2020. New year, new decade, new opportunity to predict the future of manufacturing. Well, not exactly predict, but rather reflect on what we’re learning by our daily work in the field. Last year, we highlighted New York City hardware startups’ rising need for accessible assembly space. This year, we’re going broader to cover three biggest trends we’ve seen emerge as we continue to support startups like you.
Climate Change Will Dictate Trends Across the Hardware Ecosystem
Although the M-Corps Incubator is already on top of these hot topics, cleantech is booming. As per the Paris Agreement, countries must make good on the emission reduction commitments they made in Paris five years ago in order to maintain global temperature rise below 2°C. Despite the last UN Climate Summit stall in global carbon emissions regulations, there will be an increase in local parties taking matters into their own hands over the course of the next decade.
By turning to startups, investors, manufacturers, and local government entities such as NYCEDC and NYSERDA, among others, we will see an attempt to bridge the gap across the globe and handle the impact of climate change. Some of these key stakeholders will address it head-on by shifting their business model to develop products that fix real-world problems, as well as fund those opportunities more broadly.
These can be as simple as products such as Pvilion’s flexible solar solutions, and Grouphug’s solar window charger to grand ambitions such as improving infrastructure by creating smart grids and cities. While smart home products are a tougher sell, integrating smart solutions into buildings to meet the New York City’s goal to reduce overall carbon emissions by 80 percent by 2050, are trending heavily, especially in the IoT space. Additionally, we are seeing increased use of electric vehicles (see Tarform, and UES+UPS partnership for some examples), as well as e-bikes for last-mile transportation to decrease the problem of gridlock and pollution from large trucks. Companies like Clip Bikes and Upcycles are at the forefront to address this issue and meet the upshift in global cycling use.
Another major sector in the Climate Change space is AgTech. From food waste to IoT farming devices that monitor growth, to urban farming and predictive analytics, the food world is literally your oyster – quickly changing and ripe with opportunity. As the cleantech space grows, we will continue to see other areas of impact emerge such as CarbonTech – the business of transforming carbon to actual products. Stay tuned!
Investment is Still a Long Road, Even for Zebras
Does this mean there are more funding opportunities for startups? Yes and no. Based on the new global focus on climate change, VCs are increasingly more aware of cleantech startups and investing in them more frequently, especially in pre-seed funding. Even Goldman Sachs is getting behind climate change initiatives. While the movement is global, most VC-backed startups are “still overwhelmingly white, male, Ivy League-educated and based in Silicon Valley,” says a recent report published by RateMyInvestor and DiversityVC. Minority-owned businesses are the fastest of the growing segment today. In fact, it’s anticipated that by 2044, minority-owned companies will play a significant part in the nation’s economy. Yet, they can’t always get the capital they need.
So what are VCs investing in? VCs want to see more substance over style. Flashy decks won’t necessarily get your foot in the door, but a short, concise email that outlines how your company is unique, how you’re thinking about the market you fit into (data-driven metrics are helpful here), and what you are looking for from this investment are key. Charismatic unicorn founders have struggled to meet the expectations of their investors (on top of the news of their toxic work cultures). Instead, VCs will be looking out for zebras to diversify their portfolios. According to Zebras Unite, this means companies that operate as “profitable businesses that solve real, meaningful problems and in the process repair existing social systems” are the kinds of founders who may have a better chance of gaining access to funding.
In terms of the areas of focus for VC funding in 2020: New Tech Hubs are emerging, and they are interested in a better understanding of how AI will benefit society, including machined learning, IoT platforms, 5G networks, and cybersecurity. FinTech partnerships between startups and Big Banks will continue to grow as both sides find value in that symbiotic relationship. In parallel with the cleantech focus trends listed above, VCs are interested in Mobility, Transportation, and Smart Infrastructure.
Bespoke Manufacturing is Still Important
Last year we reported on the growing need for assembly space for startups as the most common need across the hardware ecosystem. As we head towards the new decade, this need has not decreased but rather shifted its impact in light of new advances in technology and automation, easier software integration, more available space for fabrication, and support from local fab labs and shops with tools and materials at your disposal.
What has changed are the requirements to get jobs within this sector based on an increase in robotics and automation. According to the WSJ: “Within the next three years, American manufacturers are, for the first time, on track to employ more college graduates than workers with a high-school education or less.”
But not entirely, as per the NYTimes, “If developed with care, New York’s future in tech could involve more and better opportunities for the middle class, filling the gap between Google millionaires and gig economy workers with no benefits.”
How does this impact your business as a startup? Think about your hiring practices. Are you taking steps to move away from a lean framework where literally all hands are on deck at all times, to a larger fabrication team? Does your workforce development require special skills, years of experience, or higher education to work on your assembly floor? There are many ways to build out a great in-house manufacturing or installation team, including avoiding misconceptions in your job descriptions and allowing your company time to shift the way you manage your workforce as you scale.
M-Corps and New Lab-based startup Farmshelf grew its workforce from 11 to 40 (including contractors) over the course of 2019 to manage their in-house assembly needs. And they’re still hiring! Nick Wong of Upcycles adds, “As for local manufacturing, we see it as almost a necessity, especially to have access to local regulations as we scale.”
No matter what this next decade brings you, or in some cases, throws your way, we’re here for you and look forward to continuing to build out our zebra dazzle, one startup at a time.
From brewer’s waste upcycling to urban e-biking, the new M-Corps cohort is building a cleaner future, and tackling carbon emissions, from many angles covers more ground as we seek to reduce carbon emissions. Not only are these founders building companies, they’re also allies and mentors for each other during the program. Check out the new M-Corps cohort as well as the class from 2018-2019.
SecondMuse is looking for six cleantech startups who are paving the way for a more sustainable future, especially those with strong teams and products who need assistance scaling up to manufacturing. Applications are open through Sept 9.
We are excited to announce that applications for the third year of the NYSERDA Manufacturing Incubator programs are now live! The two statewide programs, M-Corps run by SecondMuse here in NYC, and Hardware Scaleup run by NextCorps upstate in Rochester, are designed to help support climate tech innovation from idea to market.