This article originally ran in Term Sheet, Coins2Day’s newsletter about deals and dealmakers. Sign up here.
Thank you to everyone who responded to the question: “What’s your top business-related prediction for 2019?” This year’s Crystal Ball was much darker than years past, with many readers predicting that a recession is around the corner.
Below are your predictions:
RECESSION: Term Sheet readers predict an economic downturn in 2019.
“Huge stock market crash, particularly in the U.S. And U.K., will lead to falling house prices and a long recession.” — Gareth Stephens
“The relative youth of the tech sector has been an essential part of its decades-long dominance. But in 2019, it is possible that many burgeoning entrepreneurs, investors, and employees in the tech sector will see for the first time what life is like through a recession. While the fundamental drivers of technology will continue to strongly impact innovation across most sectors, an economic downturn will show us which companies, young or not-so-young, are truly able to withstand the slings and arrows of real-world economic cycles.” — Yann Ranchere, partner at Anthemis
“In 2019, there’s a high probability we’re going to hit a recession and if we do, everyone is going to pull back on spending all at the same time leaving small businesses in a lurch. For small business owners, now is the time to reduce expenses, not the time to expand. As interest rates rise, a recession could arrive fast and it could be quite painful for those small businesses that aren’t prepared.” — Ian Crosby, CEO & founder of Bench
“Economists and analysts agree that a recession and market correction could happen within the next 12 to 18 months. Since a downturn will likely cascade to many compensation-related issues—such as benchmarking, dilution, goal setting, and disclosure, more companies will devise a ‘CEO Pay playbook’ to handle these facets in a potential downturn.” – Robin Ferracone, founder and CEO of Farient Advisors
“U.S. – China trade war escalates, China’s debt bubble bursts, markets crash to 1929 level and great depression starts off, leading to nationalist riots worldwide in a social media fueled dimension … or party goes on for a year and people talk about the incredible end of Snapchat instead. — Tim Bartel
CRYPTO: Readers are betting on the growth of blockchain technology.
“ I expect one or more major breakthroughs in blockchain network and infrastructure in 2019. Lack of performance, security and privacy have stunted the adoption of public blockchain technologies at scale.” — Scott Beechuk, partner at Norwest Venture Partners
“As Bitcoin and Ethereum continue their downward slide, a new protocol will emerge that solves current scalability problems and reignites global interest in blockchain.” — Aaron Jacobson, partner at NEA
“ Activist investing in crypto. Along the lines of what Vista did with smaller SaaS companies.” — Michael Nov
“ Massive hassles for many US-based crypto projects in trying to distribute tokens legally and in maneuvering around the regulators as the rules of the road become more clear.” — David Pakman, partner at Venrock
“Facebook announces launch of its own blockchain & accompanying development platform for dApps” — Nikao
“Compliance headaches for banks leads the way for blockchain technology.” — Navin
M&A: Readers predict some major acquisitions in the coming year.
“ Apple will seriously consider buying Tesla.” — Ajay Chopra, general partner at Trinity Ventures
“With Thomas Kurian at the helm, expect Google Cloud to make a major acquisition to inject enterprise DNA into the company.” — Aaron Jacobson, partner at NEA
“Uber buys an automaker. Admittedly highly unlikely but fortune favors the bold and all that.” — JC
“We will see the 2 biggest (notional $) M&A transactions in history. Maybe something big in content and telecom. Comcast/Disney type- thing. Or a big software deal. I’m less convinced of who it will be but more just think the bid for debt is so insatiable that a ‘next level’ deal will get done.” — Gabe Bassin
“Amazon buys Fitbit. Already making moves in health (lifestyle and healthcare), it’s an Amazon top seller, and they need to make Alexa mobile to compete with Apple Watch.” — Michael Remondi
“ More vertical healthcare consolidation. The Aetna/CVS kind” — Ian Bongaardt
“Social media sites will seek M&A with large news outlets (e.g. Facebook acquires The New York Times).” — Michelle Nacouzi, associate at Indicator Ventures
“ Dealmakers turn to public markets: Following the buying-binge of recent years, public corporates will continue a recent trend of divestitures and spinouts. Take-private transactions will also rise as valuations for public and private companies converge.” — Dylan Cox, senior private equity analyst at PitchBook
“Agriculture tech start-ups are looking to revolutionize the industry by developing innovations to solve key challenges in the sector left untouched by bigger organizations. In the process, Big Ag and food companies will be swallowing up these startups at an ever-increasing rate to bolster customer services, automation, market access and expand the ways they do business. Fortunately for the fledgling businesses, monetizing their offerings will matter less than a need to keep up to competition.” — Darcy Pawlik, vice president of global agriculture at Understory.
… Plus two very specific Salesforce predictions:
“The ongoing corporate investment in providing better digital experiences will continue to drive consolidation in the tech vendor ecosystem, potentially even resulting in a leader like Salesforce or Adobe being acquired.” — Scott Webb, president of Avionos
“Salesforce is acquired by Amazon or Google.” — Alex Choy
IPOS: Readers expect 2019 to be a strong year for tech IPOs.
“I expect 2019 to be a very interesting and volatile year that is overall healthy for the venture capital ecosystem. It should be a strong year for IPOs though I think there will be many peaks and valleys along the way. Tech M&A tends to be a stepchild of the IPO market in many ways, so I expect a strong M&A year overall. One thing we will certainly see is a number of companies acquired on the brink of their potential IPO. Once companies are on file, there is some incentive for the super-large strategic buyers to use some of their unprecedented cash hordes to acquire strategic assets. These assets will be more expensive once the companies go public since they will have to pay another premium.” — Sandy Miller, general partner at IVP
“Big IPOs next year create liquidity for 1000+ employees (like Facebook IPO) + VCs that will lead to an increase in seed activity. This is much needed to allow founder/startups to get funded for riskier ventures that we need, but will create another A crunch by end of 2020.” — Trace Cohen
“2019 will be a big year for tech IPOs. There will be more market debuts — and bigger ones — in 2019 than in 2018.” — Ajay Chopra, general partner at Trinity Ventures
STARTUPS: Readers predict more money to chase even fewer deals in 2019.
“It’s easier than ever to raise a pre-seed or seed round, but Series A/B investors are setting the bar higher than ever and looking for very strong traction before making an investment. On the flipside, once they see it, they are prepared to write larger checks than before.” — Matt Hartman, partner at betaworks Ventures
“I think that the piles of VC and PE money will chase even fewer deals than they have been in 17’ 18’.” — Elias
“We see a lot more down rounds for unicorns (and soon to be former unicorns!)” — Angela Graves Winegar
“A record number of new U.S.-based unicorns in 2019 will be based in the Pacific Northwest, and more than half will be based outside of the SF Bay Area.” — Karan Mehandru, general partner at Trinity Ventures
“On the private investment side, we have begun to see valuations begin to moderate, although they are still at relatively high levels on an historic basis. That said, the quality of the companies we are seeing in the late-stage private market is very impressive and, in fact, the best ever. Particularly, we are seeing a large number of companies with very rapid (40-100% annual) rapid growth at scale (greater than $50MM in revenue).” — Sandy Miller, general partner at IVP
“The big will get bigger. The great will get bought by them. And trillion-dollar market caps will become more than a temporary phenomenon.” — Ben Narasin, venture partner at NEA
“ Investors start to see how underserved parents are, and ‘parent tech’ gets hot.” — Turner Novak
…Some specific predictions around digital health:
“Valuations will peak across digital health companies, driven by two factors – the end of our long economic expansion which will cause investors to pull back, and newer entrants to digital health investing retreating to the industries they know best. But, this will leave a very favorable investing market for proven and steadfast investors in the industry.” — Keith Figlioli, general partner at LRVHealth
“Filed under ‘about damn time,’ women’s health is finally receiving the attention it has long deserved. The global women’s healthcare market is projected to be $51.3B by 2025. Investors are starting to recognize that products which address problems for half the population, never mind 85% of the decision makers in healthcare, are worth betting on.” — Cindy Eckert, founder and CEO of The Pink Ceiling
….And founders will be more cognisant of sources of funding:
“ 2019 will be the Year of Transparency around sources of capital in the venture ecosystem and values-alignment.” — Patricia Nakache, general partner at Trinity Ventures
“The venture capital industry will continue to evolve and specialize. Entrepreneurs will continue to grow wiser about the importance of selecting an investment partner that is optimized for the current stage of development.” — John Vrionis, co-founder & partner at Unusual Ventures
…And one prediction about SoftBank’s Vision Fund:
“ Softbank announces they will not do another Vision Fund and we start to see large GPs raise smaller funds than the 2016-2018 vintages. All this from experiencing first hand the phenomenon of diminishing returns as fund size increases. I think the toxicity of Saudi money is part of it, but more than anything I think that many of the companies they invested in are now over-capitalized and will suffer as a result. Not all, but I think many will have a lack of fiscal discipline that comes from too much easy money.” — Erik Berg, investment analyst at Rev1 Ventures
GLOBAL: Readers predict it’ll be a challenging year for global markets.
“ China’s economy will experience an accelerated slow down. For the first time, China will experience neutral growth in its manufacturing and real estate sectors. However, other emerging markets, such as Africa, will experience an uptick as the US stops int rate hikes” — Tala Al Jabri
“I believe 2019 will be a problematic year for the Mexican economy where we will see currency devaluation, higher unemployment, and more social unrest…” — Elias
“I predict a referendum for a French exit to the a European Union.” — Francisco
“Brexit will be called off and the UK will remain in the EU.” — Calvin
DATA & PRIVACY: Readers expect more cyber-attacks and data leaks.
“Especially with GDPR & other privacy regulations, organizations’ reputations are on the line as public demand for transparency, security & data privacy roars. Therefore those that thrive not just survive will transform their operating models to DevSecOps given shortage of security professionals.” — Ramin Sayar, CEO of Sumo Logic
“Attacks on companies will increase. Now that hackers have seen how easy it is to leak data (Facebook, Google, Apple), crimes will become increasingly targeted toward corporations and small businesses, aka ransomware, with a heavy focus on the cloud.” — Yossi Atias, GM IoT Security at BullGuard
“Large organizations have often expressed uneasiness about moving their data to the cloud despite the common knowledge that cloud providers like AWS are often more secure than the enterprise itself. But despite the massive investments in security infrastructure – it is a matter of when – not if – a major cloud provider will suffer a large-scale breach. Every provider has experienced security breaches and countless outages, but none of these massive data centers have been put to the PR test of a large-scale attack. It’s only a matter of time and it may change the way companies go about their cloud-first strategies.” — George Avetisov, CEO & co-founder of HYPR Corp.
“In 2019, we will continue to observe that failure to comply with privacy regulations will have a devastating impact on a company’s operations as much as its checkbook. Companies that don’t meet GDPR and other privacy and security requirements will lose business to competitors who do.” — Chris Babel, CEO of TrustArc
“ 2019 will be the year of passwordless authentication. Advances in digital user identity analysis, behavioral biometrics and machine learning will enable highly accurate, frictionless access to websites and mobile applications where user sessions are verified behind the scenes with no visible authentication control.” — Bruce Taragin, managing director at Blumberg Capital
“2019 will see the acceleration of the weaponization of data, a new frontier in the cyber threat landscape where data is manufactured, manipulated and corrupted to disrupt data driven systems and bypassing security defenses designed to detect and defend against penetration.” — Bob Ackerman founder and managing director of AllegisCyber
VOICE: Readers expect a surge in popularity of voice interfaces.
“2019 will be the breakout year for applications that combine people and things, communicating with each other, whether through voice activated commands (“Alexa, call Mom”), or messaging alerts (“A stranger is on your doorstep”). The lines will blur and tremendous value will be created when companies design applications, connected on secure networks, that make it as easy to develop a relationship with your smart car, smart home, or smart campus as it is to develop a relationship with human beings.” — Sacha Gera, SVP, PLM & Engineering at Kandy.io
“ As they are becoming exponentially smarter, virtual assistants and speech-enabled systems such as Alexa, Siri, Cortana, and Google Home have been increasingly adopted by consumers. We will see this wave spill over into business applications in 2019 driving the development and proliferation of new, “informal” user interfaces driven by speech, gestures, or pen scribbles – bringing consumer grade user experiences to the workplace.” — Peter Maier, co-president of SAP Industries.
ELECTRIC SCOOTERS: Readers expect the e-scooter category to get even hotter in 2019.
“Ridesharing narrows its focus: We expect automakers, ridesharing companies, and investors in the mobility space to increasingly pivot towards last-mile micro-mobility and bundled mobility-as-a-service solutions, marking a secular shift away from pure-play ridesharing applications.” — Asad Hussain, emerging tech analyst at PitchBook
“ Micro-mobility becomes a legit global category fueled by so many other disruptions before it.” — Candace Locklear, co-founder of Mighty
“Discussions about autonomous vehicles will shift from cars and trucks to e-scooters, which will dominate the emerging mobility landscape in 2019.” — Ajay Chopra, general partner at Trinity Ventures
