Most popular startup industries in 2023: revealed

As the UK’s entrepreneurial spirit continues to thrive, and the cost of living crisis continues to bite – an increasing number of individuals are taking the leap and venturing into the world of startups. 

Within the last 12 months, new data revealed that the number of new women-led businesses alone surged from 36% to 47%. Not to mention Gen Z driving the gig economy and 24% of students starting their businesses while still at university.

To surface further prevailing trends, we’ve dug down into exclusive data from the Startups 100 Index, enabling us to identify the most popular startup industries in 2023. Read on for the full findings.

Tech still a safe bet for startups in 2023

According to our findings, the tech industry is still the most popular sector for new UK businesses. Rapid digital transformation continues to accelerate sector innovation, and our results show it remains a safe industry for UK startups, with a new business population growth of 7% year-on-year. 

The UK witnessed a remarkable surge in the number of tech startups between 2021 and 2023, with entrepreneurial minds drawn to the vast opportunities presented by the rapidly evolving tech landscape. 

This proliferation of tech startups showcases the nation’s commitment to innovation and the UK’s position as a leading hub for technological advancements. 

Entrepreneurs are harnessing emerging technologies such as artificial intelligence, blockchain, and machine learning to revolutionise industries and drive economic growth. 

Fintech could be behind fallout with finance

Our research shows that the finance industry has experienced a drop in the number of new businesses. There were 6% fewer startups in the finance sector year-on-year.

Plus, while the overall tech startup sector in the UK thrives, the fintech sector is currently facing its own set of obstacles. Our Startups 100 data reveals an interesting trend with a decrease in the number of finance startups, possibly indicating a slowdown in the fintech sector. 

This observation aligns with the dip in UK fintech funding during the first half of 2023, as reported by industry body Innovate Finance. The figures show a 37% decrease in total cash raised by UK fintech firms compared to the latter half of the previous year.

Regulatory pressures (such as those Revolut is currently facing), shifting consumer demands, fear of fintech from traditional finance models, and increased competition have led to a challenging landscape for fintech startups. 

Despite the challenges, fintech heroes are still to be found

There are still notable success stories within the fintech industry. One such example is Yonder, a credit card startup and Startups 100 alumni. 

Yonder recently announced a successful Series A funding round, securing £62.5 million in investment. This investment has propelled Yonder’s valuation to over £70 million, indicating strong investor confidence in the company’s growth potential. 

Yonder’s success could be attributed to its status as a personal finance solution, which is increasingly relevant in the face of consumer struggles with finances; we identified making finance easy as a top new business idea for 2023.

In a poor economic climate, when individuals are seeking effective tools to manage their financial wellbeing, Yonder’s innovative rewards-based credit card offering has resonated with consumers.

Moreover, other companies listed in the Startups 100, such as Mintago and Caura, have also excelled in the fintech space due to similar factors, capitalising on the growing demand for financial solutions that help consumers to save money. 

Success stories such as these just go to show the persistence, resilience and adaptability of fintech startups, even amidst a slowdown in the industry. 

B2C sectors struggle as consumer spending slows

Our research highlights the industries in the UK which are currently facing significant growth challenges. These include the retail, hospitality, and travel sectors. All have been grappling with sector-specific issues that have hampered their growth and viability, threatening business survival. 

According to our findings, the hospitality sector is experiencing a particularly critical situation. 

According to analysis from UK Hospitality, the British Beer and Pub Association (BBPA), the British Institute of Innkeeping (BII), and Hospitality Ulster, over a third of the UK’s hospitality businesses are at risk of failure in 2023 due to the cost of doing business. 

Inflation, supply chain disruptions, and rising energy costs have placed immense pressure on businesses within this sector, making it increasingly difficult for firms to sustain operations and remain profitable.

The retail industry is another unfortunate victim of losses – between the pandemic and the cost of living crisis, some huge brands have vanished from UK high streets or had to significantly reduce their operations.

See: UK brands that have gone into administration since COVID

The travel industry has also been impacted by the cost of living crisis as well as ongoing travel restrictions and striking transport and airport staff, all of which have contributed to a decline in overseas and domestic leisure travel. 

The main takeaway is that as customer budgets shrink and spending habits shift,  business owners need to tailor their offerings to accommodate customers’ financial limitations.

Where will the most exciting sectors be in 2024?

As the definitive list of the most promising new businesses in the country, the Startups 100 2024 will showcase the entrepreneurial talent and innovation that continues to drive UK industry.

Will tech continue its record growth? Or will retail show a rapid resurgence? Alongside an authoritative panel of guest judges including Cheeky Panda co-founder Chris Forbes, our index will identify the biggest startup success stories of 2024.

If you think you’re a startup that is breaking the mould to excel in your industry, apply now!