By Michael Zhou
The venture capital landscape continues to grow around the world. In recent quarters, startups have closed more pre-seed and seed funding rounds that ever before. Moreover, these venture capital investments are crossing the $100M mark. With so much capital available to startups, entrepreneurs should understand how their industry stacks up against the competition. While startups from all industries are funded around the globe, you might find yourself in a highly demanded sector. To learn more, here are some of the most active industries that venture capitalists are investing in.
Internet and Software Services Industry
Over the last decade, the internet and software services industry has received the most venture capital funding of any other sector. Investments in this sector have led to faster payment processing, questions and answer websites and online job boards. Venture capitalists such as Lee Jacobs of AngelList have found successful returns in this industry and continue to invest in similar startups. However, these VCs are more sophisticated at picking which internet and software startups to invest in. You will need a truly innovative product or service to get the attention of serious investors in the internet and software industry. Undoubtedly, venture capitalists will continue to invest heavily into the internet and software industry.
Industrial Manufacturing Industry
Venture capitalists have invested billions of dollars into the industrial manufacturing industry. They are interested in startups that are disrupting the current production methods and techniques in industrial settings. For example, additive manufacturing is expected to completely change how industrial companies manufacture products from start to finish. The technology is expected to become widely available for industrial manufacturing within the next couple years. In fact, this industry has already seen enterprise companies buying out established startups with proven technology and business models. If your early-stage startup promises to innovate how to manufacture products, machines or equipment, you will find many venture capitalists who are investing in this area.
Developing Biotechnology Industry
Next, the healthcare industry receives plenty of attention and investment from venture capitalist. However, the returns for the healthcare startups is relatively low compared to the sub-industry of biotechnology. In recent years, the biotechnology industry has paid the highest returns to venture capitalists out of the entire healthcare sector. Many investors are competing to profit from the next wave of genetic engineering to improve health for billions around the world. It is one of the most highly anticipated technology trends for the upcoming years. For startups in the biotechnology industry, this is one of the best times to raise capital at a large scale.
Space Exploration Industry
Next, the space industry has been the next frontier for exploration and investment. While venture capitalists were originally slower to invest in space exploration, the trend has changed dramatically. The venture capital investment in private space companies is at a very high level. Startups have found innovative ways to commercialize products and services in the space industry. With the introduction of satellite services, space companies are providing applications to dozens of other industries. Moreover, the space industry is on the verge of creating space tourism and space mining. These types of startup products or services are a hot spot where venture capitalists are investing right now.
Security Defense Industry
Even during times of peace, the security defense industry continues to receive high amounts of venture capital investments. The next generation of defense technology will include new applications of emerging technologies like artificial intelligence, virtual reality and authentication systems. While governments and sovereign entities continue to receive new types of digital attacks every day, startups are leading the way with new forms of protection. Venture capitalists are looking for solutions and platforms that can keep citizens, corporations or entire nations secure from attacks. By providing a solution, you can find investors ready to fund your startup.
These are some of the most active industries that venture capitalists are investing in. The internet and software industry have proven returns over the past decade. Recently, the manufacturing sector is expected to experience a major disruption. The biotechnology industry continues to lead the way for the healthcare investments. More so, space exploration has taken off with the commercialization of products and services. Finally, venture capitalists are investing in the latest defense technologies. If your startup operates within these sectors, you could end up with a choice for pre-seed funding options. Otherwise, you might want to consider pivoting your startup to serve these industries that venture capitalists are investing in.
Michael Zhou is a Senior VP of Business Intelligence Development and has assisted the Fortune 1000 company with expertise in the web as a whole, including ground-zero marketing efforts that benefit both consumer and vendor. He is also contributor on Esprittoday.