It might be challenging to find bright spots in financial news these days, but seismic economic shifts, such as the one COVID-19 has sparked, always give way to new markets and opportunities. As with past downturns, it’s in those areas that the next industry game-changers and investment darlings will emerge.
COVID-19 has left a range of industries with a slew of new problems, and new startups will emerge to address them. As remote office and operational environments become permanent fixtures of business life, for example, cloud computing and software-as-a-service (SaaS) will proliferate beyond current applications thanks to their de facto remote accessibility. In addition, the recurring revenue models that typically underpin these technologies make them particularly sustainable in the face of future market upheavals.
We’ll see the first big changes in industries that were already ripe for disruption, but where the pandemic has changed the trajectory of what that disruption looks like. Here are four prime candidates:
Payments go (even more) contactless
The payments industry has seen its fair share of innovation in recent years, and COVID-19 all but assures that’s going to continue. In an industry where contactless payment had already looked inevitable, the pandemic has prompted not only an acceleration of existing solutions but also a wholesale rethink of exactly what it means to be truly “contactless.” Handing cash and credit cards to cashiers has quickly become a cringeworthy activity, but even certain tap-to-pay solutions — in an era where that physical “tap” becomes a potential vector for disease transmission — still aren’t ideal. In fact, when I was at my local grocery store the other day (all masked up, of course), I used my ApplePay app at the register. The cashier still required me to touch the store’s device to confirm my amount and sign for the transaction. So much for contactless payment, right?
True contactless options that enable payment via mobile methods like text can help alleviate lingering concerns in this regard, with the added benefit of being equally applicable for online shopping transactions and exchanging money with friends and family.
Also important will be technologies that enable reduced contact at ATMs (i.e., eliminating the need to tap screens and buttons). These solutions will manifest in mobile technologies that enable transactions through text messaging or the generation and scanning of unique QR codes.
Startups with plug-and-play software will win in drones and robotics
Nowhere will COVID-19’s acceleration of a technology opportunity likely be as evident as it will in the use of drones and robotics to revolutionize delivery services. A number of players were already developing these services — Amazon being among the most visible — and existing technology has already been tapped for deployment within higher-risk scenarios, including the forthcoming delivery of medication by CVS via drone to the nation’s largest retirement community. But there’s a lot of room for continued innovation and improvements.
COVID-19 is going to prompt an expanded set of use cases for robotics and drone technology, as well as an expanded base of users of these platforms. A lot of companies that want to incorporate drones and robotics into their business models aren’t going to have time, expertise, or interest in developing solutions for themselves and will turn to startups that have already developed or are in the process of developing plug-and-play robotics control software. Meanwhile, users will favor players focused on safety and ease of operation. As in so many sectors, user experience will become a key requirement for success in this emerging sector.
Even complex business transactions move to the cloud
In both business and consumer sectors, the widespread adoption of Zoom and other conferencing tools as a replacement for common in-person interactions is just the beginning. As concerns with Zoom have already illustrated, privacy and security will be key considerations for more advanced applications of virtual meetings and transactions. Scalability will also be a key challenge for these tools, as we’ve seen unexpected circumstances take down even the largest of players at times. For example, Zoom users recently experienced outages from an unexpectedly high surge of Sunday usage due to church services, which is likely not a use case that Zoom expected to widely support just a few months ago.
Secure software that enables people to share, review, and sign legal documents will find broad applicability in industries that were previously insistent on in-office transactions. In addition, these systems will give clients and companies a means of exchanging sensitive documents in a more secure fashion than email. Likewise, reliable, privacy-compliant means of identification verification will be widely sought across industries. This will open new opportunities for startups focused on these types of applications in industries that already required advanced screening of potential clients and users.
Remote monitoring with the devices we have
Beyond the immediate upheaval of today’s already-stressed healthcare system, COVID-19 has sparked ripples of change in patient behavior that will travel throughout healthcare in coming years. As with so many sectors, remote appointments and consultations will become more commonplace. And so will remote monitoring.
The healthcare solutions that succeed will be the ones that are easy to use. After all, these solutions aren’t just being developed for a small niche of people who’d prefer to steer clear of doctor’s offices, as was the trajectory before COVID-19. They’re being developed as the new go-to interface for healthcare interactions. Investors will be most interested in software solutions that overlay on people’s existing personal devices, rather than requiring new hardware. Applications that can transform mobile phones into vitals monitors, thermal cameras, and other diagnostic aids and transmit data easily and securely to medical professionals will become commonplace over time. New telehealth models will emerge around these new tools, and in time, the resulting data — at a privacy-compliant population level rather than an individual level — will become a vital aid in public health monitoring and modeling.
Over the next few years, the startup investment landscape will constrict, just as it does in any recession. But it will not dry up — not by a long shot. The above initiatives are by no means the full spectrum of the industry disruption we will see in the next 12 to 24 months. Expect to see many other extensive innovations in biotech, healthcare, logistics, real estate, and other areas affected by the current crisis.
Going forward, investors and funds will be increasingly diligent when determining which early stage ventures warrant their attention. Precision investment in well-run, financially disciplined organizations will replace scattershot bull-market-style investment tactics, and the startups that attract funding will be those whose models and solutions are particularly adept at addressing the challenges of the post-pandemic “new normal.”
Mike Abbaei is Co-Founder of Naples Technology Ventures.