When it comes to investing in innovation, certain industries have flourished over others. Those that haven’t are now facing a do or die situation to keep up with the demands of a modern society, the ever-prominent concern around the climate crisis, inflation issues, and an aging population.
Looking at the global stats Tracxn collected from 230+ sectors between 2013 and 2023, it’s clear which industries — education, hospitality, agriculture, industrial manufacturing, real estate and construction, and commercial airline — have fallen behind, received less funding and seen less successful startups being founded. Whether it’s been down to high costs, difficulty in securing funding due to risky innovation and uncertain ROI, or other financing issues, these industries will require more of a focus moving forward.
As our colleague Arno Nijhof, who leads the company’s innovation arm TNW Programs explained, the move towards more circular and transparent sustainability practices, plus recent supply and demand issues have put increased pressure on many of these industries to adopt new solutions now:
Corporate innovation is more and more focused on providing a positive impact on the world with many looking for new solutions to decarbonize and, at the same time, build a more resilient supply chain. TNW Programs works with a lot of parties, corporates, and companies to identify these opportunities by scouting and analyzing new technologies, startups, and markets. The world is asking for change and its new technological developments that will create the solutions we need to reach those goals.
Here’s a closer look at the industries in question, together with some of the startups challenging the status quo.
Over the last few years, our lifestyles have changed significantly and so have the ways we work, interact, and communicate with each other. However, education has failed to adapt and align with people’s behaviors, tendencies, and society as a whole, with very few long-lasting technological disruptions over the last decade. For example, although 90% of students say they prefer learning online, rather than through traditional methods, the education sector only accounts for 21% of the global learning management systems (LMS) market.
Cloud-based platforms capable of engaging remote students globally are in greater demand. Equally, there is greater understanding that a one-size-fits-all approach doesn’t work when it comes to education, but there’s still so much more educators, parents, and policy makers need to understand to better tailor methods to different types of learners. Digital tools and advanced analytics are needed to assess and track learning progress for educators to have an ongoing insight into what methods are resonating well, and where there’s room for improvement.
Many companies are also starting to look at using VR/AR to enhance the learning process. Startups like Belgium-based Altheria provide VR training experiences that companies can use and tailor to their specific needs.
When it comes to edtech, according to Tracxn there are around 36,600 startups providing technology solutions to businesses and consumers in the education industry. Of that, only 5,500 companies have been funded over the last 10 years, receiving $31.9 billion in 5,850 rounds of funding. More is needed to allow these businesses to flourish and deliver the modern solutions our schools and educational institutions need.
The hospitality industry has been faced with a number of challenges in recent years, from the sudden loss of revenue during the pandemic to a shortage of staff to meet increasingly high demand. At the same time, hotels and vacation rentals are feeling the pressure to improve their sustainability practices as travelers’ preferences for eco-friendly accommodation grow.
Few hotels and vacation rentals are currently employing digital tools to their advantage, for example using AI to automate sharing information and answers with customers before and during their stay, or installing a smart in-room setup that connects to customers’ mobile devices can significantly enhance the customer experience.
Collecting and analyzing data at all touchpoints throughout the customer journey can help proprietors create a more detailed customer profile. Making use of a cloud-based property management system (PMS), such as Germany-based Apaleo, will help automate processes and allow staff to focus on the personalized, high-touch aspects of the customer journey.
With only 3,420 startups and just one unicorn launched in the last 10 years, the hospitality industry is in need of a sprucing up. There’s so much missed opportunity and need for a complete digital transformation, from both the customer experience side of things, as well as the proprietor’s side.
As the world’s population continues to grow, feeding everyone in a sustainable, affordable way is more challenging than ever. The global population and demand for food will increase 70% by 2050, which will continue to put a strain on agriculture and food production.
The biggest challenge we now face is how we can scale up global food production in a way that reaches the entire population, without causing irreparable damage to the planet. Of the 20,600 startups providing tech solutions to the agriculture and food industry in the last 10 years, 2,410 have unfortunately been deadpooled.
5,560 agritech startups, however, have received $52.4billion in funding, and 22 unicorns have been created. Investment is received from many sources: “For example, TNW is working with Rabobank to find innovative solutions that will help its agricultural sector clients to decarbonize,” says Nijhof.
One startup that’s created an interesting product, which is already available to the general public, is Beewise. Based in the Netherlands, the startup uses modern technology to monitor beehives and support healthy pollination and efficient honey harvesting. Anyone can order their own smart Beehome and easily track its progress using an app.
Now more than ever the manufacturing industry needs to transform to increase operational efficiency, scale smart factory initiatives, improve supply chain resiliency, and improve sustainability with innovative new materials and processes. Within the next year, 62% of manufacturers plan to focus on robotics and automation, which will likely begin to address some of these needs.
Startups like Mecuris are pushing the boat out by reimagining traditional techniques into digital tools that are intuitive and easy for users to operate when designing orthotic & prosthetic products.
When it comes to developing and working with more sustainable materials, the industry can reduce its reliance on finite materials and energy. There is additionally greater potential for modern materials to allow manufacturers to create products with a longer lifespan, further improving efficiencies, and reducing the need for frequent upgrades and replacements. Finally, adopting a more circular economy allows materials and products to be repurposed, reducing production costs as well as reducing greenhouse gas emissions.
However, while manufacturing has seen some progress, there’s still a lot more potential for the industry to grow and develop. The industry has seen just 970 funded companies, and only 36 series C+ companies. Nevertheless, there is a lot of opportunity for development, and 61% of manufacturers are already planning to partner with specialized tech companies to help drive their growth strategy in the next year.
Real Estate and Construction
Similar to industrial manufacturing, stakeholders in real estate and construction are expecting to see more sustainable solutions being implemented.
However, to make the industry truly sustainable, more transparency is needed, with standardized grades across different countries, as well as accurate traceability of maintenance, analytics, and reporting.
The whole market, process of sales, and construction and renovation needs to evolve, innovate, and increase its digital maturity for professionals to be able to operate more efficiently. 41% of real estate firms admit that keeping up with technology is their biggest challenge, while 30% worry about competition from emerging virtual firms.
Making use of the tools provided by startups like EagleView, which enables greater accuracy and access to property data through the use of autonomous drones, is a good place to start.
In the last 10 years, the industry has had 5,410 startups receive $68.8billion in funding. A significant increase in digital innovation will ultimately be needed for the industry to become more efficient and reduce both monetary and environmental risks and costs.
Air and airport congestion continue to be a challenge, but smart technology could help to ease this and enable more user-friendly flight and luggage tracking. Equally, things like ML and AI have the potential to improve efficiencies within the aircraft, to spot faults quicker and help to maintain the health of its components and infrastructure. And, like most other industries, innovation is needed to improve the environmental standards of aviation, for example improving fuel efficiency, in the face of climate change.
Having received the lowest amount of funding since 2013, and $490million in aviation IT and $2.9billion in aerospace tech, the industry has only seen 1,380 startups developed. There’s a lot of opportunities, particularly for companies offering software solutions to the aviation industry and providing tech-based solutions to aircraft manufacturers to transform and improve the industry.
Startups like UK’s Hiiroc have already developed an efficient method for producing zero CO2 emission hydrogen through use of Thermal Plasma Electrolysis technology, which lowers both costs and emissions for commercial airlines.
As each of these industries continues to evolve, more investment, and innovation will be needed to give them a boost. For more insights, strategies, and tips on how to boost innovation within your organization, contact our team here.