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The Top 5 Trends for Startups in 2016

The Top 5 Trends for Startups in 2016

2015 brought ups and downs to the world of startups. On the positive side, startups continued to grow on a worldwide scale. The startup scene in Chicago had their best year ever. Over 600,000 new businesses were started in the UK last year, and Indian startups raised at least $5.6 billion in funding. Every year it becomes more apparent that Silicon Valley is no longer the only startup hub around.

Not everything was gold in 2015 however. While startups experienced huge raises in valuation, there was also a big drop in exits in US startups, which isn't necessarily a bad thing but points to a greater sense of inactivity. Most troubling is a research paper published by the National Bureau of Economic Research that revealed the decline of high growth startups post 2000, something that the US economy relied on in recent history to provide jobs.

Yet despite the decline of individual high growth startups, the startup scene itself continues to grow. $11.3 billion in venture capital was invested in US startups in the fourth quarter of 2015 alone. In order to keep growing, startups have to evolve, and here are 5 ways you can expect startups to change in 2016.

1. Hiring freelancers.

On-demand is a term that is quickly expanding beyond its television origins. Its current target: the workforce. More than ever, people want to work when and where they want to. According to a recent Time article, more than 90 million people have participated in this on-demand or gig economy in the US. In late 2015, a study conducted by the Freelancer's Union revealed that 54 million people, roughly 34 percent of the US workforce, have done freelance work in the US in the past year.

Many startups are hamstrung because local talent is often snatched up by larger companies that can afford to pay higher salaries and give better benefits. If a startup can't compete with those budgets, how can it hire the talent it needs to succeed? Enter freelancers. With the rise of freelance talent networks like Toptal that focus exclusively on quality and trust and more and more startups turning to freelancers early and often, hiring freelancers, and in particular hiring freelancers remotely, is rapidly moving to the mainstream.

2. The power of the crowd.

The days of intuition are over. It's no surprise that the power of the crowd is important to startups. The transition from visionary entrepreneurs who take risks to calculated CEOs who make decisions based on A/B testing and optimization has been a long time coming. Crowdfunding too has been popular, and several successful sites have risen in that marketplace, Kickstarter and Indiegogo among them. Many startups began in the world of crowdfunding, including Pebble which introduced some much needed realism to wearable technology in terms of price range a few years ago.

But in 2016, crowdfunding is changing in a significant way. On October 30th, 2015, the Securities and Exchange Commission voted in new rules for equity crowdfunding that went into effect January 29th, 2016. Prior to these new rules, only investors with a certain threshold of wealth and assets could invest in a company and receive equity; now anyone with the cash is able to do so. This opens up the ways in which startups can get funding, and expect to see many startups blossom using funds raised through equity crowdfunding in 2016.
 

3. The continued struggle for personalization.

Every year, new studies are released stating the importance of personalization and placing the customer first, but companies are still regularly found lacking in that role. In a recent survey conducted by Pegasystems, data showed that key customer service industries, specifically retail banking and telecommunications, are severely behind the curve on personalization. 60 percent of those surveyed admitted that they were "getting the basics right" on personalization despite a growing market that wants a lot more personalized than just the basics.

Many established companies tend to evolve more slowly because they are reluctant to discard old systems. In 2016, startups will capitalize on that slowness and come out of the gate with a focus on personalization to gain entrance to the market. Not only will more startups provide customers the experience they were looking for, but their marketing and branding will be personalized and tailored to target a specific audience. VentureBeat recently published a survey that revealed 87 percent of businesses that used web personalization experienced a boost of at least 5 percent in their most important metrics (this percentage excludes companies that said it was too soon to say). In order to succeed, startups will be personalizing faster this year than they ever have before.
 

4. Mobile first.

Look, it's no surprise that startups are building their business or product with mobile devices in mind, but 2016 is the year where mobile comes to the forefront. After all, 2015 was the year where mobile-only finally surpassed desktop-only internet users. Mobile messaging is on the rise too. Whatsapp alone has nearly 1 billion users-and Facebook Messenger, with 800 million monthly users, is close behind. That being said, despite so many users and so much time spent on mobile devices, the mobile platform still has lower conversion rates for ecommerce platforms compared to desktops.

For startups, this mobile shift means catering to these devices to an even greater degree. Marketing teams will increasingly target mobile devices, creating ads that are responsive to the size of different devices, with a focus on video and short digestible content. This year marketers are predicted to spend 51 percent of their digital ad spending on mobile devices in 2016, an increase from 40.2 percent last year and the first year mobile ads make up the majority of spending. Finally, for startups entering e-commerce, as they develop their sales funnel, expect to see an increasing push to optimize the funnel to increase conversions on mobile devices.
 

5. Online video becomes more customized and accessible.

Online video became extremely popular last year, and now video production companies will begin to hone in on a target audience by producing specific genres and types of content in the same that cable television channels evolved and produced singular genres of content. To look at a success model, consider Mitu Network's effective targeting of the Latino audience. In 2016, startups in online video production will start to build a core audience and clientele. In turn, startups in other industries will have an easier time finding the video content they need by working with the business producing content best suited to their needs.

Keep on eye on these trends in the new year, and if you think I missed any, please leave your predictions in the comments below!