The textbook definition of diversification is reducing one’s risk by making investments in various asset classes (stocks, bonds, real estate) and industries.
For Angel Investors (investing in early-stage companies), diversification isn’t just about investing in more startups, it’s about investing in different startup sectors.
Today, I’m going to reveal some of my favorite startup sectors…including ones I’ve personally invested in this year.
Before I can do that, I have to get one pressing matter out of the way.
You see, my investing partner, Chris Graebe, put together a FREE masterclass on Pre-IPO investing (read: finding red-hot startups before they’ve gone public).
- He covers the basics of this money-making strategy.
- Explains the process we use to find the most private startup deals for us to invest in.
- And best of all…reveals how you can do the same!
Now that we have that out of the way, on to my favorite startup sectors.
Like I said before, I’ve personally made investments in these very sectors this year, and am actively looking to add more.
Financial Technology, or FinTech, is one of the most exciting industries right now. Anything that enhances financial processes — that’s FinTech. The term refers to customer-facing tools that allow for mobile payments, easy investing, and personal budgeting apps. It also refers to tools used by businesses for things like payroll and credit authorization.
FinTech Startup to Watch Out For
Guac is a goal-based, short-term savings and rewards app — the first of its kind.
The problem Guac solves goes like this: the younger generations want to save for things like travel, concerts, and gadgets, but are notoriously bad at doing so. Guac gives these digital-natives an easy-to-use digital tool to incentivize savings, specifically for the “experience economy.”
Once a user’s goal is met, they can swipe right over to the in-app marketplace and book a flight or hotel or buy that new dress and get cashback. Guac gets commission money from sites like Booking.com and big clothing brands and passes the profits on to the users. Cashback goes right into their next goal, creating a save, spend, earn, repeat ecosystem.
I think many investors have had their eyes on drones for a while now. Military use of drones has been huge for decades, but personal and commercial use is just now starting to take off.
The FAA recently made exemptions that allow drone use in the insurance, construction, and agriculture industries. Also, Amazon and UPS, among others, now have FAA certification to run drone deliveries.
After this news, it’s off to the races for retailers and drone technology startups. The near future will undoubtedly see drone delivery becoming the new norm while usage for aerial photography, disaster relief, construction, and recreation continues to steadily grow.
Drone Tech Startup to Watch Out For
We just added a drone startup to our Angel Insider Deal Flow that is a total drone delivery solution for small retailers.
With proprietary drones, software, and systems, this startup gives brick-and-mortar businesses the tools to compete with Amazon. Until now, these businesses couldn’t offer same-day delivery, placing them well behind the big boys.
Now, with this startup, retailers can give their customers same-day delivery with existing infrastructure, turning retail stores into customer fulfillment centers.
Advertising Technology or AdTech refers to a wide range of tools and software. At its core, AdTech makes it easier to get the right eyes on the right ad at the right time.
Advertisers want to maximize ROI on each campaign. This means reaching the target audience, optimizing campaigns, and gathering customer insights.
Publishers want to make advertisers happy, get paid to show ads to their audiences, and maintain brand identity throughout the process.
AdTech helps both parties meet their goals through constantly evolving digital solutions.
AdTech Startup to Watch Out For
Rad Intelligence helps advertisers connect with customers in a very unique way. Clients that want to run ads are matched with influencers, aka online celebrities.
Influencers act as publishers, getting paid by Rad to share ads with their large audiences. This is great because the target audience trusts the influencer. Viewers respond to their favorite influencer’s recommendation far better than an invasive pre-roll or banner ad.
Rad Intelligence is one of the only influencer marketing platforms that guarantees ROI. The business model, traction, and timing are all just right for Rad Intelligence to take off.
Human Resources Technology provides tools that improve things like hiring and recruitment, talent management, compliance, and Corporate Social Responsibility. HR Tech will be at the heart of all future workplaces.
Using AI and other smart tools, traditional HR processes are modernized and automated.
HR Tech Startup to Watch Out For
ThisWayGlobal is a bias-free job matching platform that integrates with HR departments’ existing systems.
With this AI-based tool, candidates are matched to jobs incredibly fast, and without the inherent biases that all human hirers/recruiters have.
ThisWayGlobal’s system beat its competitors and other AI tools (including IBM Watson) in a job-matching competition.
The COVID-19 situation has created record unemployment. Post-pandemic, we are going to see the largest rehiring period in human history. Who will make the HR departments’ workloads possible? HR Tech startups like this one.
You DON’T have to be a millionaire. You DON’T need to go through a lengthy application process. You DON’T need a career as an investment banker. Learn how YOU can start investing in today’s hottest Pre-IPO companies with this FREE investing masterclass.
With the development of Industry 4.0 (the fourth industrial revolution) we are seeing the rapid growth of many smart-manufacturing solutions.
Industry 4.0 revolves around the idea of a smart factory. In a smart factory, processes are run through cyber-physical systems. The machines are connected through the Internet of Things and run on Big Data and Artificial Intelligence.
Buzzwords aside, manufacturing is headed towards a smarter, more automated future. The implications for production and supply chains are immense.
Manufacturing Startup to Watch Out For
Augury provides factories with predictive analytics tools.
By collecting data from the entire factory system and making sense of it with AI, Augury can predict when something is going to go wrong.
When a part of a machine is likely to fail in the coming weeks or months, an alert is sent out so it can be replaced, preventing a more catastrophic failure and production delays.
Agricultural Technology disrupts traditional agriculture and makes food production cheaper, safer, and faster. AgTech in some form is already an essential part of practically every farm in the US.
The need for more food is ever-present. Current projections put us at a serious deficit in the future with a global population we won’t be able to feed.
Not only do all of the normal stimulators of innovation come up in AgTech, but also serious, looming necessity pushes it forward.
AgTech Startup to Watch Out For
Just by monitoring the moisture levels in a field of crops, GroGuru can increase crop yield by 10-20% on average.
Devices are stuck into the soil at key locations across a farm to monitor the soil. Then, insights are sent to GroGuru’s software. Irrigation can then be easily tweaked to raise or lower moisture levels, significantly increasing crop yield and saving money on water and resources.
The Remote Working industry creates tools that allow people to work and collaborate outside of a traditional office setting.
COVID-19 has created many success stories in this field. Even before the pandemic, there was a gradual shift each year towards more remote work. Now, it’s impossible to ignore the potential of remote working tools and platforms.
Remote Working Startup to Watch Out For
Albi is a software tool that plugs into your virtual meeting or video conference and listens in to create insights.
An entire transcript of the meeting is made, meaning less note-taking and more focus on what’s being said. Then, Albi produces action items and follow up tasks. Requests, plans, appointments are all automatically taken down and sent to the appropriate party.
On top of that, the software makes suggestions about who was talking too much or not enough and gives suggestions on how to have a more efficient and cost-effective meeting.
Sustainable Consumer Goods
Consumer goods are anything bought for regular consumption by an average consumer. These products are used in the home, school, or office. Sustainable consumer goods are the same, but without creating waste or hurting the environment.
For years the environmentally conscious have been driving this industry. This industry is on target to hit $150 billion in the US alone by 2021.
Sustainable Consumer Goods Startup to Watch Out For
mcSquares designs and manufactures innovative home and office supplies.
The idea of a traditional whiteboard has been broken down and iterated across many fresh designs. These help a home or office (or home office) stay organized and optimized while reducing paper waste.
With remote working and home education being the new norm, mcSquares has found major success with consumers.
Pet care encompasses veterinarian care, foods and medicines for animals, shelters, and a variety of other pet products and services.
Today around 68% of US households have pets. Many young people are choosing pet ownership over having kids while the aging population gets furry friends to keep them company when children move out or they retire.
More than ever, people love their pets and are likely to spend extra cash on taking care of them.
Pet Care Startup to Watch Out For
Bond Pet Foods is a Denver-based startup that makes a special type of animal food. The food is made from real animal protein without hurting or killing any animals in the process.
To make the food, animal cells are harvested without slaughter and combined with natural microbes. This concoction is then fed a nutrient-rich broth of vitamins, sugars, and minerals in special fermentation tanks to help it grow. The result is healthy pet food without harming any animals.
Cybersecurity is the practice of protecting networks, systems, and programs from digital attacks. Criminals want to steal or destroy sensitive information and cybersecurity is the only line of defense.
The growing maliciousness and creativity of cybercriminals are pushing innovation in this industry. Today, cybersecurity is a part of the daily lives of individuals and the essential tech stacks of nearly all businesses.
Cyber Security Startup to Watch Out For
Darktrace uses AI and a team of mathematicians to provide an Enterprise Immune System service. This system detects and responds to cyber threats across cloud networks, virtual networks, the Internet of Things, and industrial control systems.
The tool requires no setup, is self-learning, and identifies threats and updates its strategies constantly and automatically.
Darktrace won “Most Innovative Security Company of the Year” from Bloomberg Innovator and the “GSN Homeland Security” award.