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A new way of categorising businesses

A new way of categorising businesses Startups

With business continually evolving, so do company types. To move with the times, Startup Funding Club has taken a new view on business categorisation.

The world changes all the time, and so do businesses. Some time ago, when talking about companies to fund, we would typically refer to the sector in which they operated – e.g. Retail or Property –, their business model – B2B or B2C –, or the areas where their service or product was applicable – e.g. marketing or finance. Today, it is not so easy. Companies come up with solutions that have applications across various fields and thus, they cannot be locked in within just one sector.

Startup Funding Club has taken a new approach on this matter and created eight categories of businesses that come from similar fields – sharing needs, challenges, and potential exit routes.

 

1. Mobile & Online Solutions

Scalable web and mobile software that uses the most recent digital technologies like AR, VR, blockchain, machine learning/deep learning, natural language processing/programming, big data, etc. They will be targeting, challenging, and changing one or more sectors – such as Finance (FinTech), Education (EdTech), Property (PropTech), Insurance (InsurTech), or Agriculture (AgriTech) – by using data and/or automations.

Their typical challenges at the start lie in code and algorithm writing, early adoption, and creation of the initial critical user base.

Startups from this category absolutely need an in-house CTO and a team of software engineers – and sometimes data scientists.

Examples from SFC’s portfolio: Cognism, Onfido, Winning Minds.

 

2. Online Platforms & Marketplaces

Digital services that innovate processes and/or provide better ways to acquire goods and services by facilitating transactions and interactions. They can use either new or well-known technologies to decrease time or costs to provide a service. Many businesses in this category have the potential to replace more traditional ways of doing business, particularly in sectors such as Retail or Property.

Their challenges will not only be on-boarding users from two sides of a marketplace and creating a balanced ratio of demand and supply, but also branding themselves in a manner that will build enough trust with potential customers and keep ahead of copycats.

For this kind of business, it is extremely important to have a market expert and marketing person on board.

Examples from SFC’s portfolio: CGHero, Hiyacar, Quuu.

 

3. Life Science

Software, hardware, and other products improving human performance and wellbeing.

Their main challenges lie in proving that their solution works – clinical trials are often needed – and receiving an official approval indicating that the solution can be used in real life. This can cost a lot of money, so the risks at early stages for this category are much higher than in other types of businesses. Nonetheless, Life Science companies might never need to commercialise if their IPs and patents are strong and attractive to potential buyers.

These companies that innovate in Pharmaceutics, Healthcare, and Medicine absolutely require a doctor of medicine and/or scientist on board.

Examples from SFC’s portfolio: Stablepharma.

 

4. Sci & Tech Innovation

Software, hardware, and other products that provide better results in existing sectors by applying new research and/or new materials and components. This category includes businesses in Robotics, Energy, Space, and Automotive.

Typically, their main challenge is to build a working prototype and sort out manufacturing.

It is important that the core team has patents in place and in-house engineers.

Examples from SFC’s portfolio: Blue Skies Space, Petalite, Valkyrie.

 

5. Products

Non-perishable goods for businesses and consumers that present better quality vs. price ratios, better performance and/or functionality than existing alternatives, or use new technologies like Wi-Fi or 4G/5G connectivity. This wide group ranges from IoT to Fashion and Retail goods companies.

Product businesses tend to struggle with manufacturing and early adoption.

The necessary elements can vary much more than in other categories, but generally it is important to have a product/market expert on board as well as a marketing executive.

Examples from SFC’s Portfolio: Banvard & James, MagicTab, Nimble Babies.

 

6. Food & Drink

Perishable goods providing better quality/price combination as well functionality or simply a better experience. This group will also include restaurants and food stores.

The list of common challenges that these companies meet is very long: branding, pricing, product shelf life, packaging, manufacturing, distribution, etc.

Due to all these obstacles, Food & Drink entrepreneurs who want to raise funds should go to investors having already achieved some initial commercial traction (sales) and having put together a team that can handle both production and sales.

Examples from SFC's Portfolio: Hope & Glory, Hunter & Gather, Olly’s Olives.

 

7. Media & Entertainment

Information and content-based products that require creative skills and an understanding of changing social preferences (how and what information/content is consumed). This category includes products that often provide different ways of communication and new ways in which information is distributed and absorbed.

Typical Sector Tag: Advertising, Gaming, Gambling, Marketing, Publishing, Social Media, etc.

Most businesses in this group will struggle to find a sustainable monetisation model.

For this, investors will want to see some initial commercial traction (sales) and a strong marketing person on the team.

Examples from SFC’s Portfolio: Channel Fight, Leading Sports and Media, Shout Out UK.

 

8. Services, Manufacturing & Other

Offline and traditional services that can be provided with better efficiency due to automations, process improvements, or expert knowledge.

Companies in this group will require an increase of human and non-human resources in order to scale, which is usually the biggest obstacle they will need to overcome.

The key elements are: having an initial commercial traction (sales), a loyal basic consumer base, and a team member with extensive market experience and connections. These companies’ value often lies in personal relationships, consumer loyalty, and brand strength – which is what potential buyers will want to acquire.

Examples from SFC’s Portfolio: Recup, Transcend Packaging.

 

Appendix

 

Consumer Type Tag

  1. B2C
  2. B2B
  3. B2B and B2C

Sector Tag

  1. Advertising
  2. Agriculture/AgroTech
  3. Automation
  4. Automotive & Transport
  5. Biology
  6. Chemistry
  7. Clean Tech
  8. Communication
  9. Construction
  10. Cybersecurity
  11. Data & Analytics
  12. Education/EdTech
  13. Energy
  14. Environment
  15. Fashion
  16. Finance/FinTech
  17. Gambling
  18. Gaming
  19. Healthcare
  20. Insurance/InsurTech
  21. IoT
  22. Manufacturing
  23. Marketing
  24. Medical/MedTech
  25. Music
  26. Property/PropTech
  27. Publishing
  28. Recruitment & HR
  29. Retail
  30. Robotics
  31. Science
  32. Security
  33. Social Media
  34. Space
  35. Sport
  36. Telecommunication
  37. Theatre/Cinema
  38. Travel/Tourism
Angelika Burawska
Chief Operating Officer