My 2017 has been off to a hot start. First off, we opened our applications for our 2017 Techstars Retail Accelerator in partnership with Target. Then I was able to attend, or more accurately survive, both CES and the NRF Big Show. After walking the floors of these events, talking with our corporate partners, and meetings with hundreds of startups, here are some trends I’m seeing for 2017 for retail technology for startups.
#1 – Serious Supply Chain Investment
Target recently announced it will be spending $2.5B on their supply chain in the coming years. Amazon spends $13B annually on R&D and Alibaba is plans to spend $16B on supply chain improvements. These numbers are massive and scream opportunity for supply chain focused startups.
#2 – Voice-enabled Purchasing Will Become Less Weird
Amazon Echo and Google Home were both breakout products in 2016. While at first this voice-based interface seemed weird, consumers quickly saw the benefits of a voice-based operating system. Today, these devices are mostly used to control your home or play music. The holy grail for retailers is turning these devices into commerce platforms. Startups who help existing retailers or e-commerce companies integrate with these emerging platforms could see a lot of opportunities to partner in 2017.
#3 – Integration of AI Into Everything Retail
Artificial Intelligence is the new Mobile for Retail. While most retailers have a “mobile strategy”, they now must contemplate their “A.I. strategy”. A.I. will quickly work its way into almost every facet of retail. I expect to see record levels of investment into A.I startups for retailers. This is both for backend of the retail machine or consumer facing products that help inform consumers to improve conversions.
#4 – Store as a Distribution Center
Brick & mortar stores are uniquely positioned to fulfill same-day orders online. However, this can be a supply chain/logistics/delivery nightmare and most retailers are not ready. This incredibly complex, highly technical problem is ripe for startups to solve.
#5 – Groceries Will Become the Next Hot Area for Membership + Delivery
Consumers buy only two percent of their groceries online. The grocery industry is $700B. Think about that for a second. How many times a week do you visit a grocery store and buy the same items? I bet it is many more times than you research and buy a flat-screen TV. My point is, this is a prime area for disruption. I suspect consumer adoption of online grocery purchasing and delivery will grow.
#6 – Retailer Startup Investment and Acquisitions Will Heat Up
Traditional retailers investment and acquisition activity lags behind other markets. Their are some notable exceptions (see Inspectorio and Jet.com), but I believe this will change in 2017 as more retailers look to the startup market for “outsourced R&D”.
Do you have any other retail startup trends you are tracking this year? Are you a startup looking to disrupt retail? Let’s chat!
Hit me up on Twitter (@rbroshar) or submit your application for Techstars Retail today.
Techstars recently launched a new Internet of Things program in partnership with GE, PwC, Verizon, SAP and Bosch. We are not new to the IoT space, however, having invested in over 70 IoT companies across the Techstars portfolio. With an unprecedented number of IoT applications to the upcoming program, we looked at the data and uncovered trends and insights about startups innovating around IoT.
In 2016 we saw almost a 2X increase in the total number of IoT applications from our last IoT program in 2014. To put this into perspective, IoT applications rivaled those of our other huge verticals such as Healthcare, Fintech and Retail – indicating the strength and continued momentum of IoT. And considering the fact that the latest IoT program only focused on business and industrial companies, we would have received significantly more applications had we included consumer IoT as well.
But trust me, we didn’t just open up applications and hope for the best… we spent a great deal of time from April through June meeting with startups around the globe:
- Over 1400 people attended our information sessions.
- Our team visited 25 cities including Berlin, Reykjavik, Taiwan, Helsinki…
- We met individually with over 150 startups.
Total Application Data:
Some Takeaways from the Data:
- Startups continue to pursue software platforms likely motivated in part by the general frustration and disappointment with standardization and interoperability.
- Health is still an area of interest but in forms other than Wearables. We saw a number of exciting medical devices and room sensors for monitoring patient behavior.
- Cleantech has found new life in IoT! Although the vertical has been out of favor with investors for the past decade, repackaging ‘Cleantech’ as ‘IoT’ may be the facelift it needs.
- IoT on the construction sites is top of mind. First we saw various SaaS solutions working to solve human efficiently. Now, sensors have been added to the mix to track facility progress, worker safety etc.
- Significant decline in the number of drone applications indicates that the unfriendly regulatory environment provides massive friction for drone innovators.
- Logistics and supply chain startups seem to be using off-the-shelf hardware and instead focusing on data aggregation and dashboards and basic machine learning.
- Geographically, there is a huge presence of Industrial IoT companies in parts of Europe (Munich, Germany; Paris, France), although the majority of the applications came from the U.S given our recruiting activities this time around.
- The promise of VR continues to attract passionate founders. No longer just about games, VR startup founders are increasingly technical and trying to solve next generation media issues.
- Throw some AI / ML on it to make it sexy. Loads of bot applications that teeter on the edge of IoT.
- Security was underrepresented in our application pool. Either because we weren’t good at identifying those startups or because there aren’t enough of them. This is a HUGE untapped opportunity.
One Final Note on Diversity:
Although tracking most types of founder diversity requires more thorough research and verified data, our applications indicate that of our top 50 applications, 13 contain a female founder and 24 have at least one non-white male co-founder.
On September 28 we will announce the newest class of Techstars IoT. Stay tuned for that!