DEFINITION of 'Emerging Industry'

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 a new technology. Barriers to entry in emerging industries can be low because of limited competition, but it may be difficult to secure financing to grow the company.

Also, marketing expenses are high, because the product or service for sale is often unproven and companies in an emerging industry must convince both investors and consumers that the product or service they are selling is valuable. Investing in an emerging industry is considered a high-risk strategy, but it can also bring high rewards.

BREAKING DOWN 'Emerging Industry'

An emerging industry can grow rapidly if it is successful. If it reaches this stage, it is then considered a growth industry. Growth industries that perform well become mature industries, which tend to grow slowly or not at all, but provide stable profits. A mature industry may eventually become a declining industry if the product or service it is based on falls out of favor or becomes obsolete.

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