Many investors, unless they’re venture capitalists, tend to think of startups as something that exist in a different land. While it’s fun to hear about innovation and possibilities, the average investor isn’t afforded many opportunities to put their money into a startup. The main options are crowdfunding platforms or a handful of ETFs that target new kids on the block. So it’s hard to know which startups to watch.
But just because investing in up-and-coming companies isn’t as easy as, say, buying shares of those that have been around for decades, doesn’t mean you should ignore them. For one, the next generation of startups could very well be the next generation of IPOs. It’s good to have a pulse on a company before they file their S-1 and the financial media swarms on their potential.
Plus, understanding the most viable up-and-coming companies can also provide insights into markets and trends that impact companies that are already public. With that in mind, let’s take a look at a few startups to watch.
Up-and-Coming Startups to Watch: Virta Health
Healthcare has long been touted as a hot industry, and Virta Health is one of the newest names that’s turning heads. The company has raised $75 million to fund its type 2 diabetes treatment, thanks in part to a $45 million Series B round announced in April.
One thing I particularly like about Virta is that it’s positioning itself as an alternative to highly expensive medications — one of the biggest and most concerning healthcare trends. Virta brings a subscription model to patients and offers around-the-clock, personalized care.
According to the American Diabetes Association, over 30 million Americans had diabetes in 2015, while another 1.5 million are diagnosed each year. If Virta can truly save patients $10,000 in medical costs in the first two years of treatment as it claims, you can see why more and more people would enroll.
Up-and-Coming Startups to Watch: Skydio
GoPro (NASDAQ:GPRO) might have been, from the perspective of a public investment, a bit of a bust to say the least, but that doesn’t mean you should turn your back on cameras altogether … especially when drones are added to the equation.
The Skydio R1 costs $2,499 and is already sold out. But the main reason I see Skydio as such a contender is because the company was created by three MIT graduates and has an impressive team of AI and robotics experts that can easily take the company beyond a high-tech provider of selfies. Autonomous drones could revolutionize shipping, farming, the military, and more. A drone that follows your car, dodges trees and shoots 4K video is just the tip of the iceberg.
Up-and-Coming Startups to Watch: Figure Eight
Artificial intelligence is a common focus of up-and-coming companies as AI has the potential to affect myriad industries –and to possibly become smarter than humans (something known as “artificial general intelligence”). For now, though, I’m bullish on the idea that AI will supplement humans, not necessarily replace them. In fact, that’s the focus of human-in-the-loop AI startup Figure Eight (previously CrowdFlower).
As the term human-in-the-loop suggests, Figure Eight offers a platform where humans can help train their artificial intelligence — an approach that can be useful for everything from self-driving cars to voice assistants to image organizing. This also positions Figure Eight to work with companies developing AI, not compete against them.
Figure Eight has raised $58 million over the course of six funding rounds and is backed by the VC arms of Salesforce (NYSE:CRM) and Microsoft (NASDAQ:MSFT), among others. And it’s a good example of the fact that AI alone isn’t what investors should be looking for, but realistic business applications and use cases.
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.