Whether high school students pet-sitting for their neighbors or would-be chefs launching a food truck, millions of people share the same vision of starting a business. (In your wildest dreams, it might even be a billion-dollar business.)
For the best chance of success, you’ll need to think carefully about the type of business to start, from an online business to a consulting firm. You’ll also need to plan out your business model and the products and services you’ll offer.
But even with the help of search engines, online courses, and other valuable resources, coming up with the next great idea for your business plan is easier said than done. In addition, there’s no such thing as “guaranteed billion-dollar startup ideas.” A great business concept is necessary but not sufficient, because so much of running a small business is about the execution: hiring the right people, finding the right niche, making the right connections with investors, etc.
There are still plenty of business opportunities out there that are rife with possibilities, however. If you’re hoping to find the next billion-dollar business idea, this article will offer five suggestions for industries that you can explore.
1. Green technology
Environmental and sustainability issues are in vogue lately, and the trend shows no sign of stopping. For example, Frost & Sullivan estimates that investments in renewable energy in North America will more than double over the next decade, reaching $92.5 billion by 2030.
A number of startups are investigating solutions to help address everything from climate change and waste management to pollution and factory farming. If all goes well, the potential breakthroughs include more efficient recycling, trash-collecting robots, plant-based meat substitutes, reducing CO2 emissions, and more.
2. Health and wellness
The health and wellness sector is tremendously broad and diverse, from “traditional” healthcare to fitness, nutrition, beauty, and mental health. For example, the Calm mobile app helps users with meditation and stress reduction, while Ottobock is developing high-tech prosthetics that give wearers greater mobility.
McKinsey & Company estimates that the global wellness market is currently worth $1.5 trillion, with a healthy annual growth rate of 5 to 10 percent. What’s more, interest in and spending on consumer health is rebounding as the peaks of the COVID-19 pandemic recede. Cutting-edge digital technologies also offer new avenues for innovation, from telehealth appointments to wearable healthcare devices.
With cracks showing in the traditional university model, education technology startups are looking to disrupt the way we learn. For-profit “MOOC” (massive open online courses) companies such as Coursera, edX, and Udemy, which let the general public sit in on university classes and even take them for credit, are just the tip of the iceberg.
For example, MasterClass is an edtech startup that sells subscriptions to celebrity-taught courses, from actor Samuel L. Jackson to chess grandmaster Garry Kasparov. Other edtech startups have made it big by offering solutions for tutoring, practicing course material, studying abroad, and more.
4. Logistics and supply chain
Billion-dollar business ideas can come from anywhere: FedEx CEO Frederick W. Smith famously came up with the idea for his company in a college term paper. With the global supply chain reeling from the effects of the COVID-19 pandemic, there’s never been a better time to throw your hat into the ring.
Supply chain and logistics startups have reached massive billion-dollar valuations through simple business strategies, such as developing new effective technologies or entering new markets. The logistics startup Stord, for example, offers an integrated cloud platform that combines software with physical services such as freight, warehousing, and fulfillment.
SaaS (“software as a service”) may be less “glamorous” than other entries on this list, but it’s no less promising for creating a billion-dollar business. Companies of all sizes and industries depend on software for their daily operations, which means you can strike gold by providing tools and platforms that fit their needs better than anyone else.
If you have the right technical skills, you can develop SaaS applications for nearly any use case—from marketing automation to property management.
What is a billion-dollar startup?
The end goal of building great startups is to create a billion-dollar startup, which is a startup that has been valued at $1 billion or more. However, this straightforward definition doesn’t address the issue of how analysts arrive at this figure.
Publicly traded companies can be valued by methods such as market capitalization, which multiplies the company’s share price by its total number of shares. But since startup companies haven’t yet issued shares, how are startups valued?
There are multiple ways to perform startup valuations. Pre-revenue startups can be valued with techniques such as the Berkus method, which attempts to quantify factors such as a startup’s concept, prototype, sales, and management team. More mature startups can be valued in terms of their predicted future cash flow, or the amount of venture capital they’ve raised.
Startups that have attained $1 billion in valuation are also called “unicorns.” This is because reaching this stratospheric level of success is supposedly as rare as spotting a unicorn in the wild. Venture capitalist Aileen Lee is credited with coining the term starting in 2013. She noted that just 0.07 percent of software startups that received VC funding belonged to this “unicorn club.”
What are some billion-dollar industries?
CB Insights classifies unicorn startups into 15 categories. Billion-dollar industries give rise to billion-dollar startup ideas, so this list is a great place to start looking for inspiration:
- Artificial intelligence
- Automobiles and transportation
- Consumer and retail
- Data management and analytics
- E-commerce and direct-to-consumer
- Education technology (edtech)
- Financial technology (fintech)
- Internet software and security
- Mobile and telecommunications
- Supply chain and logistics
- Other (renewable energy, space tech, ad tech, etc.)
How many companies are valued at $1 billion?
According to CB Insights, there are over 900 private companies in the world with a valuation over $1 billion, with a collective worth of over $3 trillion. The number of publicly traded companies valued over $1 billion is significantly higher. In the U.S. alone, there are more than 2,000 companies with a $1 billion market capitalization.
While this may seem like a lot, this number is just a drop in the bucket. The U.S. Small Business Administration estimates that there are more than 6 million small businesses across the United States that employ between 1 and 499 people.
To build a massively successful startup, you’ll need to beat the odds with a great business idea, along with the right technical skills to execute it. Finally, you’ll need an excellent leadership team, including founders and cofounders, CEOs, and vice presidents, who can navigate your startup to a successful exit.