Venture capital isn’t a monolith, but startup investors are compared to lemmings for a reason. Once a trend gets hot, every firm needs to make a play, or come up with a good excuse for missing out. (To be safe, if the firm does miss a trend, its partners should privately trash talk it to anyone who will listen.)

Investors continue to aggressively pour money into startups. As of the third quarter, US investors were on track to match or exceed 2016’s $69 billion in investments, according to the National Venture Capital Association and Pitchbook.

For startups, riding a trend such as artificial intelligence can be the difference between a hot round of funding and no investor interest. Founders have spent the last year throwing terms like blockchain, neural network, and machine learning into their pitch decks in hopes of attracting investment. Those trends show no signs of slowing in 2018. To those, we’ve added other themes that investors will be tracking in the new year.

Blockchain over bitcoin

With the price of virtual currency bitcoin hitting new highs every other day and money raised from “initial coin offerings” for new cryptocurrency projects surpassing that of early-stage venture funding, venture investors are scrambling to develop a cryptocurrency strategy.

Most firms can’t—or won’t—buy digital currency like bitcoin directly. But they’re high on the potential value of the underlying blockchain technology, and finding creative ways to pour money into the sector. David Pakman, a partner at Venrock, says he is exploring investments in apps that will run on the nascent crypto networks, much as smartphone apps run on either iOS or Android. His firm is also seeking investment opportunities in services around the cryptocurrency ecosystem, including institutional custody for cryptocurrencies, security, app distribution, and blockchain-based distributed file storage.

Rebecca Lynn, a partner at Canvas Ventures, is also hunting for companies using blockchains to build tech infrastructure. “The boring picks and shovels are where people are going to make their returns,” she says. She’s interested in startups using blockchains to securely store health records in a centralized database and to track copyrighted and trademarked content and licensing rights.

Pop-up stores over parking lots

Brad Greiwe, a managing partner at Fifth Wall Ventures, is tracking investment opportunities stemming from autonomous vehicles. If, as some expect, self-driving cars cut the number of vehicles in urban areas by as much as 90% in coming decades, we’re going to have a lot of empty parking lots. That could free up billions of square feet of space, creating redevelopment opportunities. “Smart real estate investors are redrawing their maps now to succeed in the inevitable driverless world,” Greiwe says. Already, real-estate companies like Avalon Bay and Hines are putting features like sprinkler systems into parking structures, so the buildings can more easily be converted into storage or housing.

That’s an opportunity for startups. Appear Here, a Fifth Wall portfolio company, offers short-term leases for pop-up stores, including on parking lots. Other startups that could benefit from the shift include Factory OS, a modular building maker, Kasita.com, a startup making modular housing units, and Katerra, a construction tech company, says Roelof Opperman, a senior associate at Fifth Wall.

Actual AI businesses

Artificial-intelligence experts are so in demand that tech giants like Google, Facebook, Amazon, and Apple are paying nosebleed rates to hire them. As a result, PhD’s in the field can raise venture money without so much as an idea, let alone a real business. Odds are, a tech giant will happily acquire the company before it’s built anything.

As the trend matures, venture investors are looking for tangible business ideas. Venrock’s Pakman is interested in startups that will use AI to help large organizations make decisions previously made by humans. That includes hiring, sales planning, and preparing manufacturing instructions for machines, he says. Canvas’s Lynn says her firm is looking at companies that use AI to identify the content of videos, an arena where she says the science is “not as far along as you think.”

Dollar Shave Club of everything

It’s been 18 months since Unilever made a splash with its $1 billion acquisition of subscription-razor company Dollar Shave Club. But the wave of copycat deals that many expected has not arrived. (Leave aside Procter & Gamble’s purchase of natural-deodorant brand Native, and Unilever’s acquisition of household-care product maker Seventh Generation; those companies had raised almost no outside funding.)

Investors still believe it’s coming, and that there’s a market for digital-first brands in every consumer-product category. Mamoon Hamid, a partner with Kleiner Perkins Caulfield & Byers, says his firm will seek investments in what he calls “digitally native products,” citing venture-backed startups such as Nurx, for birth-control products; Curology, an acne-treatment startup; and SmileDirectClub, a teeth-straightening service, as examples of the trend.

Source: https://www.wired.com/story/where-vcs-will-invest-in-2018-blockchain-ai-voice-pets/