Looking for the largest markets that have experienced low innovation to launch a hyper-growth startup? Want to know which sectors could offer the best growth potential for making startup investments?
These are ten of the largest markets that have been lagging in innovation, disruption, and implementation of new technologies.
1. Mobile Phone Service ($355B+)
The smartphone device market alone is worth $355B according to CNBC. 6 billion smartphone devices are expected to be in use by 2020. This also extends mobile payments, mobile apps, and more. We haven’t even seen much of what 5G can do yet either. Even larger is the market for mobile phone service.
A massive sector, still dominated by just a few incumbents who are notorious for their horrific customer service. Companies everyone hates to need. New smaller entrants like Metro PCS continue to be gobbled up by large conglomerates. Customers are desperate for alternatives.
2. Banking ($18T)
Hands down this have to be one of the largest markets that have experienced low innovation. At the end of last year, the US banking system alone was worth a reported $237B in net income, and had $18T in assets.
Again, as a massive and powerful market, sadly dominated by old companies notorious for lack of service and even fraudulently taking advantage of their own customers.
New startups are trying to provide alternatives, especially for entrepreneurs. Yet, the incumbents are also some of the most influential when it comes to regulation and limiting competition.
3. Mortgage Lending ($15.6T)
The Federal Reserve reported there was over $15.6T in outstanding mortgage debt. This does not factor in all the profits in loan servicing and origination and side industries and mandatory services home buyers are required to purchase.
While some fin-tech startups have tried to throw their hats into this ring, none appear to have made any tangible difference to date, especially when it comes to the most basic parts of lending and verifications. It’s ripe for complete transformation.
4. Real Estate ($32T)
As of early 2018, the sum value of all US homes was almost $32T. This does not even touch the massive commercial real estate market.
We’ve seen some of the impacts of new technology replacing the need for brick and mortar retail space and office space, as well as the impact on famous shopping rows in Manhattan.
When it comes to residential real estate we still haven’t really seen a sustainable and scalable innovation in terms of changing how homes are bought and sold yet.
5. Construction ($1.3T)
When thinking about the largest markets that have experienced low innovation, keep in mind the US construction industry hit $1.29T in 2018.
Many still complain there isn’t enough new housing construction to meet the need. We have seen innovations in on-site logistics (virtual reality, drones, and robot workers) as well as new green and energy-efficient materials.
We’ve seen the beginnings of 3D printed houses. Yet, they either seem to be too expensive for the average American or the cheap versions are only available overseas due to fragmented and crippling US regulations.
Whoever can bring all of these components together and get them to meet could transform global construction.
6. Immigration ($100B+)
The US immigration industry is worth billions of dollars alone making it be on this list of largest markets. It is deeply broken, no matter what your political preferences are. Big companies like Amazon and Deloitte have contracts with ICE for hundreds of millions of dollars each year.
Yet, startup entrepreneurs can still find it challenging and limiting to get the visas they need to make their greatest contributions.
7. Taxes ($3.4T+)
The IRS brought in an estimated $3.44T in federal income tax revenue for the last fiscal year. A number which just keeps on growing. This doesn’t count state, local and property taxes. The effective taxes we pay in America today are easily 1,000x greater than during the outrage of the Boston Tea Party.
Along with it are a variety of supporting industries from bookkeeping and accounting technology to payments, tax prep and filing, and adjusters and law firms.
It is also one of the most archaic systems we have. It is one of the biggest detractors from America for entrepreneurs, startups, big companies and the wealthy. It is this way often by design, with little motivation for those with the power to change it, to change it.
8. Transportation ($1.3T+)
As far back as 2012 the US transportation and logistics industry was worth over $1T and represented nearly 10% of annual national GDP. That number is far, far larger when you add in all forms of transportation including trucking, shipping, and consumer autos.
On one hand, we’ve seen some of the most and most dramatic innovations emerging in this market. We’ve got Uber and Tesla, autonomous cargo ships, Amazon drone delivery, and SpaceX.
Yet, in terms of real-world application and implementation in terms of travel and transporting people and goods we still haven’t scratched the surface.
9. Education ($2T)
While many of the most successful entrepreneurs I’ve interviewed on the DealMakers Podcast have gone to great schools and have built valuable networks there, and e-learning is growing, elementary to high school education and the student loan market is still in the dark ages.
As the workforce goes nearly 100% virtual, there will be even more ability to innovate in this space and properly equip our next generations.
10. Investing ($9T+)
When it comes down to the largest markets that have experienced low innovation remember that the retirement account market in the US alone has some $9T in assets. Most of which are very inefficiently invested.
This is an area that poses one of the biggest risks to the US and global economy, as well as to individuals. There have been great advances in crowdfunding and the ability to participate in fundraising for startups. There is plenty of room for improvement.
When disrupting a market of this size you are going to be bumping heads with large corporations and that requires capital so fundraising will be your first order of business. Storytelling is everything in fundraising and you will need to be able to master this. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember that if you want a more robust pitch deck template you can use for free the one I created below which has been used already by thousands of entrepreneurs to raise millions.