratch, without having to work around legacy equipment because there's no existing service provider. The innovations we're seeing today aren't necessarily in the creation of new tools like the smartphone, but the creation of powerful new use cases and applications for these tools. 

7. Digital health and Big Data

The year 2016 will bring more services and innovations designed to improve digital health record storage and access, provide online mental healthcare services, and create or further develop health diagnostic tools, such as "predictive cancer risk technologies," according to Pierse.

This movement will result in more opportunities for companies that "create disruptive solutions" to make sense of big data, "whether it's dramatically faster DNA sequencing and related therapies, speeding up analysis of clinical trials of new medical treatments, or machine learning that enables deep analysis of these huge new datasets," Pierse says.

8. The 'Uberization' of manufacturing

Digital manufacturing methods, coupled with cloud-based design and simulation tools, "have the potential to democratize manufacturing and allow new entrants as well as interesting business models, like 'Manufacturing as a Service,'" says Karen Kerr, senior managing director of advanced manufacturing at GE Ventures.

As a result, Kerr expects to see the "Uberization" of contract manufacturing and the supply chain in 2016, which will be accelerated by sensors and cloud technologies that allow "end-to-end visibility into supply chains and logistics." Startups could also begin to replace freight forwarders, the traditional middlemen in manufacturing and supply chains, in the same way online travel services Kayak and Expedia squeezed out many travel agents.

9. Autonomous cars

Though still years away from mainstream use, self-driving car technology is expected to be a hot startup category in 2016, thanks to "many incredible beta developments in the self-driving car market," according to ARTIS Ventures' Haroun. 

Despite safety and other concerns about self-driving cars, "there are so many long-term benefits, including environmental, safety, health, family life-balance, geopolitical and overall economic benefits," he says. "Self-driving cars will also be materially beneficial to lowering inflation, as we'll spend less money on gas, repairs and real estate." Haroun suggests software startups in the autonomous car market will gain traction in 2016, but the real impact will be felt "in the next few decades."

10. Space exploration

The race between Elon Musk's SpaceX and Jeff Bezos's Blue Origin will result in the creation of smaller companies that build technologies to complement and support the two space exploration startups, according to Hogeg of Singulariteam, which invests in Effective Space Solutions, another rival space startup. Though trendsetters such as Musk and Bezos are energizing interest in the "commercial space age," some VCs will be wary of funding such startups because "the horizon for income is so far off," Hogeg says.

This story, "The 10 biggest startup opportunities in 2016" was originally published by CIO.

Copyright © 2016 IDG Communications, Inc.

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