Looking back, the past year has taught us how fast we can adjust to newfound circumstances by heavily relying on digital technologies. Across the globe, while some businesses flourished as they seized the moment and offered their consumers just what they needed, others weren’t as lucky. But as the first vaccines are developed, and we are slowly reaching the beginning of the ‘new normal’, it is time to discuss the future of startups. As Arun Sundararajan, an NYU professor researching how digital technologies transform society said: “Crisis can be sort of a catalyst or can speed up changes that are on the way — it almost can serve as an accelerant.”
And indeed, as the last year’s storm settles, the new era of innovation is on the horizon. We might not have “flying cars” (yet!), but the future of startups is brimming with technological optimism.
Here are the industries that have flourished and will continue to do so in the near future with the help of digitalization.
The Rise of Digital Health
Before the global pandemic, the health industry in the US was notorious for its lack of digitalization. In fact, in the US, 89% of healthcare organizations were still using fax machines in 2019. Naturally, the scene was set for digital disruption.
As the demand for digital medicine surged, health startups raised a record $14.8 billion in venture capital funding during 2020. The top-funded category was telemedicine, recording a 140% increase in funding compared to the previous year.
Since we are witnessing a rush of new telemedicine users and 85% of patients who tried it for the first time said they would use it again, we can expect telehealth to continue to rise in the following years. For the time being, telemedicine is predominantly used for chronic conditions and mental health. A major opportunity for the future of startups lies in advancing technologies for medical-grade devices such as sensors that can be easily used at home and allow patients to have advanced video appointments.
Although we focused on the development of telemedicine in the US, the rapid advance of new technologies will have the biggest impact on the developing world.
Doxy.ME: Professional Help at a Click of a Button
Doxy.ME, a telehealth startup, showed significant growth in 2020. Their user base grew more than tenfold in just one year – from 70 000 to 750 000 health care professionals. While digital medicine is somewhat a regulatory minefield, compliance with all the patient privacy regulations is a must for health startups’ success. For this reason, Doxy.me promoted itself as the only free HIPAA – compliant telehealth solution and it quickly earned the trust of medical professionals for its safety and protection of doctor-patient confidentiality.
When the pandemic hit, it was quickly revealed that most digital health products are overly expensive. Doxy.ME opted for a freemium business model and it enabled them to grow faster than their competition. With this pricing strategy, their basic service is free of charge. However, premium features are available for individual healthcare professionals ($29 per month) and clinics ($42 per month). Therefore, the “forever free” offer enabled Doxy.ME to rapidly increase their user base. After using Doxy.ME for a while, health professionals were eager to upgrade and start paying for premium services.
While their user base was rapidly growing, Doxy.me was quick to adapt to the increase in demand. Agility and adaptability are the most important characteristics for a startup, regardless of their industry. Their plan to grow from 15 employees to 60 in a span of several years happened during the course of several months instead. They saw a good opportunity on the job market and hired a group of food and beverage workers that were laid off due to the pandemic.
While we might be biased, we firmly believe that their catchy – doc see me – domain name hack played a role in their success!
What is the Future of Education?
Education, like the health industry, was another sector that had to transform rapidly during last year. When classroom doors closed, teachers and more than 55 million students the US alone turned to digital technologies for help. While remote classroom tools were a major topic in 2020, the future of startups might be in different fields of edTech.
If you look at the list of largest funding deals, you may notice that investors are focusing on other specialities. Consumer-oriented fields like platforms for educational videos and corporate training topped the charts. Lifelong learning and upskilling websites will continue their rise in the following years. Every economy and sociology textbook teaches us that education is countercyclical – it rises in times of crisis. Considering how many people lost their job, the demand for courses that can help job seekers will continue to grow. We can also expect the rise of the education gig economy and a surge of teaching as a side job.
However, we often focus on the US market when talking about the startup scene. If you are interested in education technology, you shouldn’t overlook Asia and Africa. EdTech attracted $1.4 Bn in funding in India alone, and the market will reach $10.2 Bn during the next five years. Due to demographics and the rapid acceleration of the adoption of new technologies, Asia and Africa are promising and upcoming markets for digital disruption of education. Kukua.ME is the best example of a European edTech startup reshaping education in Africa.
Kukua.ME: Gamified future of learning
Lucrezia Bisignani, founder and CEO of Kukua, noticed a lack of representation of Africa in the media industry. She saw this as an opportunity to make educational content that will be locally relevant for the African population. Therefore, Kukua’s team created Super Sema – first African animated superhero.
Super Sema is combining education and entertainment in order to empower African children through unique and fun learning experiences. This approach to education is due to Lucrezia’s beliefs that gamification is the future of digital education. Undeniably, gamification has been a buzzword in education for quite some time. However, too many educational apps turn out to be just quizzes or tests posing as games. Kukua’s apps and videos remind us that the key ingredient for a successful gamified education experience is – fun. Creators often focus way too much on leaderboards and point systems and forget that, in essence, it needs to be fun and exciting.
And if you are unsure what is fun and engaging – your users are experts on that topic. For example, during the prototype testing, children would exit Kukua’s apps to take selfies or record videos of themselves. This led Kukua’s team to change the educational game and offer rewards their target audience is most fond of – selfies!
Read more: How to Avoid the Pitfalls of Gamification
Unlike digital health or edTech, financial technology has been a highly attractive field for startups for decades. However, last year pushed it even further. The change of legislation in markets like South Korea enables a higher implementation of new technologies in the financial sector.
The most significant rise in demand was for contactless payment and branchless banking, and this is a trend that will definitely continue. In their “Back to business study 2021”, global payment leader Visa announced that contactless payment is here to stay. According to their research: 74% of consumers expect to still prefer contactless payments once a vaccine is widely available.
With such a shift in consumer behavior, the future of startups in digital finance is looking bright. Verse.ME peer to peer payment platform has attracted a lot of attention and positioned itself as a market leader in Spain. This resulted in global fintech giant Square acquiring it in June of 2020. Another .MEr that was successful last year is Nowmoney.ME and here is what we can learn from their story.
NowMoney.ME: Look for Opportunities Beyond Your Borders
Rather than focusing solely on the national market, the NowMoney.ME startup has shown how widening your scope by looking for opportunities in other countries can benefit your prospects. Ian Dillon, the founder of NOW money, always wanted to start his own company. However, he realized that his banking experience wouldn’t be very useful in the over-banked UK market. Dillon would be behind the curve if he started his business in the UK. However, he noticed an opportunity in another market – United Arab Emirates.
While working in Dubai on another fintech project, Dillon and his business partner Katharine Budd noticed there is a significant migrant population who aren’t able to open bank accounts. They realized it is a problem that can be solved with low-cost mobile banking. In order to succeed – you don’t need to invent the wheel, you have to be problem-solving oriented.
“Low-income migrant workers in the UAE” may sound like a quite specific and narrow market to focus on. However, up to 80% of the UAE population are expatriates and migrants. Furthermore, up to 70% of migrant workers have low income. What is a niche for somebody may be a massive market for your business. While offering services to them was too expensive for traditional banks to bother with, it was a massive untapped market for low-cost digital banking.
Before You Go: Future of Startups
During the last year, we have massively entrusted digital technologies with the most important aspects of our life – our health, our education, and our wealth. What once seemed like the final frontier of digitalization now is our everyday life.
While we leaned on the three aforementioned industries to ‘get us through’ 2020, moving forward we can look out for startups that will change the world for the better. Previously, technological advancements were the cause for major global problems – climate change, wealth inequality, irresponsible consumption and production, animal extinction – just to name a few. Now, innovative startups are using technology to develop solutions for global problems and crises.
Moving Forward: The New Opportunities on the Horizon
An increasing number of startups are turning to the UN’s 17 Sustainable Development Goals, trying to create a future where poverty or hunger, providing quality health and education, gender equality and clean water for everyone, will not be an issue. To that end, venture capital funds and business accelerators guided by the same objectives are gaining momentum. Google launched its Startups Accelerator on the Sustainable Development Goals to support startups who are addressing social and environmental challenges. Clean energy investment fund Breakthrough Energy Ventures is focusing on startups who are reinventing our everyday life by changing the way we eat, work, travel, etc.
Businesses Which are Tackling the Issue of Global Warming
With the effects of global warming, it is expected that by 2030 Earth will be 1.5 C degrees warmer. The primary focus for many companies is the development of solutions to fight climate change. For example, Carbon Engineering is using state-of-the-art technology and recent scientific research to further develop its Direct Air Capture systems and remove the excess of carbon dioxide.
Other companies are not focusing on fixing the consequences of global warming but rather on tackling the problem at its root. Since 25% of global emissions come from food production, companies such as Beyond Meat are creating sustainable food solutions. Some scientific research is looking into the possibilities of feeding cows seaweed in order to decrease methane emission. While others are exploring new more sustainable sources of protein such as mealworms and other protein-rich insects. As we are becoming painstakingly aware, bees not only make honey, but they are crucial in the production of almost all of our foods, Apic AI is using artificial intelligence to save the bees (and humanity!) from extinction.
While most of us take the availability of water for granted, you’ll be surprised to learn that as much as 1 in 8 people on the planet don’t have the access to clean water. For that reason, another world-changing company, I-Drop is working on providing access to clean water in Africa.
So what do you think? Is the future of startups in creating a better world for us and for future generations?