Startups – regardless of what they do or the industry in which they operate – are all based on the principle of creating a scalable company that provides customers with new or better goods or services than what currently exists. Some industries, however, are more popular than others.
Popularity can be defined in a number of ways. But, examining the most popular startup sectors based on venture capital interest and industry investments provides insights most beneficial to entrepreneurs and early-stage startups.
This specific type of popularity was determined by examining a breakdown of startups selected by Y Combinator, one of the top startup accelerators in the U.S., with the five most common industries selected from Y Combinator’s two recent groups of admitted startups – Summer 2018 and Winter 2019. This represents a total of 321 startup companies. The five most common industries from Y Combinator’s summer and winter groups were then compared against data compiled by PricewaterhouseCoopers, a multinational professional services network, which confirmed that those industries consistently rank in the top 10 for receiving the most investments. Below are those top five most popular startup sectors in this area.
1. Business-to-Business (B2B) Software and Services
Startups that operate in the B2B Software and Services space made up 30 and 40 percent of the Summer 2018 and Winter 2019 Y Combinator groups. This sector creates services for companies to better manage their business or interact with their customer base. Examples include Slack, the messaging platform, and Asana, the project management software.
2. Healthcare
Startups that operate in the Healthcare space made up 28 and 14 percent of the Summer 2018 and Winter 2019 Y Combinator groups. Startups in this sector typically offer new and more convenient ways for people to manage and track their well-being. Examples include Flo Health, which helps women track their menstrual cycles, ovulation and fertility days, and Keeps, which offers a simplified prescription and delivery process for hair-loss medication.
3. Consumer Goods and Services
Startups that operate in the Consumer Goods and Services space made up 9 and 13 percent of the Summer 2018 and Winter 2019 Y Combinator groups. Startups in the Consumer Goods and Services sector provide fresh spins on existing goods and services, or bring entirely new ones to consumers. Examples include food delivery services, like DoorDash, and home-sharing services, like Airbnb.
4. Financial Technology (FinTech)
Startups that operate in the FinTech space made up 6 and 8 percent of the Summer 2018 and Winter 2019 Y Combinator groups. FinTech startups leverage technology to make financial services more accessible and convenient. Examples include Venmo, the mobile payment service, and Robinhood, the financial services company that makes investing in stocks more accessible.
5. Consumer Media
Startups that operate in the Consumer Media space made up 7 and 6 percent of the Summer 2018 and Winter 2019 Y Combinator groups. Consumer Media startups provide new ways for people to interact with and enjoy media. Examples include live-streaming platforms, like Twitch, and online communities and forums, like Reddit.
While these five sectors might be the most popular, it’s important to note that a great idea can transcend any popularity shortcomings. For more information on how to present your idea to investors in the best way possible, read Richard Sudek’s series on how to pitch to investors.