(We originally posted this on October 30, 2020. You can read more of our original ideas in our archive.)
Problem: Earlier this year, Ibis World released their list of the “top 10 global industries by revenue.” This post looks at three of them and comments on potential ideas in those spheres.
Analysis:
The first industry is Global Life and Health Insurance.
Estimated market size of about $4.9+ trillion
Lemonade, a venture-backed insurance seller, had an initial public offering on July 2, 2020 and had a phenomenal reception: the company ended its initial day of trading with shares at $69.38, more than double its amended target price of $29. This closing price gave Lemonade a market cap of $3.8 billion, far above the $2.1 billion valuation of its 2019 funding round with Softbank. What’s interesting, however, is that Lemonade does not currently sell life insurance (though, it is worth noting that in their IPO documentation they mentioned wanting to enter this industry). Instead, Lemonade only offers renters, homeowners, and pet health insurance. I would venture to guess that a tech-empowered life insurance company targeted at millennials and Gen Z could thrive in the insurance space. You can read their full SEC filings here.
Three ideas I’ve blogged about before in this industry include Dental Insurance Policies, Float Investing, and Class Action Lawsuit Insurance
The second industry is Global Pension Funds.
Estimated market size of $4.2+ trillion
The International Monetary Fund’s Fiscal Affairs office release a special series on COVID-19 in July 2020 to analyze pension schemes in the crisis. The found four notable areas of intrigue:
(1, higher claim frequency) increased likelihood of individuals exiting the labor market and claiming pension benefits;
(2, less tax revenues) labor market effects, as contracting employment and stagnating or declining real wages may result in a declining wage tax base;
(3, lower pension returns) asset price shocks negatively impacting funded pension schemes’ balance sheets;
(4, pressure for corporations and governments to maintain enough money to sustain pensions) capacity of governments and private enterprises, as underwriters of pension obligations, to maintain solvency of defined benefit pension scheme under adverse conditions.
Each of these problems could create a billion-dollar business in itself. However, I won’t dive too deep into solutions I wanted to ease out these issues for future thought.
I’ve blogged about this industry in the past with my post on External Pension Plans
The third industry is Automobiles (Sales and Manufacturing).
Estimated market size of $7+ trillion
During the COVID19 pandemic, this industry was hit particularly hard. As described by McKinsey in their September 2020 COVID-19 report, “car dealerships closed, and car buying ground to a halt, with sales plummeting 71 percent in China in February 2020, 47 percent in the US in April, and 80 percent in Europe also in April.” See below for more data, courtesy of McKinsey. One of the biggest findings was the rise of micro-mobility (walking and biking) to become the next normal. A business in the space of empowering “micro-mobility” would probably be well positioned to succeed especially as since consumer habits will not fully go back to “the old way” things were.
I’ve blogged about this with my posts Electric Buses, Digital Driving School, and Portable Auto Shop.
Contributed by: Michael Bervell (Billion Dollar Startup Ideas)