A venture capital firm called Fifty Years has analyzed the industries that receive the most and least investment relative to their size. They found that venture capital-backed startups mostly focus on software, leaving other industries with fewer new companies and ideas. This disparity means that these industries must rely on existing firms for growth or on slow-growing startups that bootstrap or finance with debt.
Fifty Years calls the industries with the largest opportunity ratios, which is the current market size divided by current startup funding, the “Top Underfunded Opportunities.” However, there are some industries that may not be good candidates for investment due to shrinking demand, prohibitive regulation, or other fundamental issues.
The author suggests that investing in unsexy industries like paper could be a viable alternative. They point out that paper mills in Maine, a state with abundant trees, have closed down, and there may be an opportunity to reverse this trend by leveraging related technologies like mass timber or biochar.
Overall, Fifty Years’ analysis highlights the importance of diversifying investment in different industries and considering potential opportunities in less saturated markets.
