It really is a small world after all and IBM tells you why

• Investors are looking for the next new thing, just as startups are
• A successful startup ecosystem means a growing economy

 

THERE are several factors driving change in the startup ecosystem, some of which are macro-economic trends and some to do with rapid advances in technology. According to IBM Venture Group director of Software Strategy Deborah Magid (pic above), these changes create a lot of challenges as well as opportunities for the players in the ecosystem.

Magid was speaking at a GECommunity event on Nov 2, part of the lead-up to Global Entrepreneurship Community 2016. One of the macro trends she identified is the increasing interconnectivity of devices – there are more connected devices in the world today than human beings.

“All these devices are constantly generating data but 60% of the data of data created at the edge of the Internet of Things is completely useless within milliseconds and 90% is never captured, analysed or acted upon,” she revealed.

The challenge here is that the rate of data creation is twice that of the rate of expansion of bandwidth over the past decade, leaving service providers to struggle to close the gap. This means that by 2017, the collective computing and storage capacity of smartphones will surpass all worldwide servers, which Magid sees as an opportunity for startups.

“Startups should use advances in technology and computing intelligence to create new kinds of businesses,” she said, citing the example of how technology that allows personalised and targeted services has become the norm.

One current trend is creating and using cognitive systems – artificial intelligence and machines that learn – to solve problems.

“This is one of the factors that make it possible to do business differently. Because of this growth, the amount of money that is invested into these systems and businesses is significant,” she said, pointing out that in the second quarter of this year, 73 deals were closed and US$624 million (RM2.6 billion) was invested into these companies in the US.

Identify the problem, solve it
Despite these macro trends influencing investment flow, one factor that remains constant no matter the industry is failure; every industry has its problems. “Investors love to invest in startups that solve big problems. The need for smart technology is everywhere,” said Magid.

Magid used the agriculture technology sector to illustrate this. About US$48 billion worth of food was thrown away last year in the US due to various factors such as spoilage and human consumption safety issues.

Technology is used to solve these problems and to tell if storage and consumption conditions are as they should be. Precision agriculture technology is used to increase crop yields, such as putting sensors in the ground to gather date about moisture content or flying a drone over fields to gather information.

“Because of these problem solvers, the agriculture and food technology industries are two of the fastest growing, and are hot areas of investment generating lots of interest from investors, startups and research institutions,” said Magid.

Other sectors where the same growth and interest can be seen are transportation systems, smart buildings, medicine, retail and many more.

Next page: Biggest disruptors understant their market