O Canada, how do you do it? The country’s growth is stealing headlines, as is biotech with its consistent traction. Meta’s own team isn’t feeling Zuck’s vision, Apple is hitting Spotify with a “you shall not pass” and an army of verified Elon Musks is getting on the Chief Twit’s last nerve.
Below are the month’s most notable news and numbers, including year-on-year (YoY) and month-to-month comparisons as well as leading industries and companies worthy of attention.
General Overview
This October, the total number of companies that raised funding was 1,435, compared to 1,012 in October of last year. This is a 51% YoY increase. The total funding raised was $54.31 billion, with a 51% YoY increase; last year, October clocked in at $35.89 billion. The median deal size was $5.4 million, a 43% YoY decrease compared to the $9.5 million in October of last year.
Leading Countries
*based on the number of companies that raised funding (not total funding)
1. USA — with 686 companies (29% YoY increase), $26.3B in cumulative investment (18% YoY increase) and a median deal size of $5.6M (19% YoY decrease)
2. UK — with 111 companies (28% YoY increase), $5.04B in cumulative investment (91% YoY decrease) and a median deal size of $4.06M (49% YoY increase)
3. Canada — (up one spot) with 93 companies (200% YoY increase), $4.13B in cumulative investment (528% YoY increase) and a median deal size of $3.54M (56% YoY decrease)
4. India — (down one spot) with 74 companies (19% YoY increase), $1.63B in cumulative investment (14% YoY decrease) and a median deal size of $4.64M (8% YoY increase)
5. Germany — with 54 companies (68% YoY increase), $1.08B in cumulative investment (9% YoY increase) and a median deal size of $5.11M (39% YoY decrease)
Conclusion: October saw significantly more funding than the same period in ‘21 and 30% more than September. However, the average deal size shrank — meaning that individual companies received smaller investments. All of the top-performing countries scored more than $1 billion in funding (after a long time), with Canada's explosive growth being the highlight.
Leading Industries
1. Fintech
174 companies (4% YoY decrease), $7.66B in cumulative investment (29% YoY decrease) and a median deal size of $10.5M (14% YoY decrease).
The top 3 biggest funding rounds are attributed to Toronto Dominion Bank Group (offers a full range of financial products and services) - $1.75B (total funding: $1.75B), Resolution Life (life and annuity insurance consolidation company focused on acquiring life insurance policies) - $500M (total funding: $500M) and Grit (real estate investment, management and development company) - $300.3M (total funding: $300.3M).
2. Biotechnology
139 companies (128% YoY increase), $6.39B in cumulative investment (117% YoY increase) and a median deal size of $8.1M (51% YoY decrease).
The top 3 biggest funding rounds are attributed to Thermo Fisher Scientific (provider of laboratory information management and scientific data systems) - $741.4M (total funding: $6.81B), Vaxcyte (develops vaccines designed to prevent or treat common and deadly infectious diseases worldwide) - $600M (total funding: $984.5M) and Insmed (biopharmaceutical company improving the lives of patients battling serious, rare diseases) - $500M (total funding: $2.14B).
3. AI
125 companies (18% YoY increase), $1.8B in cumulative investment (39% YoY decrease) and a median deal size of $4.5M (59% YoY increase).
The top 3 biggest funding rounds are attributed to Automation Anywhere (enterprise-grade, cognitive Robotic Process Automation [RPA] platform) - $200M (total funding: $1.05B), Tempus (tech company advancing precision medicine via the practical application of AI) - $175M (total funding: $1.35B) and Recursion Pharmaceuticals (digital biology company developing a drug discovery platform and pipeline with machine learning) - $150M (total funding: $615.4M).
4. Ecommerce
96 companies (9% YoY increase), $1.46B in cumulative investment (52% YoY decrease) and a median deal size of $5.19M (39% YoY decrease).
The top 3 biggest funding rounds are attributed to Slope (buy now, pay later for B2B businesses) - $125M (total funding: $157.1M), Udaan (B2B trade platform that brings manufacturers, traders, retailers and wholesalers into a single platform) - $116.6M total funding: $1.6B) and ConnexPay (transforms payment acceptance and issuance for travel and ecommerce providers which act as intermediaries) - $110M (total funding: $145.1M).
5. Healthcare
93 companies (55% YoY increase), $1.15B in cumulative investment (34% YoY decrease) and a median deal size of $4.3M (42% YoY decrease).
The top 3 biggest funding rounds are attributed to Tricida (focused on slowing CKD progression via the treatment of metabolic acidosis) - $125M (total funding: $624M), Silk Road Medical (provides research and development services of medical devices for neurovascular diseases) - $100M (total funding: $560.6M) and SprintRay (3D printer manufacturer focusing on digital dentistry) - $100M (total funding: $100M).
Conclusion: As the long-reigning fintech industry shows signs of stagnation — along with other industries’ investment numbers fading — biotech continues to be the only space with consistent traction.
Monthly Highlights
Big Tech’s Hangover
If last year was the biggest rager the tech scene had ever seen, then this year is the savage hangover making us second-guess all the cannonballs into pools of cash.
VC funding in Q3 totaled $81 billion. That’s down 52% YoY and 33% quarter-over-quarter. The managing partner and founder of Contrary Capital said we’re entering a “messy middle” era as “companies can no longer raise $5—10 million seed rounds with nothing but a deck and the assumption that revenue multiples will skyrocket beyond historical norms.”
Fintech startups raised $13.3 billion globally in Q3 2022. This is a 64% drop from the all-time high in Q4 2021, and 40% less than Q2. Fintech funding is back to pre-pandemic levels, and health (healthcare + biotech) has surpassed fintech as the biggest investment magnet in Q3. Fintech unicorns are rare again, with just seven new ones in Q3 2022, compared to 53 in Q3 ‘21.
The number of layoffs in October has more than doubled compared to the previous month, and that’s just one of the tech industry’s problems. A number of quarterly earnings reports prove that even Silicon Valley greats are feeling the burn of soaring interest rates and inflation.
- Alphabet saw shares drop in extended trading following news that revenue growth hit 6% in Q3, compared to 41% last year. YouTube’s ad revenue dropped 1.9% to $7.07 billion.
- Amazon‘s operating income saw a ~49% decrease in Q3 2022 vs. Q3 ‘21 ($2.5 billion vs. $4.9 billion). The company is pausing corporate hiring (retail division) until EOY
- Microsoft saw its slowest revenue growth in five years after going up against the strong US dollar and smaller demand for personal computers.
- Apple experienced increased revenue (8% more than this time last year) but iPhone and iPad sales were lower than expected. The App Store saw a 5% drop in revenue in September, the biggest dip since Morgan Stanley began tracking the data (2015).
- Snap scored 17 million users in Q3 but fell short of revenue expectations, with shares dropping by ~25% in after-hours trading.
- Tesla’s Q3 revenue underwhelmed, causing shares to fall by 3.5%. Still, Q3 net income was $3.3 billion — almost double last year’s $1.62 billion in Q3. The reason? According to the company, raw material costs and production issues.
But wait! A glimmer of hope and a dash of good news (for a select few).
- Spotify gained 23 million monthly active users in Q3 for a total of 456 million. Overall revenue was ~$3 billion, a 21% YoY increase.
- TikTok’s European revenue grew 475% between 2020 and 2021 (according to recent financial filings), surpassing $990 million last year.
- ByteDance (TikTok parent) also saw a 2021 revenue jump of ~80% to $61.7 billion, though the company had tripled its operating losses to fund growth.
- Roblox had 57.8 million daily active users last month, up 23% since last year. As a result, shares jumped 19%. This comes on top of news that 40% of the global population will play games this year, with total spending nearing $200 billion.
Meta’s Struggleverse
Meta has also unveiled its Q3 results but this story deserves its own section because boy oh boy, is there a lot going on.
Meta stock plunged 25% to its lowest point since 2016 after uninspiring Q3 earnings numbers outlined losses from its $3.67 billion (over $9 billion this year) investment into AR and VR tech. The company is now valued at ~$265 billion, down from $1+ trillion in 2021.
So what’s behind Meta’s lack of success on the metaverse front? Well…
- Meta was aiming to have 500k monthly users on its metaverse flagship product Horizon Worlds (metaverse platform) by end of 2022. It reportedly has less than 200k.
- Most users of Horizon Worlds don’t return to the app after the first month.
- Meta’s own employees are barely using Horizon Worlds, despite the Metaverse VP enforcing weekly internal use in hopes of employees “falling in love” with it. Instead, they’re overwhelmingly skeptical about Zuck’s vision for the metaverse — with only 58% saying they get the strategy, Mark has been busy defending himself to investors.
- Looking for ways to fill in the gaps left by unsatisfactory financial performance, Meta has increased the number of ad slots on Instagram and is testing “image carousel” ads, hoping to nab additional revenue to battle declining ad sales.
Gloomy news or not, innovation continues. Meta has a new feature called Make-A-Video that enables users to make videos out of text prompts, which now makes the company a rival not only to TikTok but also to DALL-E.
Maybe we’re just not seeing the big picture here. Perhaps Zuck is way ahead of us in his grand vision to rather be early than fashionably late. Meta announced the Meta Quest Pro, a mixed-reality headset that retails at $1,499 (compared to $399 for the inferior Meta Quest 2). Fair enough — since the worldwide market for AR/VR headsets grew by 92.1% YoY in 2021 (with 11.2 million units shipped) and the VR devices market is predicted to hit $13.28 billion by 2026.
Will all of this plus the recent announcements about virtual legs, an Iron Man VR game, integration with Microsoft work apps and a partnership with ‘The Office’ prove the haters wrong?
The ELONgest Thread Ever
At last. The resolution to an epic 10-month saga is here. Elon’s acquisition of Twitter for $44 billion makes it one of the largest tech deals in history, right behind Microsoft’s acquisition of Activision Blizzard for $68.7 billion and Dell’s acquisition of EMC for $67 billion.
In those 10 months, we’ve witnessed a dramatic series of court hearings, fraud accusations, rumors and whistleblowing, all mainly related to Musk’s doubts about the validity of Twitter’s user base — a.k.a. the guessing game of “spam, bot or regular Joe?”
Allegedly, the evening of the purchase, Musk fired Twitter’s top execs, including CEO Parag Agrawal, CFO Ned Segal, top legal/policy exec Vijaya Gadde and general counsel Sean Edgett. As the next step, Chief Twit invited Tesla engineers to review the site’s code.
Even before the purchase, internal documents showed Musk’s plans to cut Twitter’s workforce by 75%. Elon claimed the info was false — yet eventually pulled the plug on roughly 50% of 7,500 people “to place Twitter on a healthy path.” At one point, Twitter’s transition team told staff they would receive an email about whether they still had a job.
But lo and behold, Twitter is now reaching out to dozens of fired employees and asking them to return. Turns out, some were laid off by mistake and are crucial to bringing new features to life.
The turmoil has made advertisers pull back from the platform, worried that Musk’s reign would trigger a boost of hate speech and misinformation. The Volkswagen Group recommended that its auto brands — including Audi, Lamborghini, Bentley and Porsche — pause their spending on Twitter, fearing that their ads may appear alongside problematic content. The marketing teams of Danish brewing business Carlsberg Group were instructed to do the same.
So far, the most noteworthy idea from Musk has been Twitter Blue — a monthly subscription giving the most engaged users access to premium features. It was supposed to be $20 a month, but it’s now $8. Guess when Stephen King complains, you listen.
Our opinion? The chaos can either be great for Twitter (particularly in monetary terms) or kill it entirely. And when we say chaos, we also mean the multitude of verified Elon Musks popping up, providing sage advice like “if you want to be like me, drink your own pee” — and then being suspended. Seems like not all Twitter innovations are going as planned.
To end on a wholesome(ish) note, Musk has also hinted at a Vine revival. For you kids out there, Vine was essentially TikTok back in the day. And it looks like the Vine fan base is alive and well, with 69.4% of the 2.8 million people voting in Musk’s poll supporting a Vine comeback.
The More You Know
To keep you entirely caught up, a few highlights worthy of attention:
- Apple will comply with a new EU law and iPhones will adopt USB-C ports starting in 2024. And may we say — it’s about time. The cables are removable from the bricks, so it shouldn’t be too much hassle (and e-waste). Next up, iPhones without any ports?
- Spotify wants to enter the audiobook business. Apple has rejected the new audiobook app three times, saying that its offering breaks Apple’s rules governing how developers can communicate with customers about online purchases.
- Adobe is now requiring a subscription fee for using Pantone colors in Photoshop. This feels like a stretch to many people, and we agree that an agreement between the companies would have made a lot more sense.
- Paypal is adopting passkeys, getting an eager “well done” from our end. It’s time for passwords to die and with Apple, Google and Microsoft on board, the future is bright. And way more secure.
- Peloton and Hilton announced a deal to outfit the chain’s 5.4k US hotels with at least one Peloton bike by the end of the year.
- Google will test its holographic video-calling booths, Project Starline, in the offices of Salesforce, WeWork and more. The company has also entered web3 territory with its Blockchain Node Engine and a $100 million acquisition in AI avatar startup Alter.
- Interpol launched the world’s first metaverse for law enforcement, which lets users tour a virtual replica of Interpol headquarters.
- Andreessen Horowitz’s $4.5 billion crypto fund reportedly lost ~40% of its value in the first half of 2022.
- Kanye West will acquire right-wing social media platform Parler. Also…
- Adidas terminated its partnership with Ye over antisemitic remarks. This will decrease Adidas’ Q4 net income by up to $250 million. For Ye, the fallout’s worth $1.5 billion.
- BeReal exceeded 53 million app installs and now has 20 million DAUs, growing its user base ~2300% this year. But red flag alert: only 9% of Android users open the app daily.
- Gas, an anonymous app that prompts teens to say nice things about each other, became the #1 free social app in the App Store as the Gen Z social media competition heats up.
- Netflix gained 2.4 million subscribers in Q3, for a total of 223 million. It expects to gain 4.5 million in Q4 as it rolls out its ad-supported tier — but will stop sharing subscriber forecasts.
- Toyota reported a major data leak after an access key to the server which stores customer email addresses and management numbers was left on GitHub. This is negligence at such a high level that we don’t know whether to laugh or cry. Probably both.
Startups to Watch
($150M in latest funding) Bilt Rewards offers a credit card and loyalty program where customers can earn points on any rent payments made with the Bilt Mastercard. These points can then be used to help cover a downpayment or to book travel with select airlines and hotels, among other things. The funding will help build additional tools, strengthen relationships with existing loyalty and real estate partners and expand the Bilt Rewards platform across the US.
($26M in latest funding) Katalyst is a wearable health tech company that brings EMS (Electro Muscle Stimulation)-specific training to an at-home format and delivers a two-hour workout in 20 minutes, directly activating up to 90% of muscle fibers. The company intends to use the funds to scale production, develop the brand and grow the team.
($12.3M in latest funding) Zerion is a smart web3 wallet and investing tool that enables anyone with a mobile phone to manage their DeFi and NFT portfolios. The funding will be used to build out a Zerion product that aims to streamline cross-chain identity — to ultimately challenge the dominance of the “go-to web3 wallet” MetaMask.
($6.2M in latest funding) Fintor is a platform for buying and selling fractional equity shares in real estate properties. Users can buy and sell the shares of an investment property, similar to how assets are traded on the public markets. The funding will further allow the company to continue growing its user base while expanding its number of investment properties.
($1M in latest funding) Agapé is an app for strengthening romantic relationships through personalized daily questions. The scientifically-designed platform is an S21 Y Combinator alumnus that is now #17 in the Health & Fitness category in the US App Store. The funding intentions haven’t been publicly disclosed.
