We’re living in a golden age of entrepreneurship. Thanks to the internet and modern communications technologies, almost anyone with a Wi-Fi enabled device has potential access to all the education, resources, and contacts they need to dream up and create a business from scratch. Anyone with a solid idea can create a pitch deck in a matter of hours with the right tools, and start connecting with people from all over the world. It’s enabled more people to create their own businesses, and as a result, we’ve seen a wealth of new startups emerge. It’s been good for our economy and consumers as more apps, gadgets, and ideas become available on a daily basis.
But things in the economic ecosystem rarely stay the same for long.
How the Startup Landscape Is Changing
These are some of the most important ways the startup and entrepreneurial landscapes are changing.
- Investors are congregating in certain areas. Thanks to the churn rate of startups (more on that in a moment) and more lucrative investment opportunities, investors seem to be gravitating toward specific areas of the country, such as Silicon Valley (and other similarly named “silicon,” areas like “Silicon Prairie”). This makes it hard for entrepreneurs in remote locations to access funding as easily, but it also makes these “hot spots” even more rewarding for entrepreneurs already located there.
- Competition is increasing. The increased ability for new entrepreneurs to start businesses has naturally led to a greater number of businesses – but that means greater competition for everyone involved. When you start a business these days, chances are high that at least a handful of people have already beaten you to the idea. If they haven’t, they’ll be coming for you soon after you launch. This puts additional pressure on entrepreneurs to emphasize their own uniqueness.
- There’s higher demand for niche targeting. Another side effect here is that there’s a greater demand for niche targeting. Targeting a general audience, or “everybody” isn’t going to do you much good in a world with so many startups emerging at such a high pace. Instead, you need to dig specifically into targeting one niche – and the more esoteric you get here, the better. As you get bigger, you can cast a wider net, but to start, niche targeting is a must.
- Becoming an entrepreneur is simpler. The steps it takes to become an entrepreneur are getting simpler and simpler, especially as more businesses and technologies develop to specifically cater to entrepreneurs. Today, you can polish your idea, create a pitch deck, claim social media profiles, and create a site all in a single day (provided you have the focus necessary for this).
- Startup costs are decreasing. It’s also becoming less expensive to become an entrepreneur. Much of the reason for this is the digital era; thanks to communications technology, you don’t need a physical office space. Thanks to websites, you don’t need a retail presence. Thanks to coding, you don’t even need to sell something tangible. With the right skills and the right angle, you can start a business for only a few hundred dollars (and a bunch of your time).
- Success and failure are further stratified. The gap between successes and failures is starting to widen. Breakout startup successes, like Uber, make headlines with their staggering valuations, but these are rare and almost mythic. The vast majority of startups end up going under, and these metrics are only increasing.
- The pace of success or failure is heightening. Thanks to the rapid turnover cultivated by fast-paced technology, the rate at which businesses rise to success or fall to failure is also increasing. In the span of just a few months, a startup could skyrocket to become a massive success or go bankrupt in the process, whereas just a couple of decades ago, it may have taken years.
What Should We Do?
These are changes. They aren’t good changes, nor are they bad changes. We don’t need to step in and interfere, either to fight back against them or exacerbate them. Instead, we need to address them as neutral environmental changes and adjust our own expectations and actions accordingly. Whether you’re thinking about becoming an entrepreneur or you’re an angel investor looking to get in on more startups, these are the trends you’ll need to be watching in the coming years.