What kinds of start-ups are most likely to get funding this year? What are the hot sectors in 2013?
First a few comments about start-ups gaining funding in 2013 or in any year. At any one time there are thousands of good business ideas and hundreds of start-ups in search of funding.
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The supply of early stage funds will never match the demand for those funds, so only the very best start-ups have a chance of raising capital.
What improves the chances of start-up funding success?
Critical factors for success include a clearly articulated business plan, a strong management team, customer traction, good margins, a growing industry sector and strong competitive advantages.
If a start-up has these characteristics, which sectors are attractive to investors in 2013?
A good place to start is to observe early stage funding trends in other markets. In the USA, the number of start-ups attracting seed funding in 2012 jumped by 65% over 2011 according to a recent report by CB Insights.
The internet sector continues to lead the pack (information technology and software), followed by healthcare (medical devices and equipment), then mobile (CRM) and telecom (wireless). Green tech is in a slump, but energy renewables are emerging.
In Australia, the following sectors are growing and gaining traction with consumers, businesses and investors:
- Education support
- E-commerce and e-retail
- Collaborative commerce and recommendation engines
- Environmental solutions
- Local commerce and information
- True mobility
- Fitness and diet
If you are seeking funding, try to avoid launching a business that is a “me too” or in a low growth sector: aim to be innovative, creative, disruptive, exciting and profitable!