#SFSNYC: Investors on Billion-Dollar Opportunities in Local and Where to Find Them

Long before startups become the “next big thing” the masses talk about, investors have an opportunity to use their wallets to weigh in on the prospects for those emerging companies. At Street Fight Summit Wednesday in New York, investors pointed to voice, VR and AR, and influencers as some hot topics in local investing right now.

Finding the rare winner among startups is no easy feat, especially with the dynamics of innovation ever changing. “Today there is no such thing as presence; everyone is online and mobile,” said Rick Robinson, advisor with Street Fight. He moderated a panel comprised of Todd Klein, partner at Revolution Growth; Howard Morgan, co-founder of First Round Capital; and Jillian Manus, managing partner at Structure Capital.

Manus, whose firm was one of the first investors in Uber, said the concept of local has changed thanks to the spread of mobile devices. “Wherever you have your phone is ‘local,’” she said. Brands today are also being measured by different barometers than just revenue and physical presence. Nordstrom might be seen as a “small” company, Manus said, because of challenges the retailer has had with harvesting its own data on its customers.

There are changes Manus sees coming that could push the market in new directions. Facial recognition technology, for example, could be used as a means of authorizing payment that replaces other methods, Manus said. Such innovations could complement voice recognition platforms such as Siri to give consumers more ways to interact naturally with and command their environment.

There are also disruptive ideas being built up on the basis of blockchain technology for the delivery of healthcare services, Manus said. “Even though we are at the beginning of this, this is going to accelerate at a very fast pace.”

Changes are on the way as well for omnichannel and other modes of marketing, Klein said. He underscored the ways voice recognition and search are changing the game. “Call it the ‘Alexafication’ of the world,” he said, describing the growing influence of voice-based digital assistants in search and discovery. This change means marketers need to find ways to drive campaigns verbally, and that is where startups could offer the solutions for marketers’ pain points.

The ways brands retain the attention of consumers is somewhat in flux, and influencers, people who connect with consumers and shape their activity, are a prime example. Startups might offer ways to exploit these alternate forms of engagement with consumers, but investors still need to see that these ideas can generate tangible results. “We try to set standards on what is real proof, and help iterate,” Klein said.

Morgan said he is willing to look at a startup that is little more than an idea drawn on a napkin to more developed plans. Augmented reality and virtual reality are of particular interest to him, especially after the world witnessed how they can be applied to local. “We saw from Pokémon Go—you can drive people to local places,” he said.

Whatever the possibilities that startups might offer, they must show investors that they can deliver technology that is relevant, scalable, and can solve real needs. “The SMB market is hardest for startups to reach with their ideas,” Morgan said. “If you have to sell to 500 mom-and-pop shops, how do you do that?”