All projects, successful or not, begin with an idea. However, first and the most important is the choice of an industry.
Choosing an appropriate industry for your startup development is the foundation of its success.
According to Statista, about 35% of all US startupers are afraid of failure. And their fears are reasonable: according to Forbes, 9 out of 10 startups fail. About 42% of them fail due to insufficient demand on the market.
Maybe all those who didn’t survive had a poor performance. Or they had a lack of talent for business administration. Or they simply were unlucky.
But we advise you not to rely on luck or hope for better circumstances. Therefore, we offer a list of 5 industries where you can have a successful start.
In 2018, the e-learning industry has skyrocketed because it’s convenient for the user. And even more so - online education is cheaper and faster. According to forecasts, in the US by 2025, investment in EdTech will grow to $12.6 million. As early as January 2020, there were 14 Unicorn startups in the EdTech industry.
According to Statista, there are 5 US Unicorns on the list. But the most successful one is ByJu, which is valued at $5.8 billion. Its highlights are trial of 15 days, convenient interface, and the fact that it lives so long on the market. The application provides educational materials for students in grades 1-12, and in 2019 has entered the international market.
This is one of the few industries where innovations are always in demand. You have a chance to disrupt the market by creating an online school using augmented reality, or AI as teachers. Large space for unique ideas remains in EdTech, as well as not so complicated entry conditions.
Recently, third-party logistics companies have started digitizing. This helped these companies to work more efficiently, and startups to be founded in a profitable industry. Companies are ready to purchase software that will help them optimize the freight transportation, the creation of routes, and supply chain as a whole.
There is only one difficulty: this industry doesn't attract investors because it works "behind the scenes" of other projects. In fact, you will receive money for someone's use of your auxiliary software.
The pros of working in this industry is that you will always have customers. The downside is a relatively small market, valued by Armstrong & Associates at only $3.2 billion.
Even though the industry suffered from the COVID-19 pandemic, it is still one of the most promising. According to forecasts, in the next 10 years the market turnover will grow by 25.6%. So if you are not afraid of difficulties at the very beginning, and you are interested in expanding your startup - this industry is for you.
It is reasonable to say that e-commerce is the fastest growing industry as to date. In 2017, its income in the US was about $275 million, in 2020 this number has almost doubled reaching - $420 million.
Statista predicts that in 2024 e-commerce revenue will be around $600 million in the US alone.
This industry is growing so rapidly because, thanks to giants like Amazon, people have become more accustomed to online shopping. The famous e-commerce service in 2019 became the most profitable company in the world with $796 billion value, and surpassed Microsoft. But this startup also once began with a change in the working field of its founder.
You can buy online without queues and unnecessary stress. And if not so long ago people online shopping wasn't popular due to the long delivery, now stores deliver goods in a couple of days.
Ask your friends - it’s unlikely that at least one of them has never bought anything online. To create a startup in the e-commerce industry one doesn’t even need to have a technical background. The main thing is a unique idea and understanding of your customer.
Healthcare & Healthy Lifestyle Industry
Recent years trend is a healthy lifestyle. This is good both for startups and for users. In this industry there are more opportunities for development now, because healthcare is not limited to offline anymore.
According to Statista, by 2025 industry revenue as a whole will rise to $50 billion. Useful healthy lifestyle applications now receiving more downloads and gaining popularity. In 2020 alone, the CDC mobile application, which provides the access to interesting articles and data in med industry, was downloaded about 129 thousand times.
And if you take into account the fact that due to the COVID-19 pandemic this industry has become one of the few that have risen, it becomes even more attractive. Along with it the use of AI technology in the healthcare industry is rapidly growing. With help of this technology it is now possible to diagnose diseases by analyzing complex patterns of symptoms in just 10-20 seconds.
More so, AI is capable of creating drugs and vaccines. For example, one of the most interesting startups in 2020 is HealX. AI startup analyzes existing drugs and test the effectiveness for treatment of rare diseases. It also creates new drugs and treatments. The HealX database contains more than 1 billion links between diseases and medicines, being one of the most complex in the world.
In addition, telemedicine is also on the rise. Don't miss your chance to seize the moment. You can start from a small thing - fitness trackers and other similar utilities, and grow to more complex projects.
This industry holds a leading position for more than one year. The world is digitalized and we prefer online in all areas of life. According to Statista, about 64% of US respondents between the ages of 18 and 29 said they could imagine managing all transactions completely through the app.
In 2020, Digital Payments is considered the largest FinTech industry segment, with a revenue of $4,3m. And according to forecasts, the industry continues to grow, gaining more users every day. According to statistics below, the number of FinTech users will increase to 3.822 million people by 2021.
The challenge of this area is high competition. In 2020, there were about 8,775 FinTech startups in the US alone. But 9 out of 10 startups will fail.
And we will tell you how to become the one that survive.
Top 4 tips for choosing an industry to create a successful startup
1. Don't choose an industry which you don't understand
The chances of success are determined by many factors. However, a decisive indicator of your success is how well you understand your own product.
Ideally, you should choose an industry which you not only understand, but genuinely like.
Yes, in spite of everything, you can grab onto the most popular industry and try to work it out. But if your goal is to be in the impressive 10% of survivors, be guided not only by statistics, but by your own gut.
2. Find a technical co-founder
Whatever industry you choose, there is no start without high-quality software. This attracts customers, automates process, scales the business - this is a long-term investment. A technical solution will be with you from the very beginning to the moment when you'll need a new technical solution. The only one who can help you with this is your technical cofounder. Here's a video on how to choose one right.
If you are going to create a startup in technical industry, but technology isn't exactly your strong side - find a reliable IT-partner. The development company will maintain the project at all stages of its development. Especially useful in this case will be the IT-consulting service, which will help with business needs analysis and planning. This solution will help you avoid possible errors, and this is crucial for any startup.
3. Pay attention to the local market
FinTech is popular all over the world, but not in your area? Or online education isn't interesting for people from where you live? Orient your startup to a market where your industry is more popular than the rest.
If a startup is focused on a specific market, no one will promise it a long life. Try to expand and enter new markets so you won't push yourself into a dead end. The main opportunity for this will be custom IT-solution: it adapts to the business situation of your startup, taking into account all the nuances.
4. Remember about scaling
Do you want your startup to work for you one day? Check business scalability. Perhaps what you start now will one day turn into a franchise; but foundation for this is laid at the beginning. Often, startups don't think of the scaling, choosing ready-made software solutions. It seems attractive to you at first, but it will not grow with your company. A ready-made IT-solution won't adapt to the new needs of a startup, but a custom product will change depending on the external and internal situation of the business.
Do not choose an industry in which there is no visible potential for scaling in 2-5 years. You will not enter a large market with a local startup.
To conquer a large market, you first need to conquer users. Here you can learn how to find a cool business idea:
Choosing an industry is the foundation of your work. In addition, there are many more factors that determine the startup success. Market fit and the right choice of monetization are just as important. We believe that now is the best time to start your business, and hope to see your startup on the Fortune 500 list one day.