Some unusual sectors hold tremendous potential for entrepreneurs.
To launch a successful business, you need a good idea and the boldness to act on it. While all first-time entrepreneurs have their work cut out for them, anyone who can identify industries uniquely positioned for growth has a clear advantage.
That's where Inc.'s best industries for starting a business comes in. Each year, we crunch the latest data and speak with industry experts to determine the sectors that are most likely to take off. Read on to see which industries are home to tomorrow's fastest-growing startups.
A revolution in urban transportation is creating an opportunity for startups that make electric-powered bikes, scooters, and skateboards. With more than 60 percent of the world's population expected to live in urban areas by 2030--up from 55 percent in 2018, according to the United Nations Department of Economic and Social Affairs--micromobility products will gain popularity as an alternative to traditional ground transportation and mass transit.
Why it's hot: Getting around on e-bikes, e-scooters, and e-skateboards is convenient and fun, and Ford's acquisition of e-scooter startup Spin for a reported $100 million in November 2018 has brought increased awareness to the industry.
Skills needed: Micromobility entrepreneurs will need to be up to date on the latest technological advances in small-battery manufacturing, while companies offering fleets of transportation devices will have to build software to track them, and to manage a subscription service.
Barriers to entry: Building micromobility devices at scale will require a significant capital investment.
The downside: E-scooters and e-bikes are illegal in some states, while regulations governing their use have yet to be established in others. In both cases, proposals to address the vehicles' legal status are on the way.
Competition: Business consulting firm Frost & Sullivan expects more than 150 micromobility vehicles--including micro cars--to be launched by 2020.
Major players: E-scooter giants including Bird and Lime both have fleets in more than 100 cities.
Growth: Global investors put $3.7 billion into e-scooter and e-bike companies during the first 10 months of 2018, up from $2.8 billion in all of 2017 and $343 million in 2016, according to data from CB Insights. Global e-bike revenues are expected to grow to $24.3 billion by 2025, from $15.7 billion in 2016, according to Navigant Research.
No longer just a form of entertainment, video games and other software applications can now be used to treat a host of medical conditions, with some even requiring a prescription from a physician. For startups, this new category of medicine is an opportunity to create therapies that reduce patients' reliance on pharmaceuticals.
Why it's hot: Digital therapeutics can address unmet medical needs across a wide range of conditions. Products on the market or in development include software programs to improve asthma and COPD, serve as an adjunct to outpatient treatment for substance abuse, and treat pediatric ADHD and depression.
Skills needed: Startups will need to be able to create software products ranging from mobile apps to interactive digital games and to navigate the U.S. health care industry's regulatory environment.
Barriers to entry: Getting through U.S. Food and Drug Administration testing to show efficacy represents a significant hurdle for startups.
The downside: While physicians may prescribe digital therapeutics, it remains to be seen whether insurers will cover these treatments. There is also uncertainty about how to price digital therapy products.
Competition: The FDA has approved around 30 digital therapeutic apps in 2018 alone.
Major players: Click Therapeutics recently raised $17 million form Pharma giant Sanofi, and has seen encouraging results in early trials for apps designed to treat depression and help people quit smoking.
Growth: The U.S. digital therapeutics market was valued at $889 million in 2017 and is expected to reach $4.42 billion by 2023, according to business consulting firm Frost & Sullivan
There is already a strong demand in the U.S. for products containing Cannabidiol, or CBD, a natural chemical component of cannabis and hemp that's non-psychotropic, meaning it doesn't get you high. Companies offering CBD products have a tremendous opportunity, as proponents of CBD claim the substance offers anti-anxiety, anti-inflammatory, and pain-relieving effects. Consumers are already embracing CBD as a product to be incorporated into their daily lives.
Why it's hot: CBD is popping up in a wide variety of products including oils, lotions, soaps, and beauty goods. The newest niche is the food and beverage industry, where businesses have added it to snacks, coffee, ice cream, and cocktails. By 2020, CBD is expected to make its way into yogurts, soups, and even salad dressings, according to a report on 2019 food trends from snack-maker Kind.
Skills needed: A strong knowledge base about the science of the cannabis plant and CBD is crucial. While the required skills vary depending on whether entrepreneurs are making CBD products for the food and beverage, health and wellness, or beauty and personal care industries, strong marketing ability will be crucial for any new entrant hoping to stand out from the competition.
Barriers to entry: Finding shelf space at retailers will be a challenge due to the heavy concentration of new brands.
The downside: Not all CBD products are legal in the U.S. Some 47 states--along with Puerto Rico and Washington, D.C.--have passed laws allowing at least some use of CBD. The passage of the 2018 Farm Bill is expected to make CBD legal in all 50 states, which could usher in competition from larger companies, making it harder for startups.
Competition: Considering that CBD didn't exist as a product category five years ago, the competition is heating up at a rapid pace, with hundreds of CBD companies offering thousands of products.
Major players: Colorado-based CBD oil producer Charlotte's Web Holdings reported $40 million in revenue in 2017 and nearly $18 million during the third quarter of 2018, up 57 percent year-over-year. Nevada-based CV Sciences, which sells CBD products and is developing a synthetic CBD‐based medicine for a range of conditions, reported sales of more than $20 million in 2017, an increase of 87 percent from 2016.
Growth: The U.S. CBD industry grew by nearly 40 percent in 2017 to $367 million, according to recent report from New Frontier Data, an analytics company specializing in the cannabis industry. The market is expected to reach $500 million in 2018 and $1.91 billion by 2022. Analysts at investment firm Canaccord Genuity estimate the U.S. market for CBD beverages alone will reach $260 million by 2022.
There's no one-size-fits-all approach to a healthy diet, which is why some people are more apt to gain weight on certain regimens than others. Getting your genetic blueprint can help you figure out exactly what your body needs to be at its best, creating an opportunity for startups that can help consumers make customized, data-driven decisions about what to eat.
Why it's hot: Some 15 million people worldwide have undergone genetic testing, according to a study published in Science, and as many segments of the medical industry shift their focus from treatment to prevention, nutrition is emerging as one of the best ways to prevent illness. Personalized nutrition is just one segment of a larger trend toward customization in industries ranging from food to media.
Skills needed: Founders should have a background in food and nutrition, and ideally an expertise in human biology, exercise physiology, life sciences, or behavioral psychology, according to Neil Grimmer, founder of personalized nutrition company Habit.
Barriers to entry: Bringing together the core elements of nutrition, human biology, and behavioral psychology in an early-stage company can require a significant capital investment, as can hiring in-house registered dietitians and nutritionists.
The downside: Department of Health regulations in New York, New Jersey, and Rhode Island prohibit the sale of certain direct-to-consumer diagnostic tests.
Competition: There are more than a dozen personalized nutrition companies that use home-test kits, questionnaires, or wearables to track health data.
Major players: In November 2018, scientific wellness company Arivale launched a nutritionist-on-demand app called Food Therapy, allowing users to get answers to all their nutrition and health questions from registered dietitians and certified nutritionists within five minutes. And the previous April, genealogical testing company Family Tree DNA partnered with DNA-based health and wellness personalization company Vitagene to offer Family Tree DNA customers a $49 nutrition, exercise, and supplement product.
Growth: The global genetic testing market is expected to grow to $19.1 billion in 2024 from $9.5 billion in 2018, according to Energias Market Research. The broader personalized health industry is expected to become a $600 billion market by the year 2020, according to an analysis by management consulting company Oliver Wyman.
Jerky isn't what it used to be. That's because startups are trying to reinvent it with creative ingredients, superior meats, and new flavors to elevate jerky from an unhealthy snack to a better-for-you food staple.
Why it's hot: Food trends and the popularity of diets like keto and paleo, which encourage participants to eat more protein and fewer carbs, have created a demand for healthier jerky. Additionally, the clean eating movement is driving people toward foods that don't have a long list of unknown ingredients.
Skills needed: Entrepreneurs in this industry should know about food preparation and dietary trends, and have an understanding of the food regulations imposed by both the USDA and EPA, according to IBISWorld.
Barriers to entry: Companies will need to receive approval from the USDA and EPA, and adhere to their standards. Additionally, startups will have to carve out a space in the zero-sum food market, says Darren Seifer, the food and beverage analyst for market research firm NPD Group: "We are not going to start creating more snacking occasions because there are more options."
The downside: High-quality, grass-fed or antibiotic-free meats preferred by consumers are more expensive for companies to purchase. Startups must also find ways to differentiate themselves from the other jerky options on the market, Seifer says.
The competition: IBISWorld grades the level of competition in the industry as medium. While startups like Chef's Cut Real Jerky or Krave don't have the same market power as the legacy brands, they are separating themselves by promoting their products as organic, GMO-free, and free of preservatives.
Major players: Oberto and Jack's Links control 23.5 and 11.4 percent of the jerky market respectively, according to IBISWorld. Startups in the industry will also have to compete with other private companies like Krave, which markets to athletes and often hands out samples at the finish lines of marathons.
Growth: Overall, jerky's U.S. revenue is expected to grow by 3.3 percent each year to reach a total of $1.6 billion in 2022, according to IBISWorld.
People have computers in their pockets and health trackers on their wrists that can tell them just how their body's doing. That demand for technological solutions is now extending to a more vulnerable population: babies. Startups in this industry are creating innovative solutions for fertility tracking, breastfeeding, and even getting infants to sleep.
Why it's hot: As technology has gotten less expensive--both for founders and customers--it's become easier to integrate into new products. Additionally, there's been a recent increase in the development of solutions that help people get pregnant and track fertility, so it's no surprise innovations aimed at taking care of babies would come next, says Jill Gilbert, who produces the annual Baby Tech Summit, part of the International Consumer Electronics Show.
Skills needed: Founders must understand who they are trying to reach and what they can offer them, marrying both technical skills and marketing expertise.
Barriers to entry: Despite the demand for baby tech products, funding may be hard to come by. Startups in the industry have yet to draw a large amount of venture capital, according to Gilbert.
The downside: Survival in this industry demands that companies constantly improve their existing products or invent new ones for the different stages in child care, in order to build long-term relationships with families.
The competition: Four of the largest companies account for about 40 percent of sales in the online baby products industry, with the remainder belonging to small companies and owner-operated businesses, according to IBISWorld. However, IBISWorld doesn't differentiate baby tech from general baby products in its industry report. Competition in this field is moderate, but there are many different areas within baby care that startups can target, Gilbert says.
Major players: Top startups in this space include Willow, the maker of a hands-free breast pump; Ava, which sells an ovulation tracking bracelet; and changing pad and smart scale producer Hatch Baby.
Growth: IBISWorld expects the U.S. online baby product market to continue its growth and reach revenues of $9.7 billion in 2022, up from $7.4 billion in 2018.
Attend any conference, work party, or wedding and you'll likely see a photo stand equipped with camera, props, and maybe even a wrangler to ensure your shot is just right. But these new-style photo booths aren't the type that require participants to cram themselves into a box. They're highly technical and simple-to-use systems that give people more control of their shots and allow more people to fit into the picture, meaning they're great for events as a keepsake or for chance for social promotion of the event.
Why it's hot: People have a strong desire to document events in their life with pictures and videos so they can share them on social media. Additionally, some businesses are using them for marketing efforts--since users share their photos online--or for collecting data on prospective customers.
Skills needed: Entrepreneurs must be technologically savvy and have a strong understanding of software that can easily deliver the pictures or videos directly to users or their social media platforms.
Barriers to entry: Building hardware for this industry is tricky. Besides requiring companies to maintain physical inventory, camera equipment must be highly reliable since it will typically be used at one-time events.
The downside: It may be difficult for startups to make their software easy enough to navigate. Most customers will be using it for the first time, says Mark Hennings, the co-founder of the selfie stand Simple Booth.
The competition: There are many startups in this space. Some are building both hardware and software solutions, while others focus on one aspect or license the necessary platforms.
Major players: Simple Booth--No. 414 on this year's Inc. 5000 list--makes both software and hardware, including a camera rig the founders call "the halo." Other prominent companies include Curator and Snappie.
Growth: This is a new and growing category, and there are not yet reliable statistics on its market value. However, startups in this industry are seeing hefty revenue figures and increased funding: Simple Booth, for example, generated $3.3 million last year, while Pixilated raised a $500,000 seed round. The U.S. photography industry as a whole is valued at $10.6 billion in 2018 and is expected to grow to $11.2 billion by 2022, according to IBISWorld.
Since the athleisure trend sparked a fashion revolution, more brands are creating office-appropriate clothing such as button-down shirts and slacks that feature the same level of comfort and durability as activewear.
Why it's hot: Consumers are keenly interested in buying clothes that blend comfort and style, and that allow them to easily transition from the office to the gym or beyond, according to CB Insights.
Skills needed: Entrepreneurs in this industry need to be aware of fashion trends and price points, says Diana Smith, the associate director of retail and apparel at market research firm Mintel. It's also important to consider sustainability, she adds, since Millennials and other young consumers prefer to buy from companies that use environmentally friendly and socially responsible practices.
Barriers to entry: "One of the biggest is just the sheer amount of clutter out there," says Smith, noting that both discount retailers and high-end designers are hawking these types of garments.
The downside: Distribution could be one of the hardest challenges for entrepreneurs getting into this industry, Smith says. As more big brands opt for direct-to-consumer models, they are cutting costs and passing those savings to the customer--meaning startups selling only workleisure (such as in specialty stores) might have a hard time attracting customers.
The competition: Because there are so many companies that are transitioning from athleisure to workleisure, startups will compete with a lot of established brands.
Major players: ADAY, Ministry of Supply, Lululemon, and Mizzen + Main are some of the prominent names in the industry.
Growth: This is a burgeoning field, and there are few statistics on its market value. However, one sign of growth is that startups in the industry are seeing an uptick in funding: Ministry of Supply has $10 million in funding, Mizzen + Main has $4 million, and ADAY has $3 million.