Growing a startup business is tough enough – but growing a business in a declining market is even harder.
Startups that have a decent chance of making it – and succeed in raising business angel or VC investment- tend to be in a growth sector. So let’s take a look at some of the current hot sectors.
Digital and Mobile Media
Despite Facebook’s overvaluation on its IPO – its huge valuation of around $75 to $100bn is still enough to encourage the VC industry to fund new social media businesses.
However, the threat to facebook is also an indication of where the money and trends are moving – that is, can facebook make money out of mobile advertising or can other startups make a successful incursion into the growing mobile usage?
We’ve also got companies such as Telefonica funding numerous startup accelerators to gain a foothold in this rapid changing market.
At present, revenues from mobile advertising are slim – but commentators say that the same was true of the desktop advertising market – which following innovation and improvements in relevance and audience engagement have seen rapid revenue increase. Nic Brisbourne believes this is a key area of growth opportunity for the next 3 to 5 years.
It may be that in the next few years we stop talking about social media and talk just about mobile media – as that is the medium through which most of the social media activities take place.
Equally, a slightly duller, but perhaps more important sector, is the digital health sector. At the moment this is characterised by mobile apps which measure the distance you’ve run or track your fitness or health goals, but the next step will be medical devices will be those that fit to our mobile phones.
In effect, any digital device which places more ‘expect’ control in the hands of the user, the better. So, typical of this is a device, which when attached to your mobile, can take a photo inside your child’s ear and then send that photo to a doctor via a digital link.
Saves a lot of time going to the hospital or waiting around in a doctor’s surgery. It also means that we don’t need doctors surgery on every street but can centralise the advice. It also allows the advice to be available 24/7 with referrals to district or regional centres.
This kind of information captured locally (by an amateur or parent) but analysed centrally is key to the efficiency of the model and is reliant on devices for local data capture (ie mobiles) plus the ability to send that data (ie mobile broadband and cloud storage).
Equally true, the rapidly expand waist lines of the developed world – US and UK leading the world on this – with Germany close behind – mean that this will create more opportunities.
Quick thought: have you taken out necessary Business Insurance? Most startups miss this and the consequences can be serious.
At the same time, the developed world’s health services are under intense strain due to government bankruptcy (or near bankruptcy) as costs soar simply due to an ageing population.
However, obesity brings with it an increase in the number of people suffering from diabeties, arthritis and asthma. These three conditions are non-life threatening but will significantly reduce the quality of life whilst requiring regular medical intervention from national services.
Hence, medical services are now under attack from three areas and are desperate for better solutions. To some extent these will be driven by national and region procurement, but it is more likely that the rise of fitness and well-being solutions will be focused on the consumer and bypass national health services or insurance companies. (An interesting hybrid – and sister website of ibusinessangel – is the attempt to connect fitness and personal trainers with clients and customers. )
Not just health – but fitness and wellness too
Curiously, businesses focused on selling their services to hospitals or the national health infrastructure focus call themselves ‘health’ companies. Where as those startups looking to grow by selling direct to the consumer are typically sports, fitness, well-being, weight loss companies.
The very different terminology means we don’t often put these two businesses together in the same sector – they are just different ends of the same trend.
Equally, the wellness and fitness industries are pretty new – not really being significant players more than 10 or 20 years ago whereas the modern health industry has been developing since the rapid innovation methods and discoveries in the 1850s.
In many ways the fitness sector is represented by the rise of the gym – which showed a 4% increase in membership between 2008 and 2011 whilst membership (or attendance) at luxury spas has dropped noticeably.
Clearly, despite austerity, the desire (or perhaps need) to stay fit and healthy is greater than ever before with falling national health standards/ budgets and a need for more of us (especially the self-employed, freelance or startup founders) to stay fit and healthy (and working) for longer.
Therefore, there are business angel investment opportunities in new business models – not just new technology – especially in the fitness and wellness industry.
Mobile media vs digital health
It is hard to prise these two sectors apart. The growth of mobile usage is enabling new business models to develop in the fitness and wellness industry as well as creating new advertising medium. Equally, the potential to attach devices to our mini-computers – or smart phones – means that the ability to capture more health data locally and get an expert opinion is growing.
Advertising is, ultimately, a way to monetising traffic – but only works when the traffic volumes are very high. It is more likely that some niche services will have to find alternative ways to earn revenue.
Still, any business which exploits these trends is going to be in a growth market. And, any business that can exploit more than one or two trends – at the same time – is likely to have a much higher chance of success.
In our next discussion of business angel and startup opportunities – coming shortly – we’ll focus on software, e-commerce and the asset sectors (energy etc…)