Emerging sectors are becoming one of the notable investment opportunities for private investors. With fast-growing economies, increasing digital adoption, and an increase in entrepreneurial activity, these sectors can offer opportunities for those who may want to look beyond traditional investment hubs. While risks exist, the potential for growth and access to groundbreaking innovations make emerging sectors an option for investors. Learn more about investing in emerging sectors and the risks that come with it in this blog.
Investing in Emerging Sectors
What are Emerging Sectors?
Emerging sectors refer to industries that are typically in their early stages and may be experiencing rapid growth and innovation, often driven by technological advancements, societal changes, or regulatory shifts. However, not all industries have to be in their early stages to be considered an emerging sector, some of these sectors have been around for a while but are continuing to develop with the world. Some key emerging sectors are biotech, AI, Fintech, healthcare, and climate tech.
Why Invest in Emerging Sectors?
Investing in emerging sectors may offer opportunities for growth and innovation. These industries are often at the forefront of technological advancements as mentioned above and early investments in these areas can provide unique investment opportunities.
Emerging sectors may also attract government incentives, corporate investments, and other perks which has the potential to further help accelerate growth. These emerging sectors may also offer diversification because they may be less correlated with traditional industries. While there are risks like regulatory challenges and potential volatility, investments in these sectors can experience potential growth.
Venture firms may see long-term value in companies addressing climate change, energy security, and healthcare advancements—sectors that are benefiting from both technological innovation and government-backed incentives.[1]
Sectors on the Rise
Biotech
Biotech has been a major area of innovation recently, with new investments in biotech to address various challenges.[2] Despite continued underperformance in 2024, the biotech sector enters 2025 with a brighter outlook driven by groundbreaking innovations like mRNA cancer vaccines and CRISPR-based therapies. Global venture funding reached $314 billion in 2024—a modest 3% rise from the previous year—with many other startups leveraging AI to attract outsized interest.[3]
The biotech industry is made up of many different sectors some of which include biopharmaceuticals, bio-agriculture, bio-industrial, and bioinformatics. Within these sectors are companies who are making medical devices and diagnostics, biofuels, biomaterials, pollution controls, and more. Biotech companies work to address the critical issues that exist in the world to help people live healthier lives.[4]
Artificial Intelligence
AI is surpassing traditional infrastructure with AI-driven solutions, improving efficiency in agriculture, logistics, and customer service.[5] Funding for AI and ML startups accounted for 35.7% of all VC global deal value last year, according to PitchBook data. In North America, the vertical grabbed nearly half of all VC dollars. Globally, investment in AI and ML startups increased more than 50% to $131.5 billion.[6]
AI adoption is growing exponentially, driven by the need for automation and efficiency. Investors can now support innovative companies shaping the future of business and technology in these sectors.
Fintech
Fintech is helping to revolutionize financial access in emerging sectors, addressing the needs of populations without access to banks or banking structures. Digital payments, blockchain-based services and lending, and AI-powered credit assessments are some key areas of growth in this sector.[7] Global quarterly fintech funding reached $8.5 billion in the final quarter of 2024, up 12%, from Q3.[8]
Fintech startups are providing financial services to millions of individuals who may have been previously underserved, which can open opportunities for an investment. This sector may be set for continued expansion, making it a potential option for investors.
Healthcare
Healthcare demand is rising, creating investment opportunities in telemedicine, mobile diagnostics, and AI-driven healthcare platforms.[9] Wearable health devices, such as smartwatches and fitness trackers, are another area to watch. These devices offer real-time health monitoring, which appeals to both individual consumers and healthcare professionals.[10] Healthcare organizations are advancing AI adoption with a focus on measurable impact, ethical use, and workforce upskilling.[11] The digital health sector raised $10.1 billion in venture funding in 2024, down from $10.8 billion in 2023 but higher than 2019’s funding total.[12]
Investing in healthcare can contribute to improving global health outcomes Healthcare needs increase with a growing population, so investors may choose to invest in a sector like this while it is still developing.
Climate Tech
Climate technology is another emerging sector, as climate challenges help drive the demand for green technology and renewable energy.[13] Companies developing renewable fuels, waste-to-energy systems, and advanced recycling technologies are also gaining traction. With climate change increasingly influencing government policies and consumer preferences, climate tech could offer an opportunity for forward-thinking investors.[14]
This sector is expected to be valued at $37.51 billion in 2025 and has been forecasted to expand at a compound annual growth rate (CAGR) of 24.6% from 2025 to 2035.[15] Climate tech investments can align with global sustainability goals. With governments and corporations prioritizing green initiatives, early investors in this space may benefit from long-term industry expansion.
Risks to Consider with Emerging Sectors
Regulatory and Political Risks
Investing in emerging sectors come with challenges. Regulatory and political risks can shift rapidly, requiring investors to stay informed on regulatory changes. Some governments may impose restrictions on foreign investment, change tax policies, or introduce new compliance requirements that affect business operations.
Understanding the legal and political landscape may be important for mitigating risks and ensuring long-term growth in these markets. Additionally, bureaucratic inefficiencies and corruption sometimes complicate the investment process, requiring careful due diligence and strategic local partnerships.
Market Volatility
Market volatility is another key concern. Currency fluctuations, economic instability, and inflation can all impact growth. Unlike established sectors, emerging sectors have less historical performance data, making it difficult to assess long-term trends. This uncertainty can lead to exaggerated market reactions. Infrastructure challenges, such as unreliable supply chains, underdeveloped financial systems, and limited access to skilled labor, can also pose operational risks.
To manage volatility when investing in emerging sectors, diversification can be a helpful tool. Spreading investments across multiple industries and asset classes can help mitigate risks associated with any single sector’s downturn. Staying informed about industry trends, technological advancements, and regulatory changes can also allow investors to make educated decisions and adjust their strategies accordingly.
Final Thoughts
Emerging sectors can offer a unique opportunity for private investors to access industries before they become mainstream. Sectors such as biotechnology, AI, fintech, healthcare, and climate technology are helping to drive innovation and may present potential investment opportunities. By understanding the risks and rewards, identifying investment opportunities, and adopting a strategic approach, investors can position themselves to determine if emerging and disruptive sectors are suitable for their portfolios.
Want to learn more about investing in private companies? Check out the following blogs to learn more:
- Primary vs Secondary Investing
- What is Alternative Investing?
- Investing in Emerging Industries
- Tech Takeoff: Role of Emerging Tech in Venture Capital
Are you looking to invest in startups? Sign up for a MicroVentures account to start investing!
[1] https://www.twofourseven.co.uk/blog/cb-insight-state-of-venture-2024-report-insights-and-advisory
[2] https://www.labiotech.eu/in-depth/biotech-trends-2025/
[3] https://www.wisdomtree.com/investments/blog/2025/01/28/from-underperformance-to-opportunity-biotechs-case-for-2025
[4] https://www.investopedia.com/articles/markets/122215/worlds-top-10-biotechnology-companies-jnj-rogvx.asp
[5] https://www.morganstanley.com/insights/articles/ai-trends-reasoning-frontier-models-2025-tmt
[6] https://pitchbook.com/news/articles/ai-startups-grabbed-a-third-of-global-vc-dollars-in-2024
[7] https://www.forbes.com/sites/katedrew/2025/01/22/is-fintech-poised-for-a-comeback-in-2025/
[8] https://www.cbinsights.com/reports/CB-Insights_Fintech-Report-2024.pdf?ip_et_ctx=23875269_31_9
[9] https://www.mckinsey.com/industries/healthcare/our-insights/what-to-expect-in-us-healthcare-in-2025-and-beyond
[10] https://www.theinvestorspodcast.com/business/emerging-sectors-every-investor-should-watch/
[11] https://www.westmonroe.com/insights/healthcare-outlook
[12] https://www.fiercehealthcare.com/digital-health/digital-health-venture-funding-hit-101b-2024-investors-focused-earlier-stage-deals
[13] https://www.spglobal.com/commodity-insights/en/news-research/special-reports/energy-transition/top-cleantech-trends-for-2025
[14] https://www.theinvestorspodcast.com/business/emerging-sectors-every-investor-should-watch/
[15] https://www.globenewswire.com/news-release/2025/02/27/3033750/0/en/Climate-Tech-Market-Trends-Growth-Forecast-2025-2035-Future-Market-Insights-Inc.html
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The information presented here is for general informational purposes only and is not intended to be, nor should it be construed or used as, comprehensive offering documentation for any security, investment, tax or legal advice, a recommendation, or an offer to sell, or a solicitation of an offer to buy, an interest, directly or indirectly, in any company. Investing in both early-stage and later-stage companies carries a high degree of risk. A loss of an investor’s entire investment is possible, and no profit may be realized. Investors should be aware that these types of investments are illiquid and should anticipate holding until an exit occurs.
