As we are living in startup era, army of new small business emerge constantly, in every single moment. According to GEM report and numerous researches, globally there are almost half of a billion entrepreneurs trying to start approximately 300 million companies annually. They are looking for opportunities, promising industries for their startup and thinking of unique products they can offer. But only one third of them will launch the business, which means about 100 million startups kickoff every year. It’s 274,000 per day or about 3 per second.
Just imagine – by the time you finish this sentence somewhere in the world around 15 new companies will spring up.
Of course that depends on how fast you are in reading, but basically it clearly demonstrates why present days are called startup era. Interesting but not too surprising fact is the major part of startups comes from the United States and United Kingdom.
Also keep in mind that firms birth and death rates are almost equal. If 100 million companies emerge this year, another 100 million will cease their miserable existence.
Thanks to digital tools like internet, laptops, and smartphones, and the constant evolution of technology, nowadays it may seem quite easy to find peers, grab some money and turn your innovative idea into a profitable venture. However according to Forbes only 0.05% of launched startups attain the basic funding stage. That’s 50,000. Some of them receive investment from ‘angels’ and only a small bit of those (1-2 out of 100) will see venture capital financing at a later stage.
There is a number of reasons which cause starups to fail. Here are the most common:
- poor product or service
- bad location and timing
- weak realization, including software solutions (outsource your web and app development to professional IT firms, unless you are not one of them!)
- no visible potential in foreseeable future or the proof of potential
- lack of flexibility
- arrogance, shortsightedness, laziness, and all other human sins.
However the key issue which undoubtedly will push angels and VCs off is unadvised selection of business domain.
Many startups are being rejected in funding because they are not in preferred industries.
You may have an innovative product (for you) and/or you might be a godlike in using multiple channels for promotion but if it is in wrong field you’ll never see neither customer flow, nor a penny. We’ll discuss the worst industries for starting business in one of forthcoming articles, and now let’s talk about those most prospective in which you’ll have real chances to succeed in terms of opportunities and investment.
Looking ahead, in the US and EU the most successful are tech startups. Each year about 1,35 million of those are created.
1. Business software development and FinTech
If you recall how much startups are launched globally in every single moment you can get a picture of the marketplace size. Not to mention big businesses established long ago. All these companies are constantly looking for and easy adopt new efficient software solutions which either are needed for new products or services (websites, desktop programs), or for better management on all levels (CRM, ERP), including financial data analyzes.
And that’s another interesting bit. Over the past few years the quantity of financial technology startups has dramatically risen up, reveling FinTech as one of the most significant trends.
These firms do what everybody needs – they boost the efficiency of financial services and enabling areas that were untouched for years. With the modern technological tools, FinTech startups turn traditional financial institutions on their heads, helping consumers and businesses to manage various problems.
According to Forbes 2015 was astonishing for FinTech startups, and experts see growth of this segment in the coming few years. Accenture report says FinTech market will increase to $6-8 billion by 2018. That’s why investors willingly put their money into this industry. Moreover, the FinTech startup boom is observed not only in the USA but also in Europe and UK.
2. Mobile app development
No big news here. As mobile traffic exceeded desktop Internet usage a year ago and continue growing, a business demand on quality apps constantly increase.
According to Entrepreneur the app industry will rise up to impressive $77 billion by 2017. Respectively there is a strong need in mobile app development, and it is not necessary for developers to have well-known names behind. Small innovative firms, groups of developers and separate freelancers are now benefiting from big orders from wealthy clients.
3. IoT and Smart Home
It is believed that Internet of Thing is the next stage of industrial revolution. Not without good reason experts predict that IoT will change the way the consumers, businesses and even governments will interact.
For the last few years we see a well traceable tendency:
People want everything to be connected between each other – from wearables to hospitals, from their dogs, air conditioning, and cars to bus stops and state institutions.
Business Insider predicts in the next 5 years IoT solutions market will rise up to nearly $6 trillion! By 2020 we will have over 30 billion connected gadgets, comparing to last year’s 10 billion.
Which drives us to the obvious conclusion – if you can build gadgets or/and develop software for Internet of Thing, don’t waste your time. Put together a startup, do your worthy product or service and grab your money both from investors and customers.
4. Education technology
It appears to be a real pivotal moment in educational sector today. In many schools pupils no longer have to lug tons of paper, having their textbooks replaced with tablets.
Simultaneously leading universities open their courses to global users via so called MOOCs (massive open online courses). Everything gets online, easy available and free. In fact, to access to the all world’s knowledge you just need a smartphone connected to the internet.
All these innovations are driven and delivered not nearly by educational institutions, but rather by software development firms – both multi billion corporations and proactive EdTech startups. The quantity of the latter has risen dramatically over recent years, and there are few good reasons:
- Awakening of educational institutions and their willingness to keep up with time.
- Strong need for appropriate quality software development.
- The investment boom in EdTech.
According to the KPMG and CB Insights report, in Q4 2015 EdTech companies received over $1 billion. Compare to $295 million in Q3 2015 (that’s 300% up), or $474 million in Q2. All together in 2015 educational companies raised almost $2,5 billion.
5. Clean technology
CleanTech combines technological products and services designed to reduce energy/material consumption, generate less waste, and concentrate on using renewable resources.
This includes agriculture, recycling, all types of alternative energy (wind, solar, wave, etc.), as well as green transportation and information technology.
Although the area is not quite new, more and more companies emerge offering clean technology solutions. And investors are still bullish about it. As United Nations Environment Program states, in 2007 wind, solar, and biofuel firms raised huge $150 billion of funding.
Experts forecasts that by 2018 solar, wind power, and biofuel companies will see overwhelming revenue of $325 billion. Bite your tidbit.