Which Startup Sectors are Profitable in the UK?

Which Startup Sectors are Profitable in the UK?

The aim of most startups is to eventually turn a good profit. In the UK we are fortunate enough to have a rich pool of innovative entrepreneurs looking to change the game and introduce new and exciting possibilities. However, every startup is different, and no matter how innovative the idea, businesses must have a market.

Which businesses are most profitable?

The past two years have seen a shift in demand for certain types of startups and as we emerge into a post-pandemic future, this shift doesn’t look like it’s about to change. Online courses were some of the most popular businesses of 2020 and 2021. The EdTech sector consists of businesses anywhere between academic education and creative learning. In 2021, it was estimated that the UK's EdTech sector is valued at over £3.4 billion! As schools and other education provisions start to get back to business as usual, more and more parents and students are choosing to stick with online learning or use it to supplement their education. This sector is a true winner!

In a significant turn of events, delivery services have also become extremely profitable. It’s important to say that getting items delivered was already popular pre-pandemic. However, COVID-19 forced many older people to get to grips with modern technology, thus opening the delivery market to a whole new demographic. The pandemic also forced many businesses out of the street to work solely online. Consumers are now used to skipping queues and buying their favourite face cream from the comfort of under their duvets.

We couldn’t talk about startups without mentioning social media. As all startup founders know, social media is the most crucial tool for marketing and promoting a product and/or service. Crucially, it is also free. Social media consultants are employed by startups to help support them with their marketing social media strategies. This can include things like giveaways, collaborations, paid partnerships and engaging content. Because most of us have at least one social media account, it can sometimes feel unnecessary to hire someone to manage it for us. However, using social media for personalised content and to promote your startup are two completely different things. The latter requires a personalised and well-thought-through strategy so your business can reach as many people as possible.

What is the best startup to create in the UK?

Because so many startups are created every year in the UK - roughly 700,000 in 2020 - it’s difficult to pinpoint areas that are the best. This is also because startups can be so wide-ranging (anywhere between pet services to legal consultancy!) However, by looking at the top five most funded startups of 2020 we can roughly see where the demand lies with consumers and which startups are the most profitable.

The top 5 best-funded UK startups in 2020

1.     Global Switch - Informational Technology company

2.     The Hut Group - E-commerce business

3.     Deliveroo - Food delivery

4.     Prodigy Finance - Financial services

5.     LendInvest - Lending and investing

It’s no surprise that Deliveroo was in the top three most funded startups in the UK of 2020 (how many takeaways did you buy during the lockdowns?) Investors track and respond to consumer demand, and it is also notable how two of these companies relate to the financial sector. Businesses are clearly looking for ways of seeking financial support, and new startups are meeting that demand!