what is an emerging industry 
an emerging industry is a group of companies in a line of business formed around a new product or idea that is in the early stages of development an emerging industry typically consists of just a few companies and is often centered around new technology emerging industries frequently come into existence when one technology begins to eclipse and replace an older technology stocks of companies in emerging industries are often volatile and can experience wide price swings it can be hard to value such companies especially if they have little revenue or have yet to make a profit while early investors hope to get in on the ground floor of what might be the next google or apple the risks of investing in an emerging industry can be quite high understanding an emerging industryit may take years for an emerging industry to reach profitability research and development r d expenses will comprise the bulk of the early operating expenses of companies in the industry also marketing expenses will be high because the product or service is largely unknown and unproven so companies in an emerging industry must convince both investors and consumers that the product or service will be valuable investing in an emerging industry is a high risk reward proposition barriers to entrybarriers to entry in an emerging industry can be relatively high because of the level of expertise required to compete in the new field examples of these barriers include scarce resources to manufacture a company s products inability to take advantage of economies of scale lack of sufficient financing government restrictions and competition from established companies however despite these barriers many entrants will rush into a new industry in an attempt to gain an early advantage they will raise money if they can hire key personnel and secure the services of influential advisors many of these entrants however will eventually discover they do not have the skills or sufficient funds to bring a product or service to market and at some point fail entirely examples of emerging industriesthe world in the mid 1990s knew the internet as an emerging industry hundreds of companies formed to try to capitalize on the new technology the dotcom bubble refers to the rapid proliferation of internet based companies that fueled a bull market in technology stocks speculation grew and venture capitalists poured money into many startups that in some cases had no actual product or service to sell by the end of 2001 and into 2002 the dotcom bubble burst and many publicly traded companies folded however those companies that offered valuable consumer services and products such as amazon and ebay survived and flourished becoming standard bearers for the emerging internet industry emerging industries in the current era perhaps viewed as the next evolution of the internet are artificial intelligence ai virtual reality and self driving vehicles again only a select few companies with the financial resources and intellectual property are thus far dominating the nascent fields the biotechnology industry however is experiencing such breakthroughs in immunotherapy and gene therapy that it can be considered an emerging industry or at the very least a sector with growth potential at an inflection point special considerationsmany investors are interested in diversifying their portfolios by investing in emerging industries however the risks associated with investing in individual companies that are in the early stages of development deter many would be investors from taking action the creation of exchange traded funds etfs that focus on specific new sectors can offer investors a way to invest in emerging industries while mitigating some of the risks for example there are etfs that target artificial intelligence and robotics companies blockchain etfs invest in companies involved in blockchain technology biotech etfs have become favorites among investors looking to gain exposure in companies making advancements in medicine pharmaceuticals and genetics 