2016 Predictions from Term Sheet Readers

December 24, 2015, 2:30 PM UTC
Illustration by Martin Laksman

Earlier this week I asked for 2016 predictions from readers of Term Sheet, our daily newsletter on deals and deal-makers. Below are 50 some odd responses, in no particular order:

Robert: “Space X will announce its trip to Mars”

Kevin: “One or two Chinese banks will also be compelled to merge with other banks too due to non-performing loans.”

Chase: “Data supported design thinking will transform product development. The mass data capture is already taking place — now companies will be leveraging this data to influence how they deliver products. No longer will companies design a product, produce at scale, and then deliver to the market with its ‘fingers crossed.’ Companies will instead put forth low-volume product releases and iterate the design in real time. A great example is fashion — why guess on trends when you can test them in real time? To take this one step further, companies will no longer design to solely to improve aesthetics, but will instead design to transform the experience. As an example, think about how Keurig changed the coffee experience based on the notion that people want a single cup and easy cleanup, while other coffee makers were focused on aesthetics.”

Viral: “Geo-political issues will escalate to high levels prompting rise in gold and developed markets sovereigns.”

PK: “Going public will come back in style.”

Rick: “Unicorns devalue to true GAPP values.”

Drew: “DeflateGate, Part II”

Mike: “The important VC shift that will occur in 2016 is that capital availability will: (1) become highly stage dependent; (2) depend more on execution than on brilliant ideas; and (3) will move to the “edges” (early and late) with the middle becoming somewhat starved.”

Steve: “In 2016, manufacturers will need to address Converged Commerce — a strategy where each channel is treated equally, with common back-end processes that support the experience you’re trying to provide to every customer type in every channel — in order to control their own destinies. With retailers closing their doors, brands have to protect their revenue streams or find new ones. Selling direct through online channels allows them to reach broader audiences and increase margins, but they face strong channel conflict with distributors and retailers who are all selling to the same buyers.”

Norm: ““I predict that 2016 will be another robust year for later-stage technology companies. Cloud computing, security software and augmented reality are all high growth sectors.”

Ashley: “Fed doesn’t raise rates in all of 2016. Especially helpful for my floating rate student loans.”

John: “Alternative investment platforms will be front page of the newspapers and an AngelList syndicate will beat a top 5 VC firm to lead a high profile Series B.”

Sandy: “I think 2016 will be a strong year for the venture industry. Recent trends are encouraging. Private valuations are less heady. Tech IPOs are working again though the numbers are small. The big tech companies have unprecedented cash hoards. So the exit environment looks favorable.”

Kirk: “Investors considering more their portfolio’s impacts on natural resources and communities, and potentially impairing the companies who do not measure nor mitigate those impacts.”

Derek: “The S&P will hit 1,800 near the middle of 2016 as the US slips into a recession due student loan issues, distorted “headline” unemployment rate, continued declines in China, and austerity imposed on the troubled Portugal, Ireland, Italy, Greece & Spain. Let’s be honest, how are the ‘ghost cities’ in China not a red flag?”

Branden: “VCs will become more and more anxious to see additional exits via acquisition.”

Madeline: “The on-demand market bubble will crash as it will begin to feel the effects of high labor churn combined with the difficulties in expanding into other geographical markets which will be less cost effective to operate in. Instacart will be one of the first on-demand unicorns to fall.”

Esther: “There will be an increase of investments into Israeli tech companies from the Asian alternatives market.”

JC: “The rise of the physician super group.”

Mitchell: “More unicorns will get the Gilt treatment.”

Jason: “VR Sports and Magic Leap will be set to take over the world, while new consumer mobile plays will struggle dearly.”

Jennifer: “While big pharma captures the headlines, more funds will quietly be raised with a focus on tech-enabled health/biotech before the mass commoditization of some of the technologies.”

Patrick: “2016 will be the year of M&A in tech and biotech, not the bursting of a bubble.”

Charles: “Apple buys Ford.”

Shriram: “Substantial uptick in tech IPOs, as private growth capital tightens up, terms get more onerous, and late stage companies focus on positive unit economics. ‘Down round IPO’ will become NBD.”

Matt: “Dick Costolo is at the center of a major comedy media deal.”

Ben: “ETFs for millennials will morph into Wealthfront with a taste of Fitbit and a sprinkle of Bitcoin.”

Derek: “Within the next two years, no one will be talking about big data and Apache Hadoop—at least, not as we think of the technology today. Machine learning and AI will become so good and so fast that it will be possible to extract patterns, perform real-time predictions, and gain insight around causation and correlation without human intervention to model or prepare the raw data.”

Jon: “Google (or Alphabet to be precise) is going to get serious about tackling the Enterprise market. Up to now they have been sitting mostly on the sidelines but 2016 is the year that they throw significant resources at it and start to make inroads into the space and cause companies like VMWare and HPE to take notice.”

Sahand: “EU will shake, China will collapse, credit crisis reset.”

Will: “VCs will self-correct and overall valuations will remain steady with less C and D rounds and more seed and A rounds.”

Brett: “Unicorns halved, fewer Silicon navals gazed as tech democratizes and only real world problems get funding to be solved. And robots.”

Paul: “Charter Communications succeeds in acquiring TWC and Bright House; then targets Time Warner to mimic/confront Comcast.”

Andrew: “The U.S. housing market will start to soften.”

Gil: “Anything that makes American’s fatter will increase in revenues and value. Anything that helps American’s feel fitter will increase in revenues and value.”

Nikhil: “The number of unicorn companies gets cut in half, with many of them going public for significantly lower valuations or getting scooped up for parts by larger companies when they fail to secure additional financing.”

Flint: “There will be a widening gap between the uni-cans and the uni-cants with an renewed emphasis on finding long term sustainable business models.”

Justin: “2016 will be a year of reckoning for many private, VC-backed companies, as the desire for liquidity sparks many an IPO priced well below most recent financing rounds, but this will not lead to a catastrophic recession.”

Gary: “Proximity technology will explode… not talking *just* beacons, but also exploiting generic ambient WiFi signal for communication and of course, sales/marketing.”

Alex: “The year of the Fintech Squeeze. As investors realize unit economics aren’t sustainable for payment startups that have business models sandwiched between banks.”

Brian: “Debt funding from VCs will become the go-to capital source for later-stage startups with questionable valuations (e.g., Foursquare 2013).”

Brittany: “In 2016, unicorns will enter the extinction phase and VC purses will get tighter; tech companies with little revenue and overvaluation will be shot by Nerf guns and brought down to normal size.”

Mark: “Unicorn paper returns deflate faster than any ball ever thrown by Tom Brady.”

Anand: “Uber has a down round.”

Trace: “Angel/VC capital will continue to flow as these mega-mergers begin to settle and they will acquire more companies to stay competitive, while about 10% of the current Unicorns will IPO successfully.”

Jacob: “Equity markets will be manic and confused as the Fed tries to go higher, with sharp corrections and bizarre relief rallies, while all the real action and attention will shift to the world of distressed credit as opportunities outside the energy complex start to pop up on everyone’s runs.”

Sam: “Volatility continues but Dow sees positive gains for the year. VC activity slows considerably. Oil stabilizes in the 40’s. Mergers and acquisitions continue to rise.”

Rodrigo: “Twitter is acquired by Yahoo! – the company will have two stakes in “infinitely” more valuable businesses.”

Murray: “Mid-market M&A and IPO activity will continue on their divergent paths.”

Jonathan: “Fields of unicorns are turned into a Walking Dead scene after international and strategic capital dries up and no respectable late-stage VC is willing to dive into the empty pool that is a $500M Series Q round. For private equity, firms club up once again — unable to pursue mega-deals independently thanks to regulations on big banks’ lending.”

Frank: “Commodity prices start to rise in mid-2016 which is seen by the markets as a positive development.”

Jordan: “LPs find themselves over-committed and cannot meet the capital calls (this is the same thing that happened with investors that invested in High Yield who reached for yield but in this case they are reaching for total return without the financial means to support their commitment). Many anticipated exits from prior vintages will take longer to monetize and will compound the issues; unsophisticated managers will not know how to maneuver the challenging market and their investments will suffer. LPs who invested with smaller or ‘average’ firms are at a significant risk and will lead to a shakeout of the industry for 2016/2017 as fundraising will be challenging.”

Tom: “As Clubber Lang said in Rocky III: Pain.”

Gil: “There will be hideous acts of violence but the world will rally to support decent people with a simple message of love and kindness.”

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