Despite the global economic crisis in 2020, the entrepreneurial aspirations of most people have not died out, and they continue to evolve in 2021. According to Small Biz Genius, 79% of American entrepreneurs, who were planning to start their own business in 2020, say that they want to redouble their efforts to make their startup prosper within 2021-2022, and their desire to move forward with their own ventures is stronger than in the past.
The pandemic undoubtedly affected many industries negatively, but it also brought a large share of opportunities to many sectors, and made it possible to better identify the top emerging industry trends for the long run.
If you are considering starting a new business in 2021 or the coming year, you are definitely not alone. The US is the leading country by the number of startups, with more than 60,000 new business ideas coming into reality annually, and this number is likely to be even higher in the following years.
If you are looking to find out more about the current and upcoming industry trends to secure competitive leverage in your business of choice or find areas to invest in, here is a list of industries with the most promising signs of success that you should keep an eye on:
First of all, let’s clear up what we mean exactly with the term “emerging industry”.
Emerging industry is a group of companies in line of business, formed around a new product or service idea that is at an early stage of development. An emerging industry, typically, consists of only a few companies and often focuses on a new technology. Barriers to entry into emerging industries may be minor due to limited competition, but it can be difficult to secure funding for the company's growth.
In addition, marketing spending is high because the product or service for sale is often unproven and companies need to convince both investors and consumers that what they are selling is valuable. Investing in an emerging industry is considered a risky strategy, but can also bring high returns.
The tech industry has of course been the “hottest” industry to get involved with for several years now, as technological advancements and new inventions are constantly in high demand. Additionally, what is considered pioneering today, might be outdated in a few months, so there is always room for further growth and development.
One of the great advantages of getting started in the technology field is that it is cross-disciplinary, meaning that it can impact a plethora of other industries and there is opportunity to get involved with many different kinds of business.
On the other hand, it is very hard to become successful with a tech startup, as there are so many out there already and consumers have so many options to choose from.
In fact, according to the Global Entrepreneurship Monitor (GEM) there are almost 300 million people who are starting 150 million businesses worldwide each year, and the majority of them are tech-related. Less than one-third of these businesses are actually to be launched, which means that there are about 50 million new businesses each year, but less than 2 million actually succeed and last for more than 2 years. This means that the likelihood of success is relatively low for a new tech venture, but there are so many well-known examples out there to prove this theory wrong.
In particular, the top emerging areas of the tech industry to invest in for the next couple of years are:
One thing that became apparent across the globe in 2020 was the need to invest on healthcare infrastructure. This industry has not only been one of the top industries in terms of performance since the beginning of the pandemic, but it has strengthened over the years, by constant medical developments, increasing life expectancy, improvement of welfare, as well as rapid advances by pharmaceutical companies.
In 2020, people had to get used to doing everything online, even for the things that we were not used to do virtually before, and going to the doctor was no exception. As the pandemic forced people to stay at home, the use of digital health services increased – many healthcare companies reported over a 170% revenue increase between 2019 and 2020.
As it was explained above, industry trends do not arise out of nowhere. With so many people still having to stay at home, it is essential to have access to home healthcare services that come to us via the screen. This trend will not disappear anytime soon, as according to Healthline, 93% of people who used digital health services during the quarantine months want to continue using them in 2021 and beyond.
Similarly, the wellness industry experienced great interest and success in the past year with “biohacking” becoming the new trend. Specifically, biohacking is do-it-yourself biology, where individuals and organizations make use of the achievements of biology and environmental sciences for their own purposes.
The main example of this is dietary supplements, such as mushrooms that have been named the fastest-growing area of the food industry by Forbes, Inc. and Entrepreneur with a demand higher than 525% over the last three years, or CBD-based products that are on the rise not just in the healthcare and pharmaceutical industries, but also in the beauty and food industries.
Even though ecology is not an industry of its own, but rather a business theme, companies that are ecologically responsible or related to the ESS (Social and Solidarity Economy) are becoming more and more popular among the general public.
According to Yahoo! Finance investing in ESS has become a global megatrend and it has grown to become a 30 trillion market that also, attracts the attention of large banks. Moreover, the fact that electric cars, the hydrogen industry and forms of renewable energy are thriving at the moment is a testament to this trend.
The ways of how sustainable or ESS-based investing works can, however, be complicated as there are no uniform guidelines yet and the understanding is often located on the subjective level of each individual.
MSCI’s Head of Research, Linda-Eling Lee, told CNBC, “We did not necessarily expect this to be the year ESS really takes off, but it has clearly attracted a lot of attention, both in terms of companies and what they are doing from an ESS perspective and certainly from a capital flow perspective, as investment companies shift their capital to less carbon-intensive assets. Now the ESS trend is set to face another big year in 2021.”
The gaming business has been the epicenter of the global entertainment industry for several years now, specifically gambling and video gaming.
Gambling is certainly a controversial topic, but the increase and development of luxury casino hotels, as the 3rd fastest growing industry in the US, with 57.8% revenue growth for 2021-2020, shows that there is potential for a lot of success in this $50 billion market.
In addition, once the coronavirus pandemic is fully contained, it is expected that the government restrictions that are currently in place on industry establishments will be gradually removed, while operators that are exposed to the continuously increasing competition, will need to find more options for their hotels and invest in facility upgrades to attract more players.
Overall, it is anticipated that the gaming and hospitality industries will continue to benefit from growth in per capita disposable income in the years to come.
Even though the hospitality and retail industries suffered greatly during 2020 and 2021 with many restaurants and small stores closing, and millions of people around the world losing their jobs, the interest in veganism hit an all-time high across the US and Europe, according to a report by food-centric media outlet Chef’s Pencil. Specifically, sales of plant-based foods in the US increased by 90% during the height of pandemic, when compared to last year’s sales during that same time period.
The Plant Based Foods Association reported that since 2015, there has been an increase of 214% in vegan foods, with large chains, such as McDonald's, KFC, Subway and Burger King, advocating the trend and bringing new products to the market, thereby increasing public acceptance.
The increased interest towards veganism is very likely associated to the on-going climate debate, with many people deciding to pay attention to their nutrition and switching to plant-based meat alternatives, that can now be found in almost every grocery store – something that five years ago, was considered a rarity.
Since new companies and ideas often carry a high level of risk, setbacks are always likely to happen. Nevertheless, future industries offer good opportunities, especially for risk-conscious investors, that can benefit from in-trend areas, products and ideas that might bring long-term success.
Investing in stocks in an emerging market can be life-changing, but on the other hand, unexplored markets are very volatile, so it is crucially important to learn before investing. Knowing where to invest your money comes down to research. From AI to Cloud Computing to Cybersecurity and Robotics, it is clear that technology will rule most future industries. So, where are you planning to invest first?