Earlier this week I published a piece around avoiding the shiny object trap so many angels fall prey to.
But there’s something else I see with angel investors. It’s focusing on the same industries and verticals time and time again.
Most professional angels, myself included, will tell you the best way to be a successful investor is to invest in startups from industries you know best. Or at least where you understand the business model and market.
However, this mindset certainly limits the deals you get in on. Especially if your knowledge is rather narrow.
That’s where deal flow comes in. Am I an expert in the startup industries I invest in?
But I surround myself with people who ARE experts, and trust that when they come to me with a deal… it’s vetted and ready for my investment.
I’m about to share 3 industries with you… 2 were complete shockers to me!
Things like cybersecurity, construction, artificial intelligence, and retail are always on our radars. There is so much activity and promise in these fields. But sometimes, we allow headlines to obscure our goals. You know…“2020’s hottest industries for startups” — and the like.
It’s an incredible time to be an angel investor. You could throw a dart at a board full of industries and wherever it lands, you’ll find innovative, rapidly growing startups.
So today, I want to show you some strange, obscure, or under-the-radar industries that are goldmines. For each industry, we’ll break down why you should consider it, and how startups are reshaping it.
Let’s see why you need to invest outside of the box.
One of the most surprising, but little known, trends today is the growth of the mysticism market — specifically astrology.
Astrology is having a cultural moment, and this means big opportunities and big bucks for angel investors.
If you don’t currently have astrology startups on your short-list of business ventures — I don’t blame you. In a short time, this fringe market has gone mainstream.
Astrology has traded in its dusty fortune teller’s shops for major Instagram clout and multi-million dollar apps. As an industry, it has grown by 209% since 2015.
Banu Guler, founder of the massive astrology app Co-Star, says,
“Over half of American millennials, and a third of American adults, read their horoscope. These numbers are rising now… So this is a huge, durable market that nobody seems to be taking seriously.”
Astrology is following the astronomical success of other wellness and mindfulness startups like Talkspace and Headspace. These apps reimagined therapy and meditation, for an increasingly anxious, meaning-starved generation. Astrology exists in this same space, but it’s still under the radar, bubbling away.
This obscure industry has more than a few startup success stories already. Let’s explore a couple.
Co-Star – Astrology Social Network
Co-Star uses artificial intelligence and data from NASA to track the movements of the stars. The website proclaims Co-Star’s use as “irrationality to invade our techno-rationalist ways of living.”
Not only does it give insights such as daily horoscopes, but it also acts as a social network.
The app encourages users to connect with their friends and fellow stargazers. From there, they can compare predictions and gauge compatibility.
Science doesn’t back this, but users don’t care! Co-Star helps people to understand themselves and connect to others in an increasingly confusing world. Skip the small talk and delve into the most intimate and arcane subtleties of your friend’s personality.
Sanctuary – Live Mobile Astrological Readings
Sanctuary has been described as “Uber for astrological readings.” For $19.99 a month, users receive a monthly one-on-one chat with a professional astrologer.
Founder and CEO, Ross Clark was inspired by meditation apps like Headspace and Calm. He liked how these apps, “translate what was a very esoteric Eastern practice into something that’s a really compelling digital experience.”
Sanctuary is the first mobile interpretation of professional astrological readings. With significant financial backing, and hundreds of thousands of app-downloads already, it surely won’t be the last.
Recently, pet pampering has become a serious business.
As silly as it may seem to some, the pet care industry is a massive, rapidly growing field. More than 85 million American families own at least one pet. The new cultural norm involves pet birthdays, special doggy-diets, and school buses for animals.
Today, pet care goes far beyond veterinarian visits and doggy treats. Many sleek-and-shiny apps and toys are popping up in the pet world. In 2018, investors poured almost $520 million in startup capital into it.
Here are some of the most compelling examples of why you should pay attention to this industry.
Wag! – Dog-walking App
Wag!, despite its recent troubles, shows the massive potential seen in the pet care industry today.
A few short years ago, Wag! had already earned about $60 million in funding. Then, the Japanese investment powerhouse, SoftBank, saw its potential and poured an incredible $300 million into the startup.
All this hype and fuss — over a dog-walking app.
Wag! is like an Uber for dog walkers. Pet owners can quickly and easily find a professional dog-walker, schedule a walk time and location, and get info on the walk itself.
You get real-time GPS updates on your pet’s location. Once the walk is complete, you receive a full walk-report, with a photo, notes, distance traveled, and even defecation information.
Wag! quickly garnered celebrity attention, with famous users such as Mariah Carey and Kendall Jenner. This stoked the flames of the startup’s social media presence and attracted hordes of users.
Even with recent controversies and problems, it’s easy to see why Wag!, and its $300 million investment, signal the shocking valuation of pet care.
Scratchpay – Vet Financing
No — this isn’t a bank for dogs and cats. Scratchpay is a financing app that helps pet owners manage the complexities and limitations of paying for veterinary care.
Here’s the pitch — Each year, millions of pets go without proper care due to their owner’s financial constraints. Scratchpay thinks you shouldn’t need a perfect FICO score to secure financing. And what if you could see your payment terms upfront, without hidden fees or deferred interest?
Through its mobile app, Scratchpay has already helped over 70,000 pets get vital veterinary care. Also, vets are hopping on board. Over 5,000 pet hospitals in all 50 U.S. states have adopted regular use of the app.
Finally, we have aquaculture.
Aquaculture is the breeding, raising, and harvesting of fish, shellfish, and aquatic plants.
I know for a fact that most angels out there are not watching this industry closely. There is a massive demand for farmed seafood and the marketplace is starved for innovation.
Aquaculture is the fastest-growing food production sector. The global market is set to reach $209 billion by 2021. By 2030, the world will eat 20% more fish. Yet, the industry is still struggling to overcome technological challenges related to scaling.
You better believe entrepreneurs are working around-the-clock to solve this multi-billion-dollar problem.
Here are two aquaculture startups that are already addressing some of the biggest problems in the industry.
NovoNutriens – Alternative Fish Feed
NovoNutrients converts waste CO2 into fish food. Rather than tapping into wild food sources and blending them up into feed, NovoNutrients takes a sustainable approach.
Essential proteins and oils are made in processes similar to fermented food products. Imagine, beer, tofu, cheese, wine, yogurt, and now — fish food!
This method wastes less water, saves fish, promotes afforestation, and removes CO2 from the atmosphere. Types of harmful CO2 that can be used include bioethanol refinery emissions, cement flue gas, and oil & gas refinery waste gases.
NovoNutrients eliminates the need for non-agricultural plant materials, soil, methane, microalgae, and other byproducts that are harmful to ecology.
This is a green, long-term solution for feeding the growing population of farmed fish.
VakSea – Oral Aqua-Vaccination
Another tall hurdle the aquaculture industry must jump — disease.
Each year, farms lose $20 billion of fish to disease. As production scales-up to meet the global demand, disease and parasites thrive. Large operations with high populations of fish are always at greater risk.
Fish vaccines are indispensable to aquaculturists. The only problem — high-cost.
In most cases, workers must inject fish by hand, one-by-one. Farms hire entire teams to net fish out of the water, place them in tanks with anesthetic, and precision-inject them with a vaccine. Some farms have hundreds of thousands of fish, making this process very inefficient.
VakSea offers an alternative — oral vaccination.
Special food pellets with immune-boosting proteins act as insurance for farmers’ stock. VakSea creates its own special proteins that are stable in food pellets. Farmers can simply swap between vaccinated food pellets and normal feed.
This eliminates the need for labor-intensive vaccinations and greatly reduces costs while keeping fish and shellfish healthy.
Opportunity in Every Direction
I’d like to close this off by reiterating — don’t stay stuck in the “top 10s” of startup industries! There’s too much to explore.
Angel investors walk a fine line. It’s a pro-move to know your area of expertise and stick to it. But, it’s a rookie mistake to get caught in headlines and heatmaps.
Turn back the clock ten or twenty years. Were all the unicorns and game-changing startups in the places everyone expected? Were they in the “hot and trendy” industries?
In many cases — no. They often came out of deep-leftfield and left investors scratching their heads.
We profiled 3 industries, but there are dozens more for you to explore. Stay tuned for more Angel Insights to see what else you might be missing, and what opportunities are coming around the bend.