Making definitive predictions regarding what will happen over the course of a given year is a dangerous game. This is especially true when you look at business--and entrepreneurship in particular. What happens one year may or may not impact what happens the following year. However, there are plenty of instances where early predictions prove to be accurate truths.
With that being said, let's take a look at some of the ways industry professionals are predicting the entrepreneurship game will change this year, now three months into 2016. While the future is difficult to forecast, these particular predictions are backed by strong indicators that suggest this year will be a year of significant change.
1. Unicorns will be Corrected
In 2015, we saw a number of tech startups achieve the $1 billion valuation that distinguishes them as a "unicorn." In fact, a number of businesses--including Dropbox, Uber, Airbnb, and Snapchat--have even been labeled "decacorns," which indicates their valuations exceed $10 billion. While the names are certainly hip and the thought of valuing these businesses so high may be exciting, the reality is that unicorns are built on arbitrary valuations.
"Few people would disagree with me when I say that tech companies have been overvalued by the private markets the last few years," writes venture capitalist Ben Parr. "Now we're beginning to see a correction--NOT a bubble bursting--in valuations, spurred by the realistic valuations these companies can achieve in the public markets."
Certain unicorns could avoid devaluation--including the likes of Airbnb and Slack--but look for most to gravitate back towards reasonable figures. What this really means is that we won't see any more new unicorns enter the marketplace. The term will be retired and investors will turn their attention towards more stable pursuits.
2. Live Streaming Becomes the New Mainstream
Last year, we saw a new form of social media hit the marketplace in the form of live streaming. Meerkat was introduced at the annual SXSW Conference last March and Twitter quickly countered with its own platform, Periscope, just days later. Over the past few months, we've seen a serious surge in the popularity of these platforms. And as millennials continue to express an affinity for video content, it's clear that live streaming is the future of the industry.
"From an entrepreneurship point of view, this represents a dynamic pivot. Savvy entrepreneurs will find ways to leverage this largely untapped market by building personal brands and marketing services..." says Sheldon Michael of NetJumps International. "From product demonstrations and customer support to behind the scenes content and video syndication, there are dozens of different ways live streaming can be used."
On a much bigger scale, look for a new player to enter the live streaming social niche in 2016. While Periscope has a firm grasp on the number one spot, it's becoming evident that there is room for multiple players. Estimates suggest Meerkat has at least 2 million users, while the average amount of time its users are spending on the service has doubled each month since its launch.
3. Data-Driven Entrepreneurship will be the Only Option
As technology has evolved in recent years, entrepreneurs have gained access to incredibly sophisticated tools that isolate and assimilate relevant data for valuable insights into business functioning and market needs. This year we'll finally reach a point where the use of data becomes less of an option and more of a mandatory requirement for entrepreneurial success.
"Data is going to be a key component when it comes to future business success, and that future is rapidly arriving," entrepreneur Sujan Patel wrote back in August 2015. "By the time we ring in the New Year again, data will be the cornerstone of businesses looking to thrive going forward."
Patel uses Netflix as an example of why data-driven business decisions will lead successful businesses this year. Netflix, which has 65-plus million subscribers, uses a machine-learning algorithm to determine what each individual user wants to watch next. Surprisingly, it's often quite accurate. As a result, subscribers stay engaged and spend more time using the platform.
In a time where most markets are saturated with competition, it'll be the businesses that are able to customize user experiences by accessing relevant data that thrive. "So how can you use data to modernize your business and customize each experience with a client to an individual level of satisfaction?" Patel asks his readers. "The answer to this question is the key to your business's survival next year."
4. Immigrant Entrepreneurs will Thrive
According to the 2015 Kauffman Index report on startup activity across the nation, U.S. immigrants were twice as likely as native-born citizens to become entrepreneurs this past year. Specifically, the rate of new entrepreneurs hovers somewhere around 0.52 percent for immigrants and only 0.27 percent for native-born citizens. From 1996 to 2014, the annual percentage of immigrant entrepreneurs has grown from just 13.3 percent to nearly 30 percent.
If these trends continue as expected, look for immigrant entrepreneurs to thrive this year. This is good news for the entrepreneurial community and represents a prime opportunity to enhance business diversity throughout the U.S.
5. Fed Rate Hike will Impact Funding
We haven't seen a Fed rate hike since 2010, but that could change before the end of 2016. While a rate hike affects everyone differently, entrepreneurs may take the raw end of the deal.
"When rates are low, investors looking for yield are willing to take a little more risk in hopes of higher return from start-up companies," writes Jean Chatzky of NBC News. "When it becomes easier to make money with less risk, they'll often look elsewhere."
This doesn't mean funding will cease to exist. There will always be venture capitalists and investors who specialize in startup investing, but it simply means funding will be harder to come by for smaller ventures. Fringe investors will jump back into other markets, leaving only specialized investors with open wallets.
6. Crowdfunding will Surge
In 2015, we saw a multitude of incredible crowdfunding success stories. Startups raised billions of dollars and crowdfunding became less of a niche resource and more of a mainstream strategy. However, 2016 will be the year that it really takes off.
Thanks to a new law approved by the SEC, equity crowdfunding will soon be open to the general public. In other words, gone are the days where people offered $10 in return for a keychain and a dose of feeling charitable. Now, ordinary people can actually invest in pieces of the companies they like. This will make crowdfunding exponentially more enticing and points to an entirely new frontier of investing.
The Future of Entrepreneurship in 2016
Change is inevitable. Each year, entrepreneurship undergoes dramatic transformations and evolutions, and this year will be no different. From social media to funding, the entrepreneurship game is about to experience a lot of change. Some will be good, some will be surrounded by question marks, and some will be completely unfamiliar.
While it's challenging to make accurate forecasts, all signs indicate that these six predictions will come to fruition in the coming months. Will you be ready for them? Your answer may very well define the extent of your success in 2016.