10 potential niches for startups in 2021

Monday, August 9, 2021

The popularity of startups in such niches as MedTech (telemedicine applications, targeted search for new medicines, startups in the field of mental health), EdTech (distance learning) has significantly grown due to the very extraordinary year 2020. The market of technological startups, where the new driver is the pandemic crisis, is experiencing a great rise in solutions due to the need for adaptation and the ability to be ready for new crises and challenges of the modern world. It is essential to emphasize that the pandemic has not only become an impetus for the creation of new startups but also exposed the problems of the appearance of the modern world, the solution of which in the post-crisis period requires the efforts of startups. At the same time, it is noticed that the application of all the factors affecting the startup industry allows you to create not only a popular product but also open new niches for creating revolutionary startups.

Startup Jedi

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In today’s article, we will talk about potential niches, show examples of successful startups and the ones which are gaining popularity, startups that both meet the challenges of the crisis and set a completely new vector for the development of the industry.

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We cannot overemphasize the fact that the crisis year has changed our lives and increased the role of technology. They have been and continue to be central to almost all aspects of adaptation in a pandemic. Technologies from the 2021 targeted search for new drugs and remote patient care to the e-commerce AR technology reflect the accelerated trends caused by the impact of the crisis and social distance measures.

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Why the crisis and the global change in our world give new impetus and prospects for a startup niche

Digital medicine technologies are at the forefront of transformation: telemedicine solutions; targeted search for new drugs and substances; new digital therapy solutions.

In the first quarter of 2021, global funding for digital healthcare increased by 9% over the previous quarter. Equity financing for companies operating in the digital healthcare sector reached a record level of $9 billion in the first quarter of 2021, and the number of transactions increased by almost 13%.

For example, artificial intelligence in healthcare: In the first quarter of 2021, almost $2.5B was raised, mainly through mega-rounds totalling about $1.5B. These rounds covered applications from drug discovery to patient payments.

Telemedicine: The companies set a record of $4.2B in equity financing in the first quarter of 2021. Six telemedicine companies have become unicorns.

Mental health: funding increased by almost 54% from the previous quarter to $852B, and transactions increased by 14% to 64 deals.

Artificial intelligence technologies have the potential to change the face of the educational world and, under the influence of the pandemic, are becoming more popular, providing more adaptive, personalized learning to improve outcomes and provide equal access to education. In addition, they will make it possible to accelerate the learning process and to expand the possibilities of distance learning, to improve the performance of students.

Also, solutions based on artificial intelligence can provide high-quality education in remote use.

The Canadian startup Korbit AI is gaining popularity — an educational AI platform for personalized interactive teachers. One more example is the famous Korean platform

Riiid Labs, specializing in educational mobile/web platforms based on artificial intelligence, which helps students while exam preparation.

Solutions in the field of renewable energy sources are gaining popularity among startups in this niche.

Green hydrogen is produced using renewable energy sources as opposed to other hydrogen fuels produced from fossil fuels or natural gas, making it a true zero-emission energy source. It can be used to provide clean energy to high-emission sectors such as transport and heavy industry.

One example is Ekona Power Inc., which is developing a new solution for producing hydrogen on an industrial scale that is inexpensive and clean. Another example is the Heliogen startup, which is operating a solution using computer vision software to accurately align the array of mirrors reflecting sunlight to a target at the top of the tower. A modular system based on artificial intelligence is designed to deliver affordable renewable energy in the form of heat, electricity, or hydrogen fuel.

The search for fresh methods of food production gives an impetus to the popularity of technological solutions. Moving from a farm to a laboratory, companies are exploring new options for the production of food and beverages. Protein fermentation involves the production of products that do not contain animal protein, which can be used to prepare a variety of dishes, including snacks, drinks and frozen desserts.

Protein fermentation companies have gained recognition in recent years, judging by the share of financing: investment growth increased by more than 15% in the first quarter of 2021.

Perfect Day, a startup that uses fermentation to produce dairy products that do not contain animal protein, but contain the same proteins as in cow’s milk, is gaining popularity.

Myco Technology uses the mycelium of fungi to convert plant protein into nutritious protein mixtures. One more popular startup, Clara Foods, is working on the development of food technologies, having created the world’s first egg white that does not contain animal protein, and also creates protein products for sports nutrition, baking and industrial use.

Content creation platforms provide an infrastructure for authors (writers, musicians, artists) to create and monetize content:

tools for recording, editing and publishing;
links between content producers and consumers;
content monetization mechanisms.

The popular Anchor startup for creating mobile podcasts, which allows users to record and distribute podcasts, was bought by Spotify in 2019. One more famous startup is Substack, a newsletter monetization platform that provides design templates, content management, subscription tools and secure payments via Stripe.

The niche of content creation startups is growing every year, reducing barriers to publishing to content authors and expanding their potential opportunities.

Many companies are turning to technologies such as artificial intelligence to better understand their operations, predict fluctuations in demand and respond faster to changing circumstances. For example, in early 2021, the company’s project 44 project to ensure the visibility of the supply chain raised a mega-round of $100M. Meanwhile, popular RELEX Solutions, the winner of the CB Insights RetailTech 100, has raised a total of $224M in funding for its AI-basedd platform for demand forecasting and product management.

AI companies raised a record $33B in equity in 2020. Since commercial AI applications are rapidly scaling up, businesses want to upgrade the existing data management and IT infrastructure. Startups are looking for best practices for searching and storing big data in different formats, deploying AI models, monitoring their performance, and developing ethical solutions that meet the new rules.

Workplace stress, awareness of mental health and lifestyle-related illnesses are all driving the demand for wellness solutions. Such trends suggest that the niche of startups in the field of health and well-being will continue to grow during 2021 and in the following years.

Measures aimed at social distancing and home isolation have increased the demand for home fitness and wellness care. For example, the popular online training startup Zwift received funding in the amount of $450M.

ПЛАШКА 9. FinTech

FinTech has developed significantly over the past few years and continues to change rapidly. Digital payments are without a doubt the main driving force of the fintech sector. With a projected growth of 12.8% from 2019 to 2023, the total transaction value is expected to reach $6.7T by 2023.

The use of digital wallets increased to 83% during the pandemic, and experts predicted that by 2025 the industry would cost more than $10T per year. In addition, there were over 779 billion digital transactions worldwide in 2020, which are expected to increase by 13% in the coming years, and by 2022, cash payments will be the least common mode of payment.

In recent years, brands have been using AI technologies to improve the customer’s buying experience, analyse data, increase sales and predict trends. In addition, by combining inventory tracking with powerful trend forecasting tools, brands can have a significant competitive advantage.

Take, for example, the popular British startup Finery, which has created an automated wardrobe planning tool that uses analytics to record the purchases of its customers and add them to a personal virtual wardrobe. The platform also allows women to create images from it and even choose their clothes from more than 10 000 stores.

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From the mass deployment of telemedicine to remote operation, technologies have become central to adaptation, as each sector is coping with the effects of the pandemic crisis.

Resources: fortunly.com, Jedi Startup, mckinsey.com, Financesonline.com game-changer 2021 (cbinsights.com), 12 technology trends, watch closely in 2021 (cbinsights.com). The 70 Best Startups You Need to Keep an Eye on in 2021 (cloudways.com).