In the last twelve months, investors on EquityNet reviewed nearly 4 million company profiles while surveying the landscape for their next investment. We decided to use this data to analyze the best sectors to invest in based on those that intrigue investors the most.
When using our platform, businesses have 34 options to categorize their sector, ranging from Aerospace, Chemicals, and Defense to Pharmaceuticals, Media, Real Estate, and more. Below, you will see the 10+ industries piquing the most interest among investors on EquityNet:
In typical Pareto’s Principle practice, the top two sectors received as much investor interest as the next eight most intriguing combined.
As we dig into each of these categories more, it will be helpful to give you a quick breakdown of some terms and methodology used:
- TTM Views: This is the number of profile views for this sector over the last 12 months. In finance, TTM stands for “Trailing Twelve Months.”
- Peak Interest: Looking at the monthly breakdown of investor interest in a given industry, we highlighted the month in the last year with the highest interest.
The data used in this study is not based on actual investments made, but on views of company profiles categorized by industry to assess the types of companies that are broadly appealing to investors.
Here are the best sectors to invest in 2021 based on investor trends:
1. Web Service Software (SaaS)
The software as a service sector is one of the fastest-growing and most lucrative industries on the planet. Marc Andreesen, the billionaire entrepreneur and VC is famous for saying, “software is eating the world,” and software’s appetite only seems to be getting bigger.
The typical SaaS business model is brilliant because while it does require significant startup capital, as customers are acquired, the incremental costs of each additional customer become exponentially less as the network grows. Investors love software companies because the cost structure tends to result in high margins.
As an example, Sky Systemz is a provider of payment processing for legacy industries that have been apprehensive about switching to cloud processing. The company boasts month-over-month growth of 30%+ and has a 300% higher average annual processing per customer compared to Square.
2. Business Products & Services
Companies building products and services to solve the problems of other businesses, and not general population consumers, are known as B2B companies. The B2B sector is attractive to entrepreneurs and investors because, by their very nature, businesses typically have more resources and are less price-sensitive than consumers.
This is why one of the most prominent trends in venture capital has been the investments in cloud computing and developer operations, comprising 28.6% of early-stage investments in 2020.
As an example, the CloudSherpas profile on EquityNet, showcases a managed service provider targeting enterprise clients that have distributed assets on the cloud. To date, CloudSherpas has raised $43,300,000.
3. Consumer Products
The consumer products industry creates hardware and software for the general population. While the products can be tools to solve a common problem, they can also be luxury goods, consumables, and products targeting underrepresented markets.
Consumer products are interesting to investors when there is a clear opportunity in the market to scale to larger audiences or command high prices from small, loyal audiences.
SoNo 1420, for example, is an American craft distiller and a great example of a consumer products company that has gained recognition for its high quality—winning double gold in the World Spirits Competition.
4. Consumer Services
It’s no surprise that next on the list of most popular industries after consumer products, is consumer services. The services industry is one of the largest by total addressable market, consisting of more than 3% of total annual GDP. Much like other well-established industries, the service sector has seen recent disruption by technology companies that are innovating and streamlining processes.
Investors find the growth potential of consumer services companies attractive if they can leverage technology to achieve scale, which historically has been a hindrance of service-based businesses.
FuelClub is a good example, leveraging location-based technology inherent in their mobile app to bring gasoline directly to consumers. This is an interesting service business because while the market has existed for a long time (automobiles in need of fuel), the opportunity to bring fuel direct-to-consumers was enabled with the widespread adoption of mobile phones.
Early biotechnology companies like Genentech and Illumina set the course for this industry which is undergoing somewhat of a renaissance. The rapid pace of innovation and increase in funding, such as with the recent discovery of gene-editing technologies like CRISPR and the subsequent billion-dollar companies that are currently using it.
Investors see this radical transformation and increased investment in the industry as positive signals for continued investment. Biotechnology companies also have the potential to create therapies and cures for diseases that afflict millions annually, saving lives and participating in the lucrative healthcare market.
Bioviva, for example, is a gene and cell therapy company that is aiming to solve such widespread diseases as Alzheimer’s, Atherosclerosis, and even some cancers.
6. Real Estate
Ranking just out of the top five, Real Estate is the largest sector in the US by percent of GDP but is typically viewed as a more established and traditional business model. Real Estate Investment Trusts or REITs, for example, are common companies for real estate investors.
Investors typically look to incorporate Real Estate in their portfolio for yield, without assuming the risks associated with owning a single property. Currently, the real estate market is as in-demand as ever, and investors are looking to gain exposure to this hard asset in multiple ways.
MariahCorp, for example, has an innovative approach to developing communities built on cutting-edge technology. Their eco-friendly approach to building and operating has enabled their properties to offer reduced living expenses and less reliance on the resources of municipalities.
Over the last twelve months, companies in the healthcare sector have received nearly 5% of all investor views on EquityNet. Combined with Biotechnology, we find this to be a good signal for the future of the healthcare sector. Our health is one of our most precious resources, which is why everyone can agree this sector should be well-funded, innovative, and safe.
Healthcare is another sector investors look to as a huge market potential as well as one known for healthy profit margins. As technology continues to infiltrate hospital wings and operating rooms, investors are seeing a huge opportunity to extend the health- and life-span of millions.
MedSign, for example, is a first-of-its-kind innovator in the telehealth space, with a HIPPA-compliant and encrypted hub for connecting with one’s care providers from their television. Their goal is to reduce the rate of hospital patients returning, therefore reducing wait times and increasing hospital capacities.
Entertainment is a hugely popular and profitable sector but most people initially think of Hollywood as the all-encompassing entertainment industry. In fact, the entertainment sector spans the gamut from gaming and sports to theatres and theme parks. Companies today are constantly vying for our attention, and if they can grasp it for sustained periods, it’s entertainment.
Investors know that when something’s entertaining and can keep users engaged and coming back, it can be a profitable business. Just look at the meteoric rise of the social media industry — which is arguably in the business of entertainment.
WinkTV, for example, is an entertainment company that focuses on the beauty, lifestyle, and fashion industries, creating unique experiences and opportunities for advertisers.
9. Financial Services
The financial services sector has been experiencing massive disruption and transformation with the rise of fintech startups, robo-advising companies, high-frequency algorithmic trading, and more.
As you may have noticed by now, investors are very attracted to industries that have traditionally been able to service large customer bases at high-profit margins and ripe for technological disruption—the financial services sector certainly checks those boxes.
As an example of one such disruptive company, BlueKey Technologies has developed a proprietary trading algorithm for foreign exchange trading and arbitrage.
Although many people associate the retail sector with brick-and-mortar businesses and consider that to be an antiquated business model, most products and services are still sold in person. But the retail industry does also include e-commerce players who are making a push for market share.
Investors understand that most retailers will eventually have a presence online, if not exclusively, but the retail industry as a whole is still on an upward trajectory, which is why it is currently ranked as the tenth most popular sector on EquityNet.
Curativly, for example, is innovating the home improvement, furnishing, and renovation retail experience with its patented augmented reality technology to bring the traditional retail experience of visualizing products into the home and online.
Honorable Industry Mentions
Looking at the industries that fall just outside of the top ten, we can get a sense for some of the industries that may be on the rise for 2022 and beyond. Alternative and renewable energies have gained widespread interest and investment as we seek to offload global carbon emissions from fossil fuels.
Some of the smartest people in business and investing have put billions of dollars into potential alternatives, and not only because it is good for the environment, but because the potential ROI is massive.
Blue Planet, for example, is working on proprietary carbon capture processes to convert pollutants into materials for green construction. The need and growth potential for carbon capture companies was outlined in detail by Bill Gates in his recent best-selling book, How to Avoid a Climate Disaster.
Investing in Your Industry of Competence
Although we’ve highlighted some of the most popular industries on EquityNet as of late, truly outsized returns will come not from following trends, but rather from setting them.
Depending on your area of interest, expertise, and day-to-day operations, you will be better able to support the businesses you invest in with more than just capital, which is one of the tenets of being a value-add investor.
As an investor, funding the future you believe in is the highest-impact contribution you can make towards a better world. At EquityNet, we are dedicated to helping investors like you streamline your deal flow, focus on your investment thesis, and build a better future.