If you're looking to launch a startup in 2020, pay attention to these industries
2019 is on pace to be the second-highest year ever for venture capital investment in startups. According to Pitchbook, total VC deal value hit $96.7 billion USD through the first three quarters of the year, and while total VC funding may end up slightly lower than 2018's record high, investors are still looking for promising startups.
If you have a great idea and a great business plan to back it up, you can succeed in a variety of industries. But if you're still looking for that lightbulb moment (or if you've already had it, but just want some validation), you should pay attention to these hot industries for startups.
1. Micromobility tech
Bike and e-scooter rentals have become ubiquitous in urban areas in a very short amount of time. Big transportation companies have taken notice, and are pouring big money into micro mobility. In 2018, Uber and Alphabet poured $335 million USD into bike- and scooter-sharing startup Lime. The same year, Ford acquired Lime's competitor, Spin, for $100 million USD and scooter startup Bird raised $300 million in funding.
With three major competitors, micromobility might seem like an already crowded field. But there are currently two main types of transportation on offer: bikes and scooters. According to Inc., business consulting firm Frost & Sullivan has predicted micro-cars will be the rising trend in 2020, and that up to 150 other micro-vehicles will also launch.
The difficulty in jumping into the micromobility market is the capital you'd need to produce the vehicles themselves. This can be a serious barrier to entry for aspiring startup founders. But, considering the market for micromobility in estimated to reach $300–500 billion USD by 2030, it's worth looking at ways to break in.
Technology is transforming healthcare, from giving people more control over and insight into their own health, to developing new pharmaceuticals to helping the healthcare industry become more accurate and efficient. The global market for digital healthcare solutions is expected to hit $504.4 billion USD by 2025.
Healthtech covers a variety of different industries. It can encompass healthcare SaaS tools, health and wellness mobile apps, biotechnology, drug development and more. In fact, healthcare accounted six of the top 10 verticals by venture capital deal activity in the third quarter of 2019. According to Pitchbook, healthtech VC deals are expected to hit a record high in 2019.
Breaking into healthtech requires a lot of research and a lot of insight into the target customer. If you're planning to build a B2B startup, you need to deeply understand the challenges faced by healthcare practitioners and their various pain points. If you're looking to build a B2C solution, you'll need to have some actual medical insight, and you may need the help of a lawyer to make sure you comply with regulations.
If you do have a good startup idea in the healthtech space, there are plenty of resources to help you. There are a number of startup incubators that focus specifically on healthcare.
Feeding the world is a growing challenge, and it could be reaching crisis levels unless new technology intervenes. It's projected that we'll only be able to grow enough food to meet half of global demand by 2050 if current crop yields stay the same.
That's where agricultural technology comes in. The agtech industry has been the quiet achiever in the startup space, setting new funding records in 2018 and on pace for an even bigger year in 2019.
Like healthtech, agtech is incredibly broad. It can encompass both downstream food delivery and upstream food production. Agtech startups are involved in everything from vertical farming and drone watering systems to lab-grown meat and cannabis production.
Agtech is a great space for startups because it fulfils an area of demand that, by its very nature, will only increase. And it's full of business models that are ripe for disruption. Any technology that produces and distributes food quicker, cheaper and more efficiently can make a major impact in agtech. Plus, global trends demand that new technologies step up to the plate to keep the world fed. It's a startup sector making a real impact on the world.
4. Artificial Intelligence
Artificial intelligence is the startup sector that's driving other startup sectors. It's a technology that's beginning to be woven throughout every industry.
According to KPMG, AI is one the primary technologies driving attention from venture capitalists. Unlike nearly any other technology, AI has applications across just about every industry. KPMG said venture capitalists consider AI to be "the true game changer" for the startup space.
The broad range of applications makes AI a great industry for startups. It has immense B2B applications as it can help automate business processes. There's huge B2C potential as well, as AI can be integrated into just about any networked consumer product. The Internet of Things, or IoT, is a growing market that's largely powered by AI. Fortune Business Insights has predicted the IoT market will grow to $1.1 trillion by 2026. That's a huge opportunity for AI, and for smart startup founders.
It's probably no surprise that fintech is on this list. High profile startups like Avant, Lemonade and Xero have disrupted verticals like payments, insurance and accounting. The sector has produced nearly 50 unicorns so far, and it doesn't look to be slowing down. Fintech is still expected to grow to a $26.5 trillion market by 2022.
The big barriers to entry for fintech startups are compliance and security. Solving the compliance issue is tricky, as different geographic markets will have their own regulations and often their own licensing. Fortunately, technologies like blockchain are helping to solve the security issue.
If you want to get involved in fintech, you'll need to get your head around the regulations governing the space, the various niches involved in finance and the solutions that already exist. It's a crowded market, so you'll have to develop a unique value proposition to stand out from the crowd. You could also consider using the product you develop to partner with an existing financial institution. You bring the tech know-how, the marketing nous and the innovation and they bring the customer base and the licensing. It's a win-win.
A great business idea can disrupt any industry. If you've planned out your startup, studied the market and validated your idea, it doesn't matter if it doesn't fit neatly into one of the industries we've examined. While these industries are looking big for 2020, the next unicorn could come from somewhere completely unexpected. Here's hoping it's you.