Predicting the future is never easy, especially when it comes to business. Based on the economy, politics, new technology, sales cycles and the rest, guessing what industries will thrive or take a back seat can be difficult.
But to get a sense of what to expect in 2019, DC Inno talked to local venture capitalists and tech leaders about what might happen in the coming year.
Their answers varied, but they mostly agreed that cybersecurity, hospitality and biotech startups will flourish in the DMV, and that startups across all industries in the region could take advantage of the new-found Amazon spotlight. The area's venture funds raised hundreds of millions of dollars in 2018, while businesses and startups saw the biggest funding year outside of the dot-com era, so look for some money to be deployed as well.
Not to mention, technology research in local universities, government and private foundations is leading to spinoff technologies helping solve global social problems problems like disaster relief, sustainability, energy and healthcare delivery.
"When cybersecurity companies like Tenable have an IPO or consumer food companies like CAVA start making acquisitions," said Franklin Advisory's David Wilson, "it continues to open people's minds to the possibilities."
Here are four predictions for the D.C. area's tech and startup scene in 2019.
Events & Hospitality
Several local investors agree that the hospitality industry is strong as ever in D.C., and will continue growing quickly in 2019.
Some of the world's biggest hospitality companies are headquartered in D.C., said Social Tables founder and CEO Dan Berger – Marriott, Hilton, Host, Interstate, Cvent – and the area is home to some of the most important meetings and events in the world – and lots of them.
Given that D.C. is also the nation's capital of associations and societies, Aldrich Capital founding partner Mirza Baig said, it’s no surprise that there is a strong local tech industry built around the events they stage. "The local association and events technology sector is poised for strong growth in 2019, not least because some of the U.S.’s fastest-growing sector companies are located in the DMV."
Amazon
Amazon has already begun hiring for its Crystal City campus, and Virginia Tech will embark on its $1 billion innovation campus in Alexandria to supplement the deal.
There's understandable worry from D.C. startups about talent: New research from Eagle Hill Consulting found that nearly three-fourths of IT workers in the D.C. area would consider leaving their employer to work for Amazon.
"Area employers should be worried, especially those that need to retain their tech talent," Eagle Hill CEO Melissa Jezior said in a statement. "Employers should do all they can now to hang on to their employees before Amazon arrives – especially in such a tight labor market."
Penny Lee, chief strategy officer at the 1776 incubator, said it’s too early to tell what Bezos may bring: "We are still waiting to understand the type of employees that will be coming in 2019."
From employees entering and exiting Amazonian territory, David Wilson said, tech talent is poised for a big year.
"Many of those people will leave the company to go on and become founders or join high-growth startup teams," he said. "You will have all these very talented ex-Amazon employees joining our startup ecosystem and continuing to help us grow."
Cybersecurity
Government agencies are, more often than ever, facing software espionage and cybersecurity threats that are rooted in the commercial marketplace, and those battles demand new strategies and new talent churned out by the likes of George Mason University and Virginia Tech. Both of those universities are pumping money into Northern Virginia computer science education to prepare.
"The D.C. area is poised to be a leader in cybersecurity and other deep technologies like AI," Social Tables CMO Trevor Lynn said. "We have the unique talent pool, we have incredible customers for that type of software in the area and it’s a major global focus. If D.C. can capitalize on that, our tech economy can boom."
David Wilson said that solid customer base and industry growth will drive up acquisitions (both in volume and value) as corporations look to capitalize on the increased protection activity.
"Where there are lots of acquisitions, there are lots venture capital dollars and investments," he said. "Where there are lots of investments, there are lots of startups."
Venture Capital
In the world of D.C. venture capital, local trends match the national wave of fewer, larger investment deals.
Jonathan Aberman, founder of Amplifier Ventures, said he believes the venture capital market as a whole is due for a major correction in 2019 possibly echoing 2001, as too much money is chasing momentum and not focusing on building companies.
Early-stage deals continue to fall nationally, as well as in D.C., and late stage deals dominate.
"As a secondary VC market (we weren’t even in the top 10 for the fourth quarter of 2018), what happens in the national market will have a ripple effect on our own," Aberman said. "[D.C.] entrepreneurs have been growing businesses creatively, and using proximity to government and customer revenue to grow great companies. Funnily enough, I think that our region will out perform other regions if a correction occurs."
Dan Berger said the local net worth exists to support early-stage companies.
"It's about finding it and educating those folks about it," he said. "The Social Tables exit, for example, had over 25 angel investors. Our deal was the first angel deal for 20 percent of those folks."
Penny Lee said the local market may continue to struggle attracting risk-tolerant capital. "We have some strong players in the VC community, but we're lacking in the early-stage funding."
There have been additions to the local venture scene, though, that may help support startups in their backyard. Joining long-time DC investing stalwarts like The Carlyle Group and Revolution are sizable new funds such as Aldrich Capital Partners and The Motley Fool’s new venture fund.
As for the rest, we'll have to wait and see.
