2014 has been an incredible year for a number of startups in the UK but what lies ahead? Here, with the help of a number of experts, we take a stab at what’s likely to happen in 2015.
1. Wearables takeoff
Google Glass has seen limited success this year, with the internet search giant announcing this month that it plans to close all of its Basecamp stores around the world. However, with the Apple Watch coming in early 2015, that could all change.
Duncan Spencer, MD at Insurance2Go, said: “We see a continuation with the fascination of wearable tech with loads of products being launched but not many becoming mass market products. We feel an application that really captures the imagination is yet to arrive. However, interest in watches that link back to the consumers phone will continue to grow.”
Some employees may be alarmed to hear that Chris Babel, CEO at online privacy management services provider, Truste, believes that businesses will implement wearables to track employee’s locations, wellness programme participation and more.
“The benefits are clear for employers, but I predict there will be a significant backlash from employees concerning their privacy,” he said. “Will they want their employers knowing information about their health and where they go on weekends during non-work hours? This practice may feel intrusive to employees and they may feel undermined rather than supported as a result."
2. The rise of the young entrepreneur
Despite what you might think, many of 2014’s startup co-founders were over the age of 55. This is set to change, according to Paul Lawton, general manager of SMB for O2 Business.
“2014 has been the year of the ‘oldepreneur’ with research we conducted earlier in the year showing a distinct rise in over 55s starting businesses,” he said. "The economic climate created a hot bed of entrepreneurialism, but with the graduate job market being more competitive than ever, the digital skills that today’s teenage and twenty-somethings have grown up with will really start to pay off. From ten year-olds setting up loom band businesses in their bedrooms to Nick D’Aloiso selling his mobile news app to Yahoo for $30 million, I predict we’ll see many more of these ‘youngerpreneurs’ emerging in 2015.”
3. Sharing economy boom
The licensced taxi drivers and the hotel chains of the world don’t like the competition they present but the end users love the convenience and what is often a better overall service.
The UK government is currently undertaking a review into the sharing economy in a bid to understand the economic potential and social issues that are generated when people share products and services over the internet.
BT 'futureologist', Dr Nicola Millard, said she expects the sharing economy to grow as the companies profiting from it continue to harnesses the power of the social, local and mobile web to allow people to share their assets.
“From cars to cleaners, driveways to dogs and hotel rooms to handbags, all can be rented by the hour,” she said. “Companies like AirBnB, ZipCar, Task Rabbit and the, now notorious, Uber are all starting to gain in popularity with consumers. However, they aren’t winning friends amongst the companies whose business models are being challenged – see taxi companies’ reactions to Uber, for example.”
4. IPOs, valuations, mergers and acquisitions
Technology companies in the UK raised hundreds of millions of pounds in 2014 and some even went public in the process. But not everyone believes the fun will continue.
Paul Cooper, partner at Clarity, a corporate finance advisory firm that specialises in technology and media deals, said: "The flood of UK IPOs expected in Q1 2015 will be a washout because of domestic election fears and bigger worries about the global economy. Global IPOs outside the Uber-sized opportunities will struggle for the same macroeconomic reasons.
He added: "M&A will accelerate with corporates desperate to buy growth and innovation. The buying spree will be fuelled by cash-rich corporates and private equity firms.
"Startups will continue to get funding but investors will be more choosy. However, the ready availability of investment capital will ensure good businesses will continue to command good valuations in later stage series A rounds."
5. Tech bubble
Some believe we're in the midst of another tech bubble that could pop at any moment.
Raju Vegesna, evangelist at Zoho, which builds cloud based business software, said: “No one knows how long this party will last. Will it end in 2015? My guess is as good as anyone’s. But one thing is for sure, when it ends, it won’t end well. We have seen this before in 2000. Let's just hope things don't get even more insane than they already are.
“Not a lot of SaaS companies are profitable today. Even the well-known ones with huge valuations have been losing money. This is a trend to keep a close eye on. If this trend doesn't change, this could get ugly.
“The valuations will come down, especially when there are lots of unprofitable companies. Profitability is something several companies ignored during the past few years. Profitable companies, will be valued at a premium."
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