4 key opportunities for startups in 2023

What do Electronic Arts, Cisco, Airbnb and Square have in common? They are just some of the successful technology leaders that have emerged as startups in times of economic uncertainty. And they didn’t just grow; they changed the way people worked and lived.

It could be that tough times are making startups shudder and building cultures focused on efficient, sustainable growth. They are certainly launching a market where customers are ready to try something new and become more efficient themselves. After all, older ways no longer work as they used to, and there is a much greater need to change behaviour. Look no further than cloud computing’s boom after the 2009 downturn, as startups and enterprises moved to the cloud to take advantage of new cost savings.

2023 looks set to be one of those times of economic trials, and if history is any guide, it means today, somewhere, the next world-changing startups are forming. What’s the next big thing they’ll develop?

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I don’t think any of us know for sure which market leaders are being born today, but I’m confident they will be built with the most advanced tools available for platforms and environments that will grow in the coming years. And by looking at the most promising emerging tools, technologies and markets, we can begin to find signals for what to look for in great startups. Here are four key areas I believe will provide opportunities for startups in 2023.

Real data and artificial intelligence

AI and ML have become increasingly affordable and easy to use, so applying them to everything from online shopping to production quality assurance makes sense. It is a matter of lower costs and greater ease of use to broaden a potential market.

However, there is more than that. Existing companies will look for new ways to extract value from their vast and growing data holdings, and will seek new insights by combining multiple data sources in ways they have not done before. This creates opportunities not only for AI/ML services, but also for new ways to cleanse, align, and securely combine multiple data sources, both inside and outside companies. With many companies hesitant to spend a lot of capital, there is an opportunity for new companies that can do this as a service or automate parts of it.

There are also many industries where new analytics and AI approaches have not yet played a role, due to cost, reluctance to change processes, or a lack of knowledge about these industries among the data community. That could change in 2023.

The vertical opportunity for startups

Economic pressures are changing work patterns. In a job market where many people are already choosing to work later in life before retiring, layoffs, headcount reductions and other staffing challenges can lead people to return to work or seek part-time and advisory work. That creates a new knowledge base around all kinds of niche industries that large companies have not approached, where experts with years of knowledge can look to apply things like cloud-based data analytics, targeted mobility solutions, chatbots or robotics. They can work with people with modern technical skills who can leave one industry and migrate to another, seeking new opportunities or a different lifestyle.

The startups that succeed in niche industries will look for adjacent companies, or even find a process that can be adapted into something truly revolutionary for mainstream markets. Sometimes startups create entirely new verticals, something that seems particularly current in fields like sustainability, life sciences or agriculture. Such adaptations are easier today than in the past, thanks to the flexibility of cloud-based software and cloud practices such as microservices and serverless computing. In fact, the investment community craves this kind of opportunity.

Many of today’s technology companies have managed to grow rapidly while maintaining their experimental DNA. But it may soon be more challenging to initially succeed with a broad new platform offering, as opposed to finding and building a company with a clearly focused product. In an era of tougher fundraising, where investors are looking for more obvious data points for success, bringing a clear value proposition to an industry ripe for change through the adoption of new technologies is a winning formula for startups.

Distributed systems, distributed teams, distributed companies

The underlying technology of networked blockchain ledgers is likely to find more and more practical applications in the coming years. It happened 20 years ago when the underground and submarine cables laid during the telecommunications bubble made things like offshoring and outsourcing possible during the post-bubble downturn. Blockchains, which distribute information across a large number of computers with a means of authenticating real-time activities such as the completion of work or financial transfers, are likely to find new uses.

At the same time, the collaboration technologies that have proven so important during COVID have made it possible for large groups to organize and perform work simultaneously from multiple locations. This means that teams and companies can organize themselves and develop products cheaper and better than ever before. Capacity within large cloud systems remains high, and it is likely that we will see more startups organized without a physical headquarters.

Helping startups grow and prosper

To continue to provide startups with the support they need to build, grow and thrive, the Google for Startups Cloud program has ramped up startup skills training, developed more mentoring and information sharing opportunities for startups to connect with engineering and product development, and identifying more ways to help startups find customers and improve distribution through channels like our Apps Store.

The startup ecosystem is bigger and more diverse than ever, and the pace of that growth is accelerating; it’s good for everyone to see that growth. Mentoring in technology, product development, and regional and global expansion are both a good idea and good business on both sides. That’s why I, and the Google for Startups Cloud team, are excited to partner and support even more startups in 2023.

After all, it wasn’t that long ago that Google, too, was a start-up that wanted to grow in tough times, build a sustainable culture, advance new technologies, and build something big.

Ryan Kiskis is Director of Startup Ecosystem at Google Cloud.