2018 capped off another year of tech surprises that ran the gamut from Apple becoming the first publicly traded company to reach a $1T valuation (and then quickly losing that distinction just a few months later) to an explosion of scooters across almost every street corner. It was also an exciting year for M&A and IPO activity that had no shortage of its own unexpected moments. From the M&As of RedHat, GitHub, Flipkart and the last minute $8B acquisition of Qualtrics by SAP to Spotify’s unorthodox direct listing on NYSE, there was a flurry of activity across both consumer and enterprise industries.
While the year was full of surprises, we also saw the continuation of a lot of big tech trends including AI & ML and security that we believe will continue to have a big impact in 2019 and beyond. With that in mind, we wanted to pause and reflect on the past year and the changes that happened across our team and portfolio, and ask our teams in the U.S., Europe and India about what they’re excited about for the year ahead.
Appreciation for 2018
2018 was a memorable year for many companies in the Accel portfolio, including the IPOs of Dropbox, Tenable, Spotify, and Docusign and the M&As of Flipkart, Pillpack, Heptio and Qualtrics, among others. Many of these companies were ones that we partnered with in their earliest days, and it's a rare privilege to have supported them on their journey from startup to a public company or as they became part of another strong organization.
In addition to our portfolio companies, 2018 also marked a special year for our team. We believe that in order to continue to be good stewards and partners, it’s incumbent upon us to find and grow the next generation of investor talent. With that in mind, we’ve continued to strengthen our team to help us to find and nurture that next generation of “original” founders. We added senior investors to our team including Maya Noeth, Cherry Miao and Ethan Choi in the U.S. and Luca Bocchio in Europe. We expanded our Venture Development team to include Eli Collins, Technologist-in-Residence, Paula Judge, VP of Talent and Dave Sherry, Operating Partner, in the U.S., and Ulrika Werdelin, Chief Platform Officer and Holly Bennett, Head of Ecosystem and Portfolio Development in Europe.
What’s Ahead for 2019
Now that we’ve wrapped up another exciting year, we asked our team’s perspective on the themes they believe will carry over into 2019, as well as new trends and technologies they think will emerge and, given the global focus of our firm, what locations we think will be a hotbed for innovation outside of Silicon Valley in 2019.
What trends from 2018 will we see carry over into 2019?
“2018 may well have been the year of the API, with companies like Checkr, Segment, Stripe and Twilio becoming household names for developers building modern product experiences. But often these tools lack the global piping and plumbing (like emerging market bank relationships or direct carrier connections) to function seamlessly beyond the U.S. In 2019, we'll see the emergence of internationally native dev tools that help us transact or interact across the rest of the world. In the Netherlands alone (population 17m) you have MessageBird and Ayden emerging as multi-million dollar alternatives to Twilio and Stripe, and we'll see similar proliferation in regions like LatAm, APAC and beyond.”
“Consumers are increasingly realizing that companies are gathering huge amounts of data about them and monetizing that information in ways that might not always be in their best interest. Simultaneously, high profile data breaches from Target, Marriott, and others make it clear that consumer data is not always well-guarded. I think in 2019 we'll continue to see two trends: 1. Companies will continue to ramp up investment into cybersecurity and data management in order to avoid being in the headlines and 2. Consumers will demand more transparency over how their information is being used, perhaps more widespread governmental regulation over data privacy.”
“As large incumbents are having their “Amazon moment”, there is a huge opportunity in enterprise automation—especially in Europe. New technologies are reshaping entire industries, and incumbents are responding by undergoing huge digital transformations harnessing software developed by a select few European-originated businesses such as UiPath, Celonis and Instana. We only expect to see more companies like these building tools that reduce costs and increase performance for businesses come out of Europe, but also, across the globe.”
“2018 was the year of mobile internet in India. The cost of data dropped by 90% and mobile internet speeds increased nearly 300%—consequently driving an explosion of data consumption. These factors also had a profound impact on digital payments and we saw unprecedented growth in transactions. 2019 will be an important year for the continued growth of consumer internet and FinTech companies in India and we’ll continue to see more companies like Swiggy, Urbanclap and other large consumer platforms proliferate in the coming year.”
Is there a particular location that we’ll see more innovation come out of this year?
“I think all the recent discussion around opportunity zones will point people to regions where we've already been seeing innovation for the last 10+ years, such as Nebraska (Hudl), Utah (Qualtrics, Podium), Carpinteria (lynda.com), Troy (Plex Systems). Those regions will continue to innovate, and hopefully get the visibility they deserve!”
“After spending five years at a Montreal-based startup, I'm a huge believer in Canada. The Canadian government has put a lot of time, energy, thought, and resources into establishing policy and fiscal choices that support a vibrant startup ecosystem. We've already seen it pay early dividends in Canada's core role in the AI community and the IPO of Shopify, and I'm very bullish on Canada's continued ability to build globally important companies.”
What sectors do you think we'll see take off in 2019?
“Healthcare is a large and untapped opportunity. Annual healthcare spend in Europe is a massive 10% of GDP, while the patient experience is deteriorating. Technology has the potential to change the delivery model and, as a result, produce a step change in patient experience. We’ll continue to see platform companies emerge to provide digital healthcare, from telemedicine and integrated pharmacy to lab tests and proactive customized data. In Europe, tapping into the public health reimbursement systems will help companies achieve scale, like Kry, a primary healthcare telemedicine business originally from Sweden and now across Europe, has done.”
“There’s still a gap in the market for fintech startups serving mainstream users with quality, transparent and cost-effective products. A lot of the innovation in consumer fintech has historically been centered around urban users, millennials, or mid-to-upper incomes, while outside of these groups people still use traditional inefficient products offered by incumbents. Companies such as Monzo are filling that gap by addressing a broad audience with a core banking product that's delightful and affordable, and we expect to see more companies like this in 2019.”
“A stable underlying security and compliance architecture for blockchain is emerging, which is a necessary requirement for initial custodian and payment services to continue growing. Security solutions like Ledger enables secure safe-keeping of crypto assets in wallets for asset managers and funky hardware wallets for consumers. For example, compliance tools like Chainalysis helps financial institutions meet regulatory requirements around anti-money laundering and will be fundamental in the move towards mainstream use of crypto. 2019 will be a watershed year for institutional and consumer crypto products as other household names in the banking industry join the fray eager to capture market share in the rapidly-moving space.”
Your best life hack?
“I use our Nanit baby camera to read a quick book to my infant son, Baker, when I get a break in the day.”
“Whenever I'm feeling particularly stuck at work, I take a big blank sheet of paper and a pen and write down thoughts free-hand. Something about the ability to jot things down and draw relationships between them always unlocks new pathways for me.”
“I always keep my travel bag ready to go so I don’t waste time packing.”
-- Team Accel