Manufacturing, Robotics, Blockchain, New Food: This Is Where Startups Are Flourishing Right Now
Deep Tech is on the rise – especially in the areas of advanced manufacturing and robotics, blockchain, agtech, and artificial intelligence shows the latest edition of the Startup Genome Report. In the same, the largest declines are happening in sub-sectors increasingly dominated by big platforms, as in Adtech, or in pure software and internet areas like digital media and gaming.
Nearly half (45%) of startups created globally in 2017 and 2018 now are in Deep Tech subsectors. Moreover, the deep tech startups, the ones that build their business around technological breakthroughs and tangible IP, seem to be also the fastest growing ones.
The top four areas, according to Startup Genome are in robotics, blockchain, agriculture tech, and AI. These are the subsectors where the early stage (seed and Series A) funding has flown into in the past five years. The deals in these five areas have increased significantly.
#1 Advanced Manufacturing & Robotics (107.9%)
#2 Blockchain (101.5%)
#3 Agtech & New Food (88.8%)
#4 Artificial Intelligence, Big Data & Analytics (64.5%)
Growth has slowed down for all startup sub-sectors — including high-performing ones, the report reads. Based on the analyzed data, the authors state that being around the peak of the economic cycle, with capital still flowing in, but growth rates are strong yet smaller than they were last year. There are also several subsectors which seem to be declining and where deals have been decreasing recently.
The dawn of the gaming and edtech?
On the top of the list of sectors experiencing a shrink of early-stage funding deals, we find adtech, gaming, digital media, and edtech. Although mega rounds and later funding rounds might still be happening, the lack of seed and Series A deals is an indicator for the future potential there – probably the market is also crowded already. One major shift since last year is outlined by the report – while edtech was considered a mature sector in 2018, now it lands among the declining ones.
#1 Adtech (47.9%)
#2 Gaming (40.4%)
#3 Digital Media (38.9%)
#4 Edtech (15.8%)
Despite the decline of early-stage funding however, those four sectors are still meaningful due to their size, and it’s expected that they could be revived by new technologies like AR or VR for instance.
The next wave: deep tech & local strengths
The report suggests that the next wave of the development of the startup ecosystem will be slightly different from what we’ve experienced so far. The rise of Deep Tech is outlined as real opportunity for ecosystems to grow based on their existing strengths.
Countries and regions, that are far behind the major software startup hubs, now have the potential to build a thriving startup economy leveraging their universities, research capacity, and traditional economic strengths. Example for this trend are Lausanne-Bern-Geneva, San Diego, and Munich, which are not among the best software startup producers. Yet they all made it into the top 30 global startup ecosystems thanks to their performance in Deep Tech and Life Sciences factors.
Balkans on the blockchain
The Startup Genome report features the Serbian ecosystem as an example of a well-developing blockchain hub. According to the authors, Serbia is one of the top five countries in the world in the number of blockchain developers and has many product-oriented blockchain startups. The biggest ICOs in Serbia include those by GameCredits ($56 million) and OriginTrail ($22 million). Other local stars are Blinking, blockchain-based digital ID solution giving users control over their data, and MVP Workshop, named the 2018 EY Innovative Entrepreneur of the Year.
In the same time, Bulgaria’s blockchain ecosystem is also quickly evolving. Trending Topics’ earlier explorations have shown there are several dozens of blockchain companies on the local market, and around 20 of them are product startups. “Even though nobody is making too much noise around that, Bulgaria, at this very moment, is one of the driving forces behind the global blockchain industry. The evidence are names like Nikola Stojanov of aeternity or Petar Tsankov of Chain Security, who recently found an exploit in an Ethereum update right before it was published – a significant event for the global community”, Nick Todorov, CEO of blockchain developer LimeChain, told us in a previous conversation.
Not least, last year, The Balkan Blockchain Association (BBA) was founded. Its main focus is to improve the blockchain and startup ecosystem and the business environment in Bulgaria and South-Eastern Europe.