People always want to know what types of startups have the biggest potential in the market — to invest or even start a business in. During the last two months, I learned about original ideas and business models of various startups from applying for SWE intern roles and reading newsletters about startups (one of my must-dos every day). I observe 5 types of startups that show great demands from the market and have the potential of booming growth in 2021.
B2B (Business-to-Business) SaaS (Software-as-a-Service) are extremely popular these days, majorly due to the booming online co-working during the COVID-19. B2B SaaS serves a 30%-40% portion of startups invested by Y-Combinator in the past two years. They serve as a productive tool for companies to operate and grow, from startups to tech giants.
More company owners realize the necessity to transform how the company should operate into a more automated and efficient way by adapting B2B SaaS. Some examples I used to collaborate with engineers in my company include Slack (messaging), Asana (project management), ClickUp (Scrum sprints), Lattice (goal tracking), Tandem (standup chats), and Loom (video record sharing). These SaaS greatly help automate our team workflow efficiently and create a better online co-working environment.
Another key growth in B2B SaaS I noticed is the no-code / low-code development. No-code / low-code SaaS helps companies to promote their product and interact with consumers online by creating websites and tools with little code. Popular no-code / low-code SaaS includes Stripe (transaction plugin), Mailchimp (email marketing) and Webflow (generate websites from design). No-code / low-code SaaS avoids engineers developing a website or tool from scratch, but it still requires customized development when the product becomes complex.
Out of my expectation, healthcare with tech generates outstanding growth in recent years. Among all startups in YC, healthcare takes up 14–28% of them.
The main reason digital healthcare grasps a large consumer base is because of the lack of efficiency in the US healthcare system. It takes an unrestful amount of time to make a reservation with the nearest specialist and wait until the provider is available. Startups that move healthcare online solve this problem perfectly, such as Babylon health (video appointment with doctors), Freenome (spot pattern to treat cancer), and Alector (cure Alzheimer’s). My intern company, Done., aims to connect ADHD patients with providers online, growing fast and receiving 2k+ appointments each month.
Another key growth is the daily healthcare sector. With people pay more attention to their daily health nowadays, startups aim to monitor their health cycle and give suggestions on users’ behaviors, such as Flo Health (track menstrual cycles for women), DNA Nudge (shop suggestions based on DNA test), and Keeps (prescription for men hair-loss).
Consumer Goods & Services
Since Amazon, selling goods to consumers online has never been less popular. In the past few years, Amazon-like startups started to target selling or renting goods in different categories, taking up 9–13% of YC groups in past two years.
The key factor in fast-growing startups for consumer goods & services is sharing economy. Rather than being a vendor itself, a sharing economy startup provides a platform that connects vendors and consumers. Notable examples include Uber (ride-hailing), Airbnb (home-sharing), DoorDash (food delivery), and Instacart (grocery delivery). Other than the incoming giants, new startups also expand sharing economy into different industries, like Cloud Kitchens (shared kitchen for delivery-only restaurants).
FinTech (Financial Technology) is taking the wheel in making the banking system and stock market accessible from people anywhere. FinTech startups take up 6–8% of VC groups in the past two years. Noteworthy examples are Robinhood (stock investments), Venmo (peer-to-peer transaction), and Square (business payment).
However, the major issue in FinTech startups is financial regulations. FinTech companies are strictly regulated by Congress, which even encounter lawsuits in transaction cases.
Tired of cliche social media, people are looking for new ways to entertain themselves during the quarantine. Consumer media is emerging to provide unique ways for users to interact with and enjoy media, taking up 6–7% of YC groups in the past two years. Examples include Twitch (live-streaming), Discord (server-based chatroom), and Teleparty (interactive Netflix).
Of course, any startup with a genuine idea with passion can become successful. Nevertheless, choosing the correct category that matches consumer demands can help you win investments from VC and profits in the long-term.