With 2020 being so eventful (well, I would say that’s quite an understatement!), many of our clients have recently requested targeted company leads on up and coming or trending industries. Covid19 has pushed us to explore new subsectors and bring-to-market new health and medical, food and beverage, IT, and distribution and warehousing industry technologies.
If the ultimate goal is to locate scaling, high-growth companies, the theory, “if you’re going to go fishing, use a fish finder and find the fish first”, would make most sense. With this approach in mind, our team has referenced PitchBook, along with many other valuable resources, to assist our researchers in delivering those most active, high-growth companies to our clients. PitchBook is a platform that focuses on companies that have recently been funded. It is clear that private equity and venture capital companies typically invest in companies that have a high probability of scaling. With the theory, “If you’re going to go fishing, use a fish finder and find the fish first” in mind, we can take a look at who the PE and VC companies are investing in, and “follow the money”. In the midst of a pandemic, where companies are facing the unknown, these companies, we know, are receiving funding and likely to scale.
According to PitchBook, here are the top 10 emerging industry subsectors receiving the most funding:
- Quantum Computing (IT)- Quantum computers utilize quantum-mechanical phenomenon to encode information into quantum states and process vast numbers of calculations simultaneously. Companies in this space develop and produce quantum computers, components and related emerging technologies such as quantum chemistry, quantum drug discovery and quantum dots technology, as well as facilitate and advise businesses hoping to harness the power of quantum computing.
- Robotic Process Automation (IT)- Robotic Process Automation (RPA) is the practice whereby an algorithm or computer software performs actions usually carried out by a human in order to complete rule-based tasks. It differs from traditional software by working at the user interface level, replicating the exact actions a human user would take, enabling companies with tools to create their own software robots to automate any business process.
- AI-Powered Drug Discovery (Healthcare)- Companies in this space are experimenting with artificial intelligence for the purposes of researching and discovering new pharmaceuticals and drug therapies. AI systems are able to sift through millions of different chemical compounds and isolate the most promising candidates at a fraction of the time it would traditionally take human researchers. However, there has yet to be a drug put to market that has been created using AI, but proponents hope that upcoming advances in technology might decrease drug development times, and enable pharmaceutical companies to develop drugs in previously unprofitable areas.
- Assistive Technology (Healthcare)- Assistive Technology refers to any item, piece of equipment, software, or product that is used to increase, maintain, or improve the functional capabilities of persons with disabilities. Though the space has been around for some time, a new wave of companies are using emerging technologies such as VR/AR, artificial intelligence, and robotics among others to jump start innovation and offer more compelling solutions for disabled individuals.
- Insect-Based Foods (B2B/Food Manufacturing)- Insect-Based Foods companies are using insects as a key ingredient to produce foods and beverages such as beer, pasta, energy bars, pancakes and granola for human consumption. Growing insects for human consumption has been touted as a sustainable and cheap alternative that is high in protein, vitamins, fiber, and minerals, all while having a lesser environmental impact than meat.
- Electric Vehicle Charging Infrastructure (Manufacturing)- This space includes companies building EV charging infrastructure to support the electrification of the mobility sector. The number of charging outlets has significantly expanded as awareness and adoption of electric vehicles has increased, and this trend is expected to continue and accelerate as large automakers such as GM continue to make investments into electric vehicle development.
- Indoor Farming (Food Processing & Manufacturing)- Indoor Farming refers to the growing of crops or plants in a facility enclosed from the environment, usually on a large scale, using technologies such as hydroponics and artificial light. Indoor farming offers the advantage of using a controlled environment such that growing can happen year round, and whereby produce can be stacked vertically to maximize output in a confined space. Companies within Indoor Farming include the growers and facilities, the equipment inside, and the software to manage them.
- Cellular Agriculture & Clean Meat (Food & Manufacturing)- Cellular Agriculture focuses on the production of agriculture products from cell cultures using a combination of biotechnology, tissue engineering, molecular biology, and synthetic biology to create and design new methods of producing proteins, fats, and tissues that would otherwise come from traditional agriculture. Most of the industry is focused on animal products such as meat, milk, and eggs, produced in cell culture rather than raising and slaughtering farmed livestock. The most well known cellular agriculture concept is cultured meat. Clean Meat is identical to animal meat at a cellular level, but is grown in cell culture rather than in an animal’s body. Clean Meat has so far been one of the most successful applications of cellular agriculture. The process is drawing attention for its potential to disrupt the traditional meat market, possibly ameliorating the effects of climate change by reducing the necessity of raising cattle.
- Blockchain Real Estate (IT)- Blockchain Real Estate refers to the use of blockchain and the underlying distributed ledger technology to increase transparency in real estate transactions. Upgrading the traditional Multiple Listing Service (MLS) database to a blockchain-based one would create a more transparent ledger system where brokers and agents could see the entire transaction history of a property.
- Sustainable Packaging (Packaging & Manufacturing)- Companies in this space are developing alternatives to traditional packaging materials in forms such as bioplastics and plant-based polymers, among others. As a variety of national and local governments around the world begin to ban single use plastics, corporations are looking for affordable and sustainable alternatives. This space is connected to the theme of the circular economy, which aims to reuse materials to eventually eliminate waste.
Other backed and trending or emerging industries include Cannabis Beverage, Electric Vehicle Platform, Cloud Gaming, Neurotechnology, Sleep Technology, Mental Health Technology, Ghost Kitchens, and Warehouse Management Technology.