The world had an epic phase last year with the emergency of the coronavirus epidemic, but apart from the everyday lives, it also brought a tremendous shift in the whole start-up ecosystem. Though every coin has two sides, and so does this challenging situation. With Work from Home (WFH) becoming the new regime, the situation poses a bunch of opportunities for start-ups. As per data, more than 69 percent of start-ups begin their journey as home businesses. Seamlessly working from home requires newer technologies and that brings us to the expectations of an increase in tech start-ups in the coming few years.
Running a start-up business has never been easy, and that too when the start-up failure rate is at 90 percent. With the new technological advancements and changes taking place in this industry, it becomes essential for start-up owners or potential start-up founders to brace themselves and grab the opportunity at hand. So, what are the future trends in this industry? Let’s dive in.
The Gig Economy
When a company hires an independent contractor or a freelancer, it becomes part of the gig economy. In the coming years, it has high potential as a lot of employees have lost their jobs and are trying to do something on their own, but not everyone has that capital to start a full- fledged business set up. So, here start-ups can take advantage by hiring independent contractors, as it is less expensive than hiring full-time employees, and supplying them with all the job benefits is not a compulsory requirement.
As per a MasterCard survey, transportation services, asset-based services, professional services, and homemade goods services are the leading sectors of the gig economy with market capturing of 57.8 percent, 30.3 percent, 3.8 percent, and 8.2 percent respectively. In addition to that by 2023, the global gig economy is expected to reach a whopping $455 billion with a CAGR of 17.4 percent. It stood at $204 billion in 2018.
A few companies such as Airbnb and Uber have already implemented this concept. So, in short, the gig economy’s expected growth would lead to a new trend for start-ups: to hire gig workers and get the benefit of less overhead expenses and equipment costs.
Environmental, Social and Governance (ESG) Investing
Large organizations are already coping up with implementing Environmental, Social & Governance (ESG) as one of their corporate agendas, and with that start-ups are no longer excluded. More than 60 percent of start-ups are already trying to implement ESG in their corporate structure, while
50 percent of the start-up businesses that are not a part of the ESG framework are planning to opt-in soon. In addition to that, in Q1 2020, out of the total $384.7 billion start-up investments, $45.6 billion was poured into impact investments.
Implementing ESG in the company structure enhances the reputation and shows that the start-up values social and environmental causes like climate change. ESG can be implemented at any level of start-ups; for environmental purposes, a start-up can use biodegradable packaging or can respect the community by applying good cybersecurity for data protection of customers, or simply have better governance that hikes employee work level satisfaction and promotes a smooth work culture. With more organizations accepting ESG as a core value enhancement, it would be a great trend for start-ups as well.
Dash in ABC-Tech Start-ups
Tech start-ups include fin-tech, Edu-tech, health-tech, artificial intelligence, blockchain, etc. With social distancing, online education, and people trying to avoid crowded places, tech start-ups have more opportunities. At present fin-tech accounts for 7.1 percent of the total start-ups, followed by healthcare and life science at 6.8 percent, AI at 5 percent, gaming at 4.7 percent, and ad-tech and ed-tech at 3.3 percent and 2.8 percent respectively.
Tech start-ups include fin-tech, edu-tech, health-tech, artificial intelligence, blockchain, etc. With social distancing, online education, and people trying to avoid crowded places, tech start-ups have more opportunities`
Start-ups are getting digitized and with that new innovations are spurring well. One such example is biotech start-ups. It already values at $295 billion and with technologies like DNA analysis, it will open the realm of new possibilities for the online healthcare industry. There are other trends predict-ed as well, as per Goldman Sachs the virtual and augmented reality market can reach $80 billion by 2025, which is only at $7 billion at present. So, with the changing requirement of consumers and innovation taking place, the tech start-up boom is not that far.
CryptoCurrency Based Start-ups
Cryptocurrency based start-ups can have two approaches.
The first approach is based on crypto transactions as a payment method and the second is start-ups that are in the business of cryptocurrencies. With the changing time, we can expect a boom of both of these soon. Cryptocurrency has a safe and decentralized digital system that implies encryption for monetary transactions in terms of digital coins.
There are multiple cryptocurrencies like Bitcoin, Etherum, Ripple, Dash, etc. There were 1.1 million average transactions of Etherum in Q3 2020 which was 3.5 times more than that of bitcoin. Bitcoin’s average daily transactions stood at 3,19,000 for the same period. Talking about the transactions as a mode of payment, cryptocurrencies are skyrocketing. On March 22, 2020, the raw amount of Bitcoin payment was 391.419k which amounted to 858.263k on January 29, 2021.
Cryptos can also be used to raise funding faster than the traditional methods, there are various revenue methods for crypto based businesses like Bitcoin Forking Start-ups, Bit-coin Wallet Service Start-ups, Decentralized Exchange with Atomic Swaps, Cryptocurrency MLM Service for Start-ups, and a lot more. Even giant companies like Tesla have said to be planning to accept it as a payment method. Thus, without a doubt, this is one of the hottest trends for a start-up ecosystem in the coming few years whether it’s based on transactions or minting coins.
Well, the list of trends goes on with the innovation and development of new technologies, and sooner or later that will open many more realms for start-up economies globally.