A sunrise industry is a developing industry investors believe holds a lot of promise and will eventually become a large and potentially dominant market sector. Investor activity around such industries is usually brisk as people attempt to position themselves to take advantage of the industry's rise, and government regulators may also be interested in such growth industries. A closely related term is “sunset industry,” describing a formerly forceful industry in decline as a result of changing market conditions, the emergence of new technology, and the development of new interests and needs on the open market.
One example of a sunrise industry is the technology industry in the 1990s. Many investors recognized that the Internet and telecommunications industries were growing rapidly and would quickly become a significant market force. New companies mushroomed on the economic landscape and investors were eager to take part in fundraising efforts like initial public offerings, recognizing the potential for significant profits.
Sunrise industries benefit from innovations including new technology and new ways of looking at and solving problems. People of various ages may be involved, although many have a heavy proportion of young people with new ideas and business approaches. Funding is variable as companies struggle for a foothold and carve out niches in the industry and turnover of new developments is often very high. Trends in a sunrise industry wax and wane rapidly and eventually several companies and ideas emerge and rise to prominence in the industry.
Rapid growth, numerous opportunities, and quickly changing fortunes are all characteristics of sunrise industries. Investors cannot always predict the future direction of such industries but those who do make savvy predictions stand to benefit. People who invested in major technology companies when they were still relatively small, for example, experienced significant growth in their stock portfolios over time as company values rose.
Eventually, a sunrise industry will become a mature industry. Mature industries experience slow, stable growth and relatively limited innovation. The number of companies in the industry typically narrows over time and many companies rely on a core of flagship products to maintain their reputations and generate steady income. As new technology and ideas start to arise to replace the industry, it goes into decline and becomes a sunset industry.
Sunrise industries often represent a new way of approaching an old issue. For example, alternative energy in the form of wind and solar power was a sunrise industry in the 2000s, replacing coal and other nonrenewable sources of energy.
