As 2017 comes to a close, we thought it would be fun to ask some local experts on what the city’s startup scene could look like in the year ahead.

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A common theme that came up was that Austin, and Texas as a whole, is following the nation’s lead and more investors are getting into new technologies such as artificial intelligence (AI), machine learning, and blockchain technology.

In addition, new funds that recently came online will be ramping up in coming months. For example, in September, former general partners and, along with former Bain consultant, unveiled. The Austin firm in business software companies that are located outside of the traditional venture capital hubs of New York, Boston, and San Francisco.

As further evidence that the early-stage ecosystem continues to develop, accelerators such as, which was founded by and, also came online. Unlike traditional incubators or accelerators, Sputnix ATX is focused that already have a minimum viable product and at least one customer.

Of course, those I talked to are active in the Austin community, so they’re naturally biased about what’s ahead for early-stage funding in the region. But as a whole, they are optimistic about 2018. Here’s what they had to say:

, Partner at

I think you’re going to some reshuffling and refocus. Austin historically has been an early stage seed investment city with a few key big players. But that’s changing. I’ve been doing a presentation series with and a couple of the slides focus on funds in town people should be aware of. A few years ago, there were only a few. Today, I can barely fit them all on two slides.

We’re starting to see more collaboration among Texas cities, which is crucial. That should continue into next year. I also think Austin will continue to build its own identity. People used to define this region’s venture capital market by comparing it to San Francisco or New York.  And that’s totally OK because we’re not trying to be another coast. Maybe San Francisco has a relatively higher proportion of unicorns. But there’s this other thing we’re pretty good at in Texas. And, that’s turning out positive successes over and over again. Austin has always been well positioned to lead the rise of the “middle” markets. There’s all kinds of other opportunities here. And I think a lot of funds are not chasing that $1 billion exit but instead a bunch of $100 million exits.

Austin is also well-positioned to do some great things when it comes to blockchain and AI. We’ve got a number of great companies doing both and cryptofunds are launching all the time.

Overall, I think Texas is going to eat everybody else’s lunch as the four major cities – Dallas, Houston, Austin and San Antonio – continue to cooperate and become a venture ecosystem in the way people talk about the Bay Area.

, General Partner at

We’re currently closing out our second fund in which we are raising $50 million. In the last quarter and in this quarter, we closed on a number of follow-on rounds as well as Series A rounds.

Although we are a Texas-focused fund, most technology roads in Texas lead back to Austin in some form or fashion. Historically, Austin has been very strong in software, especially in enterprise software and we’ve seen lots of exits, experienced executives and venture capital flowing. But it’s also growing when it comes to ecommerce – look at, and for example.

But what a lot of people may not realize is that Austin is one of the top three global cities for video games and interactive content. I think that will continue to expand in 2018. You’re seeing a lot of companies move here or have major offices here after an acquisition. In years past, companies would acquire here and then move operations back to the West Coast but we’re seeing – and I expect we’ll continue to see ­– more companies choosing to grow their staff here or build a second corporate office in Austin.

I believe next year, the early stage scene will continue to be impacted by more startups being founded by people who have trained by the region’s large tech employers such as,,,, and. The University of Texas at Austin () also continues to produce more talent who start, launch and growth companies because they don’t need as much money to get going here as they do on the West or East Coast.

Overall in the state, aerospace, agriculture, real estate and energy continue to be big industries. AI is growing. There’s so much money and experience in the software industry so that is naturally leading to the creation of new software technologies.

, Vice President Of Client Strategy Of Austin-based

All indicators point to a robust funding environment for early-stage companies in Texas in 2018. There have never been more startups that demonstrating early client traction at the same time that there are more active funds, angels and private equity sources looking to deploy capital.

There are several new funds coming online and historic funds are raising this year, not to mention more investors are getting into new technologies like AI, machine learning, and blockchain. We will continue to see consolidation and technology innovation in traditional businesses like health care, real estate, banking, legal and accounting which will offer opportunities for both new startups and investors that are willing to tolerate risk for outsized returns in the next few years.

Answers were lightly edited for clarity.

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But while tech startups are embracing the AI terminology in their marketing materials and VC pitch decks, the technology often claimed to be AI is actually smorgasbord of machine learning, advanced algorithms (also known as deep learning), and natural language processing—with a dose of humanity to help tape it all together.

And it’s that last bit, the human bit, that founders and investors tend to gloss over. After all, the whole point of artificial intelligence is to make our gelatinous brains unnecessary. Those brains cost money to maintain, and that’s not helpful for revenue multiples. But even mundane tasks, such as booking a hotel room, are difficult problems to accomplish with algorithms. And major tech companies are known to rely on a crew of Mechanical Turk workers to .

However, there are signs that AI startups are growing more honest about their helping hands. And looking ahead to 2018, humanity could actually become an asset (or at least come out of the shadows) for startups claiming to be developers of artificially intelligent software.

Human Help Needed

While a tremendous number of AI startups and large tech companies go to great lengths to gloss over the human input needed to make their AI products work, one startup, , swooped in at the end of the year with a notably different tact.

The AI-powered assistant, co-founded by and , aims to handle any digital task at a cost of $1 per minute. And as Lessin told , looking to AI to replace human intelligence is a “mistake” and “the future is people helping people.”

To make this happen, Fin has 100 full-time employees that help complete tasks. It’s this human aspect that allow it to work on a dizzying array of complex requests, many of which on the company website. But what’s most surprising is what little work Fin and company undertake to cover up the fact that humans are a critical component of the app. Its work page, for instance, gives “human” placement over “machine intelligence.” Contrast that with X.ai, which avoids discussing that ,�� share in the task of scheduling calendar appointments,

And while Fin hasn’t received VC funds, according to Crunchbase data, its honesty could lead to the rise of what some call “,” or software that uses AI methods such as machine learning to simply help humans do their jobs more effectively.

It’s a term that expresses a bit more honesty in what artificial intelligence methods are actually capable of accomplishing today. The billions behind Google, Facebook, and Apple have not been able to use software to solve the most basic of requests. And if those tech giants can’t accomplish buying plane tickets automatically, it is much less likely a startup with comparably little data and engineering talent will find a software-only solution.

So while it may have been sexy for startups in 2017 to use artificial intelligence as a buzzword, technical limitations may limit how long VCs and users will believe the claim. To counter this, startups may be required to lean into their humanity rather than dismiss it as superfluous—much like Fin has chosen to do.

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And that cost could lead to some putting their dollars into companies that run against the very trends and patterns that fueled the prominence of today’s biggest social companies.

Just as the processed food glory days of the 1970s and 80s bequeathed us Whole Foods and $4 organic mangoes, today’s digital habits are leading to a push for a healthier alternatives.

So what’s driving this backlash, and what form could “anti-tech” investment take in 2018?

Back In The Day

Journalists have been quick to churn out highly clickable stories about a growing consumer against big tech, with prominent startup investors among those the scourge of addictive and manipulative algorithm-driven content.

Many of the entrepreneurs, angels and VCs responsible for Facebook and its ilk taking over our daily lives are warning of the dangers of our screen-addicted ways. Yes, this isn’t an entirely new phenomenon. Even Steve Jobs used to keep his kids away from iPads, one of a number of tech industry leaders known to take a to parenting.

But the anti-social-media drumbeat is getting more intense, and closer to home. This month, even Facebook’s company news site featured a titled “Is Spending Time on Social Media Bad for Us?”

The authors considered whether most people connect in meaningful ways online or whether they “are simply consuming trivial updates and polarizing memes at the expense of time with loved ones.” Though it wasn’t exactly a forum for Facebook-bashing, the authors did cite some negative effects that result from too much time spent passively scrolling posts, including a worsened mood.

Early Facebook executives sound more critical. Chamath Palihapitiya, former VP for user growth at Facebook executive and founder of VC firm Social Capital, recently social media for “ripping apart the social fabric of how society works.” Sean Parker, Facebook’s founding president and the founder of early aughts music phenomenon Napster, says the social networking site was built to be addictive and in human psychology.

But there are apps that are trying to break the cycle as we head into 2018.

Reclaiming Focus

One niche is meditation and mindfulness-focused startups, which employ digital technology in an effort to make us more centered and happy. This category saw a surge in funding this past year. Since much of this is seed and early-stage, there’s plenty of room for follow-on investment.

Even digital media moguls are joining the bandwagon. Arianna Huffington, who helped fuel the clickbait-driven rise of Huffington Post, is now scaling up l, a year-old startup that aims to “end the stress and burnout epidemic.” A few weeks ago, the company closed a $30 million Series B round.

More broadly, the anti-tech investment theme looks for ways to reclaim our attention from those who would fritter it away on addictive and damaging time-wasters.

Borrowing from the $4 mango concept, we could see apps and tools emerge that do much perform many of the same activities as attention grabbing apps we use today, but with higher prices and without the pitfalls. We’ve seen that people who can afford to are pretty willing to pay for ad-free streaming media, fair trade coffee, and organic wheat grass juice. So why not marketing-free social media?

Income inequality also plays into the ant-tech investment theme. With wealth increasingly concentrated into fewer hands, businesses are catering to those with the most surplus cash. And one thing these people want—if enrollment of tech executive’s children at a Silicon Valley private is any indication—is a healthier relationship with technology.

What form could other investments along these lines take? Many will probably take approaches we hadn’t thought of here.  Maybe apps to monitor our digital habits and work toward healthier goals? Tools to better monitor and restrict children’s use of technology, and steer toward better uses of time? Or perhaps neurotech, a booming startup sector, has something to offer.

One could argue, of course, that there are also low-tech solutions. Putting down your smartphone, for example.

But what would be the fun in that?

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Although the total value of the cryptocurrency market crept steadily higher throughout 2017 – and then suddenly all at once in the last quarter – investors and observers shouldn’t expect growth to continue like this without some sort of correction.

2018 will likely be a rocky year for crypto markets, so to relieve some of that dread, here are some lighthearted predictions.

2018: Blockchain Soldiers On

Just like how a new cryptographic block file gets added to a chain at regular intervals, come hell or high volatility, so too will experiments with this emerging technology throughout next year.

The more “unique” aspects of cryptocurrency culture will drive a bigger wedge between its more colorful communities from the mainstream.

Some may view this as an advantage. After all, the original bitcoin white paper was a political document, one that lays out a technical and intellectual framework for a currency that supposedly releases the control of economic value from the coils of central banks and other third-party intermediaries.

However, radicals rarely usurp incumbents directly. But a radical idea – if sufficiently compelling – can be adopted or co-opted by incumbents. I expect maintained interest in blockchain technologies from mainstream organizations to continue despite the cultures around specific cryptocurrencies.

Here’s what to look out for in 2018:

• Expect to see more countries’ central banks experiment with blockchain implementations of national currencies or internal ledger systems.
• Expect collaborations between traditional financial institutions to develop shared blockchain infrastructure to start bearing fruit.
• Die-hard believers in open, unregulated blockchain systems (like Bitcoin, Litecoin, and many others) will be very dismissive of these efforts. Such dismissiveness will likely be ineffective at slowing the pace of institutional adoption of blockchain technology.

2018: Crypto Finds Hierarchy

Divisions over software design and implementation are to be expected, to a degree, in any open source software project. But those disagreements rarely result in billions of dollars worth of economic fallout as they can in the crypto world.

At least in the bitcoin ecosystem, a certain tribalism has emerged.

Most recently, an ongoing disagreement over how to make bitcoin more scalable resulted in a literal split in the community. Bitcoin Cash “forked” off of the main bitcoin blockchain on August 1, 2017. Its main feature is a larger block size, which its creators argue would increase transaction throughput on the network. Bitcoin Cash was listed on CoinBase, one of the most popular bitcoin exchanges and online wallets in the US, in late December 2017. This caused the price of Bitcoin Cash to jump and the price of bitcoin to fall, leading to a slew of accusations ranging from “shilling” (another bit of blockchain jargon) by Bitcoin Cash boosters like Roger Ver to insider trading at Coinbase, and more.

Contrast the infighting in bitcoin with relative peace in Litecoin (an open source cryptocurrency on an open blockchain), Ripple (also open source, but on a blockchain maintained privately by ), or Ethereum. These cryptos either have strong technical leadership, a shorter and less contentious history of forks, large endowments (either from ICOs, like Ethereum, or from VCs, in Ripple’s case), or some combination thereof to help maintain internal cohesion.

Given that and more, here’s what 2018 might hold:

• No, people won’t “just stop fighting and get along.”
• Expect to see “closed” cryptocurrency systems gain more traction as community involvement in open implementations will become more fractured and contentious, without intervention
• In open-source cryptocurrency projects, expect the “management structure” to become more top-down and hierarchical as strong, authoritative leadership will be increasingly seen as a necessity. These leaders won’t be CEOs per se, but more like “” (BDFLs) who serve as “the last word” when adjudicating intra-community disagreements over technical decisions
• Expect communities of developers, investors, and enthusiasts in open cryptocurrency systems to split if there isn’t already a credible individual (or small group) that currently serves the BDFL role.

Be Boring Again

While crypto kiddies are busy playing with their Crypto Kitties, and one branch of an open-source tree publicly smears another in a battle for ownership of the trunk, development of blockchain technology solutions and further research into blockchain implementation will quietly hum along in the background.

Whether any of this will bear any fruit is largely unknown at this point. For all of those folks who’ve said “it’s about the blockchain as a filesystem, not as a payments system,” let’s hope it does. Because then we could stop talking about it so much, just like we don’t have heated debates and breathless news coverage about the protocols that run, say, email.

We should all strive to make blockchain boring again. But that’s probably not going to happen next year.

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