Last week we identified the top industries in terms of market size. Large markets are a boon for startups because it implies that there’s plenty of room for the company to grow – and provide a return to investors. However, a large market isn’t the only market metric investors should look for. Because startups take years to reach success, it’s important to consider market growth rates. So while a large market now is good, the question of how large a market will be in the future is also crucial.
In this Chart of the Week, we identified the top 10 industries with high average growth rates in 2021. We examined startups that raised capital between January 2021 and January 2022 before drilling down into their target markets and how rapidly those markets are growing.
While real estate & construction won out for the largest current market size, the fastest growing market was marketing & advertising at 18.6% annually. Online and data-driven advertising are rapidly growing sectors. So startups in this space have plenty of opportunity to grow alongside their target markets. The business services, software, & application industry had the second largest market growth rate at 15.8%. The lower end of the top 10 fastest growing markets included media, entertainment, & publishing; energy, power, & natural resources; and healthcare & pharmaceuticals. Slowed growth often indicates mature markets where there’s limited innovation or heavy regulations. Startups could struggle to attain ample market share in these sectors.
Market growth rates are often great indicators for earning potential and general market trends. In particular, growth rates highlight which markets are gaining relevance and which are on the decline. A startup capturing even a small share of a market with high growth potential could be an incredibly lucrative opportunity for investors.
Note: all data used for the Chart of the Week comes from the KingsCrowd database and represents a snapshot of the crowdfunding market.
Wall Street has Morningstar, S&P, and Bloomberg
The equity crowdfunding market has KingsCrowd.
About: Carolyn Price
Carolyn is passionate about mission investing within the startup ecosystem. Prior to KingsCrowd, she was a founding team member at Rentearn, a proptech startup that makes real estate investing more efficient and equitable for inexperienced investors. Carolyn also co-founded a fintech startup, which was accepted to and funded in MIT Sloan’s accelerator program, that makes long term investing simple for university students. Carolyn holds a degree in Economics and Political Science from Wellesley College. In her free time, she enjoys practicing yoga, stand up comedy, and surfing.