Six start-up sectors ripe for picking

Written by: Jon Watkins Posted: 03/12/2018

BL59_startupsLooking to make it big? We go beyond the headline-making business ideas to explore some of the less well known start-up opportunities for investors

Whether you’re a seasoned investor, a serial entrepreneur or just gazing out of your office window thinking of breaking free to start up that long-dreamed-of business of your own, you’ll be interested to know where the opportunities lie. So, we’ve delved beneath the regularly talked about start-up sectors to bring you six opportunities you might not have considered – or even heard of!

1. Street food and pop-up restaurants

The days of ‘street food’ meaning a half-cooked, greasy hotdog or low-meat-content burger from a man with a silver trolley at a football match are long gone. Food markets have become big business – inspired partly by consumers’ desire for food from around the world, as we travel further and become more adventurous eaters. 

The street-food revolution was originally fuelled by ambitious chefs looking to give vendors restaurant-quality food at a price they could afford in the wake of the financial crisis. Since then, family-run start-ups selling fresh, independent food that consumers can relate to have jumped on the bandwagon. Now, daily street markets are a common sight in cities all around the world.

And with a projected revenue growth of 3.7 per cent in the US alone over the next three years – bringing the industry total there to $1.7bn – food markets offer a great start-up opportunity. What’s more, the winners of the UK-based British Street Food Awards now go through to the European, and then world, finals – proving this is now a truly global industry.

Pros: Very low start-up costs mean you can get going quickly and adapt your offering as you go.
Cons: With many markets already established, the focus will be on finding a point of difference.
Interesting fact: A sixth of Camden Market’s 72 stalls now cater almost exclusively to vegans, with seitan burgers and coconut pancakes providing tasty alternatives to the vegan falafel staple.

2. Canned wine

Barely have we recovered, if we have at all, from the debate about cork versus screw-top wine, than another contender enters the market – wine in a can. But while the wine connoisseurs dive to protect the ears of their Domaine Leroy Richebourg Grand Cru 1949 from this apparently ungracious upstart, the entrepreneurs among you would do well to consider the opportunities.

Today’s consumers crave convenience – we’ve all arrived at the beach with a bottle of rose and no corkscrew – so a wine that offers a single-serve drink and can be carried and stored easily at festivals, picnics and the like will appeal to the millennial generation.

And while the concept of canned wine might sound like it’s in its infancy, plenty of players have already shown there’s money to be made. Nielsen estimates there are currently more than 60 brands in the US selling canned wine and that sales there rose to $32.3 million last year from $3.3 million back in 2014.

Pros: This is still a relatively young market, giving ample opportunity to join early and stake a claim.
Cons: You’ll need knowledge of the wine market and also the ability to get shelf space in supermarkets to really drive growth.
Interesting fact: In 2017, E&J Gallo Winery’s Barefoot brand produced more than 12 million cans of its wine spritzers.

3. 3D printing and manufacturing

While the emergence of 3D printing may initially have felt like something from a futuristic fantasy movie, today it’s very much a reality – and it’s revolutionising manufacturing. Whereas manufacturing components used to be carved from a material, now they can be ‘printed’ from thousands of minuscule layers.

The result is that 3D printing is shrinking supply chains, reducing development times and increasing the ability to adapt to customers’ needs. 

With the right technical skills and equipment, just about anything can be 3D printed, from auto parts to kitchenware – which means a start-up 3D manufacturing firm can be a supplier of component parts to other businesses or a manufacturer in its own right.

Lantos Technologies, for example, was spun out of a mechanical engineering lab at MIT. It initially developed its 3D scanning system for commercial use, but has since become a manufacturer and seller of earpieces – demonstrating the opportunities to be either a supplier or a seller of products… or both.

The research group MarketsandMarkets expects the 3D printing industry to grow to $32.78bn by 2023.

Pros: Ability to produce at volume and at reduced cost will appeal to clients.
Cons: Need to stay on top of legal developments such as copyright.
Interesting fact: 90 per cent of all jewellery is made using 3D-printed moulds.

BL59_startups24. Influencer agents

The worlds of reality TV and social media have brought many – good and bad – changes to modern-day popular culture. One is the rise of the social media ‘influencer’ – a much-followed ‘celebrity’ or other known figure who, through their high numbers of social media followers, can make money from promoting products or services.

Influencers charge brands or advertisers for a picture-led Instagram post. According to the Financial Times, ‘an influencer with 100,000 followers on Instagram can charge around £2,000 per picture, while celebrity influencers with between four million and 20 million followers can charge up to £13,000’. The most successful will make seven figures in a year.

All of these people require agents to find brand affiliations, negotiate deals and create the content for posting. So, if you enjoy mixing in celebrity circles and cutting deals, then this could be the start-up area for you.

It’s certainly a growing industry. According to eMarketer, a survey from WhoSay found that 70 per cent of US agency and brand marketers agreed that influencers’ marketing budgets would increase in 2018. Meanwhile, 89 per cent said influencer marketing can positively impact how people feel about a brand.

Pros: Little start-up costs and a big pond of rising influencers to fish from.
Cons: You’ll need to build relationships with influencers and show you can help them make money. Also, a decade-long study by Offenburg University of Applied Sciences in Germany revealed that for every major player in the US, there are 27 earning less than a McDonald’s worker’s salary as an influencer.
Interesting fact: YouTube gaming star DanTDM, or Dan Middleton, is one of the highest-paid social media influencers, bringing in around $16.5 million per year, according to Business Insider.

5. Alternative protein products

Better education and increased media exposure around healthy eating have pushed the issue of diet higher up the consumer agenda. According to PwC, nearly half (47 per cent) of 18- to 34-year-olds say that they have changed their eating habits towards a more healthy diet over the past year. That’s increased demand for alternative protein products – be it a vegan milk substitute made from peas, cricket protein, or meat-like products made from plants.

To make waves in the market, you’ll need technical knowledge of food production and a clear product message to help you cut through the noise. However, there are benefits to be had if you can do so. A report by the farming investment initiative FAIRR suggests the market for alternative proteins will expand by more than eight per cent a year by 2020, reaching $5.2bn.

So, if you think you’ve got the ability to create bleeding meat-free burgers or milk made from peas, this could be your recipe for investment success.

Pros: Rapidly growing business area that can genuinely be started at home.
Cons: An already competitive marketplace will require innovative products to break through.
Interesting fact: Soybeans are considered a whole source of protein – they provide the body with all the essential amino acids it needs.

6. Green and renewable energy

Being a wind turbine service technician is officially the fastest-growing job in the US, according to the Bureau of Labor Statistics. Solar photovoltaic installers aren’t far behind – a sure indication of the growing focus on green energy generally.

So if you’re looking to invest in or build a start-up in any sector, this could be it. Renewable energy is still a relatively small industry, with wind supplying just 5.6 per cent of electricity on the US grid and solar generating 0.9 per cent – so it’s a great area for entrepreneurs.

Generous business tax credits around the industry – in the US these are up to 30 per cent – have further helped drive interest in the sector, and start-up opportunities are varied. From investment in wind farms and renewable energy plants at the top, other start-up successes are transferring waste into fuel, creating marketplaces for the distribution of unused energy, and building facilities to store hydrogen.

Pros: Still a relatively young market with lots of scalable opportunities.
Cons: Big players will be dominant at the high-end of the market, so you may need to seek opportunities lower down.
Interesting fact: The main forms of renewable energy are solar, wind, hydro, biofuel and geothermal (energy from heat generated under the earth’s surface).

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