Startup's are set to benefit from a drastic improvement in market conditions in 2022. The post-covid economy is already providing plenty of growth opportunities across all sectors and industries, and the challenges that different sectors have encountered in the past have now brought new opportunities for growth in 2022. In this blog, we explore the most popular sectors for startup opportunities in 2022.
Although the Covid-19 pandemic has taken its toll on the world and business in particular, many sectors experienced growth throughout 2021, especially those developing technology with the consumers in mind. In particular, the businesses where people can make use of them whilst being at home have seen huge growth - for example, On-Demand Tech and EdTech.
Between 2019 and 2020, there was a rise of digital security, quantum computing, and also crypto-currencies in 2021, we experienced some new leaders - services-on-demand took the lead, with the biggest increase in deal activity (growing from 75% with 32 announced investments in 2020 alone, to 56 in 2021), closely followed by EdTech and PropTech.
Below, we delve into the fastest-growing start-up sectors currently in the UK, and explore the companies who are paving the way of innovation:
Services-On-Demand -
The UK's fastest growing sector has been listed as services-on-demand. Services-on-demand allow their customers to consume a service immediately, from anywhere and at anytime. These services can include anything with the likes of IT, mobility, parcel collection and delivery, and also workforce provision. The growth of on-demand services has been driven by it's technological developments and also it's changing customer requirements: as customers have grown to expect instant gratification as a result of the companies like Amazon and Netflix.
Around 192 of the UK's active high-growth companies operate in the services-on-demand sector, which has since becoming extremely appealing to investors, since they were in high demand during the peak of the Covid-19 pandemic.
There's no surprise at all that all three of the sector's top companies are within the on-demand grocery business, as the pandemic prompted a huge demand for takeout and online grocery shopping - a great company that comes to mind is Mindful Chef.
Mindful Chef has managed to raise £9.3m to date, after being founded back in 2015 by Giles Humphries, Myles Hopper and Robert Grieg-Gran. The Mindful Chef founders wanted to create a recipe box service that put nutrition, sustainability, and the environment at the forefront.
With two incredibly successful crowdfunding campaigns under its belt, a record of 10 million ingredients delivered and a 4.6 star TrustPilot rating, this company has definitely been one to pave the way for the sector.
EdTech -
EdTech has become the second fastest growing startup sector in the UK. Education technology introduces tech tools into the classroom or even at home, which helps to create a more engaging learning experience. EdTech's help makes education a lot more accessible by opening up world-class academic resources to people around the world, and even making them available 24/7. With the impact of Covid-19, it definitely encouraged the growth of the EdTech sector, as teachers needed to find digital ways to educate their students during the global lockdown.
London-based Kano, is the EdTech company that has raised the most equity to date, currently sitting at £70.8m. Kano sells kits, which allows kids to build and customise their own technology, such as computers and headphones.
Another great EdTech company is Perlego, who has raised a total of £55.6m. Perlego is an online library of academic resources and different tools, allowing students to have access to them from wherever and whenever. Students can pay for a subscription to Perlego, rather than having to buy each textbook individually, helping them to save money over time.
Sustainability -
Across the recent years, we have seen a change in how governments view climate change. Since adopting the phrase "climate emergency", it has provided a focus on solving climate challenges across the world. At COP26, world leaders agreed to work together in order to "turbo-charge the uptake of clean technologies", by introducing worldwide standards and policies.
An important outcome of the COP26 summit was for governments to encourage private investment in low-carbon technologies. This development should help green technology bring in billions, if not more, in private finance over the next few years. Climate change has become the pressing concern facing every single country on the planet, and governments now seem to want to fix that.
The green sector isn't a discrete set of businesses or an industry in its own right, but going green has a role to play across all of the sectors. This will include important carbon-producing sectors like steel, road transport, agriculture, hydrogen, and electricity. In many ways, these carbon heavy businesses are prime examples of industries that are waiting to be disrupted by creative start-up's offering new ways of doing business.
Another company that comes to mind for this sector is Zeigo. Zeigo is a platform that enables businesses to buy and manage clean energy from wind and solar farms. Since being founded back in 2018, they have managed to fund £1m so far. Their data and analytical tools help their customers to make informed decisions about the power purchase agreement. Zeigo is a climate-tech platform that connects the supply and demand of renewable energy across the globe.
Alternative Finance -
AltFi (Alternative Finance) typically describes any type of business finance which doesn't come from a mainstream provider such as a high-street bank. Traditional financing methods aren't always suitable for businesses - following a survey, which states that 'two-thirds of younger businesses actually chose an alternative finance over the traditional banks'. Now, theres 210 of the UK's active high growth companies operating in this sector.
In 2021, AltFi companies were able to secure 53 funding rounds, which has shown a 43% growth from 2020. The top company in the alternative finance sector is Atom, and they have raised £597m to date. Built by investment professionals, Atom's mission is to empower people to make informed decisions using the best software and data.
Founded back in 2018, this leading FinTech company operates an investment platform that offers several layers of data, resources and analysis to institutional and retail investors. Its platform is completely customisable and curates the research experience to their user's needs.
InsurTech -
With the combination of insurance and technology, insurtech refers to companies using technology to drive innovation in the insurance industry. 174 high-growth companies are currently active within the UK insurtech industry.
Insurtech companies were able to secure a total of 52 funding rounds in 2021, which is up 37% from 2020. With this sector having seen 158 fundraisings in total from back in 2013 to 2020, the growth in 2021 indicates a drastic increase in investor interest, along with maturation of the market. Not only has the total number of fundraisings increased over the years, the total value of fundraisings has made a huge leap from just over £200m to over £700m in 2021.
Unicorn firm ManyPets, is one of the top companies in this sector, after raising £357m so far. This company provides pet insurance, and they pride themselves on how it listens to their users in order to create its policies - offering up to £15k in lifetime vet fee cover, along with a multi-pet discount for pets on the same policy.
With the world slowly recovering from the global pandemic, these are just some of the sectors paving the way for other tech startups, and also contributing the much needed growth to the UK's economy. Looking ahead, the prospects for the UK's startups look strong in 2022. Considering the last financial crisis during the pandemic, the new wave of tech companies are definitely well on their way to help recover the economy.
It's extremely exciting to see what's in store with the future of the tech industry, specifically the progression of startups. Let us know your thoughts on the matter!