Fintech and biotech are riding high, as is the UK and web3 — now with Y Combinator’s support. We’ve got 43% fewer new unicorns prancing around compared to 2021, social media apps are slapping fancy stickers on borrowed goods and Twitter peeps aren’t vibing with Elon.
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 September, the total number of companies that raised funding was 1,346, compared to 1,043 in September of last year. This is a 29% YoY increase. The total funding raised was $42.04 billion, with a 28% YoY increase; last year, September clocked in at $32.76 billion. The median deal size was $6 million, a 33% YoY increase compared to the $4.5 million in September of last year.
Leading Countries
*based on the number of companies that raised funding (not total funding)
1. USA — with 683 companies (33% YoY increase), $27.29B in cumulative investment (37% YoY increase) and a median deal size of $8M (19% YoY decrease)
2. UK — (up two spots) with 96 companies (17% YoY increase), $954M in cumulative investment (60% YoY decrease) and a median deal size of $4.06M (25% YoY increase)
3. India — (down one spot) with 88 companies (40% YoY increase), $2.01B in cumulative investment (180% YoY increase) and a median deal size of $4.76M (116% YoY increase)
4. Canada — (down one spot) with 57 companies (43% YoY increase), $579M in cumulative investment (53% YoY decrease) and a median deal size of $3.7M (30% YoY increase)
5. Germany — with 52 companies (68% YoY increase), $464M in cumulative investment (73% YoY decrease) and a median deal size of $4.99M (on par with last year)
Conclusion: The market is slowly recovering from the macroeconomic shock that hit the world in the last six months, with the total funding beating last year’s numbers and being 56% higher than the previous month. Despite skepticism coming from the likes of Bloomberg, a look at the data suggests the tech world won’t collapse any time soon.
The top-performing countries are experiencing growth in the number of startups scoring investments. However, the majority of them have less money in the funding pipeline, meaning that the money is now scattered among smaller players across the globe.
Leading Industries
1. Fintech
154 companies (11% YoY increase), $4.25B in cumulative investment (29% YoY decrease) and a median deal size of $8.76M (10% YoY increase).
The top 3 biggest funding rounds are attributed to Ratio (gives SaaS companies capital upfront so they can offer customers more flexible payment options) - $400M (total funding: $411M), Fullerton India (non-bank credit lender) - $352.2M (total funding: $352.2M) and Pie Insurance (insurance company specializing in small businesses) - $315M (total funding: $621M).
2. Biotechnology
134 companies (74% YoY increase), $8.74B in cumulative investment (123% YoY increase) and a median deal size of $10M (53% YoY decrease).
The top 3 biggest funding rounds are attributed to Medtronic (healthcare tech for treating chronic diseases) - $3.49B (total funding: $3.9B), Alnylam Pharmaceuticals (biopharmaceutical company focused on discovery, development and commercialization) - $900M (total funding: $3.88B) and Relay Therapeutics (developer of an allosteric drug-discovery platform for applying computational techniques to protein motion) - $300M (total funding: $1.17B).
3. AI
118 companies (18% YoY increase), $1.3B in cumulative investment (32% YoY decrease) and a median deal size of $10M (79% YoY increase).
The top 3 biggest funding rounds are attributed to Brightflow AI (financial intelligence company providing small business owners with forecasting and financing tools) - $100M (total funding: $119.2M), Netradyne (improving fleet safety through computer vision and in-depth data analysis) - $65M (total funding: $262.5M) and Deep Instinct (applies AI’s deep learning to cybersecurity) - $62.5M (total funding: $321.6M).
4. Ecommerce
106 companies (4% YoY increase), $2.93B in cumulative investment (47% YoY decrease) and a median deal size of $5.16M (11% YoY increase).
The top 3 biggest funding rounds are attributed to Kavak (online platform offering insight into buying and selling used cars) - $810M (total funding: $2.39B), LINE MAN Wongnai (ecommerce platform connecting consumers, riders and businesses for services) - $265M (total funding: $265M) and Wayflyer (revenue-based financing platform for ecommerce brands) - $253M (total funding: $889.2M).
5. Healthcare
86 companies (34% YoY increase), $1.46B in cumulative investment (4% YoY decrease) and a median deal size of $2.52M (52% YoY decrease).
The top 3 biggest funding rounds are attributed to Ardent Health Services (premier provider of health care services) - $500M (total funding: $500M), Therabody (developer of medical devices for targeted vibration therapy and pain relief) - $165M (total funding: $165M) and Quipt Home Medical (specializes in the provision of ventilator equipment and aids) - $110M (total funding: $110M).
Conclusion: While fintech continues to be the hottest sector in the tech space with oversaturated startup competition in neobanks and crypto, biotech is also having a great year — with steady YoY growth as it looks over all the fancy DeFi startups’ shoulders.
Monthly Highlights
99 Problems But Tech Ain’t One
Let’s talk Venture Capital. The tech market is a bit confusing at best, controversial at worst. For the cynics, not even all the money flowing in can offset a few less positive trends.
Compared to last year, 2022 has seen 43% fewer new unicorns worldwide and corporate VC funding is down 32%. Global IPO volumes dropped by 44% and the US market is heading towards its lowest proceeds since 2003 — mainly because around 87% of companies that IPO’d in 2021 are trading below their initial offering price.
On top of that, the stock market experienced its worst day of 2022 following an August inflation report that was even lousier than expected. It’s really no surprise that big players are still pursuing various ways of cost-cutting:
- Snap turned to more layoffs after missing revenue and growth targets.
- Patreon, DocuSign and Lyft froze hiring.
- Twitter has seen more than 700 employees leave the company in the past four months, with many citing Elon Musk as the reason.
- Meta wants to reduce costs by at least 10%, which will likely mean more layoffs.
- Google is requiring that certain employees apply for new positions within the company and has canceled 50% of its R&D projects.
- Netflix is reacting to its growth slow down by reducing its animation department and imposing more financial discipline; it has cut costs in cloud computing and company merch, and its Salt Lake City office is no more.
But not everyone is running for cover. SoftBank’s Vision Fund 2 is now worth 19% less than the $49 billion they put into it, yet the investment group is considering a Vision Fund 3.
We’re clearly living through a VC funding correction. Some still say everything’s about to come crashing down, but that just might be a teeny bit exaggerated.
Social Hypnosis
The world’s biggest tech clash is happening right on your home screen, in the social and visual media space. We’re talking Instagram, TikTok, BeReal (currently no. 1 free iPhone app in the US App Store), Twitter and YouTube. And they’re all shamelessly adding each other’s unique features to their own products to nab the competition’s users.
Instagram is perhaps the most aggressive, with many new features, tests and pivots in its product strategy. Current actions being taken:
- Reportedly scaling back its commerce features to focus only on those that directly drive advertising, which will result in a new home screen that will be minus one shopping tab.
- Working on its own BeReal-like feature, “IG Candid Challenges.” Speaking of… TikTok — the gold standard among the apps others steal from — copied BeReal with a new feature called TikTok Now.
- Changing up the Instagram Stories format; all stories under a minute long will now play continuously (versus being cut into 15-second segments).
- Testing: a filter that will prevent users from DMing unsolicited nudes; a feature that lets you leave a text “note” for followers lasting 24 hours; “Gifts,” a new monetization tool for creators.
Starting in 2023, YouTube Shorts will give certain creators a 45% share of ad revenue. Meta’s internal research found that Instagram users spend 17.6 million hours a day watching Reels, compared to TikTok users’ 197.8 million hours watching TikToks.
The streaming competition among big players like Netflix, Amazon and Disney+ is heating up as well. Together, the companies have spent up to $50 billion to enrich their content libraries. Every three hours, YouTube adds as much content as Netflix and Amazon’s catalogs combined.
And fun fact: The estimated number of minutes watched on TikTok in 2021 is 22.6 trillion, compared to Netflix’s 9.6 trillion. The biggest difference? TikTok spent virtually $0 on its content.
With all that happening, who are you betting on in this social media Squid Game?
I Say Web, You Say 3
One area of the tech world that’s especially resistant to problems is web3, a.k.a blockchain, a.k.a. crypto, a.k.a. sheesh, my wallet got hacked again. Indicators of its relentless popularity are Y Combinator’s (YC) new “batch” and web3 innovations of the world’s biggest brands.
The YC Summer 2022 batch has 30 crypto startups (up from the previous 25), which is 13% of all companies — compared to 6% last time around. YC is now investing $500,000 in each accepted startup; since that number used to be $300,000, contenders are extra hyped.
Security is a big focus point for YC’s web3-oriented startups due to the rise in crypto hacks and phishing attacks. It’s also all about making crypto more user-friendly, building consumer-facing products (wallets, community/group-based investing) and entering the DeFi and NFT space.
But the YC hopefuls better check the competition; Robinhood released a beta version of its web3 wallet (to 10k users) that will allow trading 20+ cryptocurrencies without fees.
On the individual companies level:
- Ticketmaster now allows event organizers to issue NFTs tied to tickets on Flow.
- LG Electronics launched an NFT platform that lets users buy and sell digital art.
- Starbucks now has a customer loyalty blockchain project called Starbucks Odyssey for earning, buying and selling NFTs — “journey stamps.”
- Ethereum’s “The Merge” is on. One of crypto’s most popular blockchains has now switched to proof-of-stake consensus, meaning it will consume 95% less electricity. The transition has caused Ethereum’s value to drop by more than 17%. We will continue monitoring the situation. Back to you, Jack.
The More You Know
To keep you entirely caught up, a few highlights worthy of attention:
- Adobe intends to acquire Figma, a cloud-based design software company that allows for real-time collaboration, for $20 billion. By announcing its plans, Adobe eliminated a budding rival and made a big bet on the future of design in the process.
- Adobe is also busy with emoji research, uncovering the top three most misunderstood emojis: the cowboy hat face, the cherries and the upside-down smiley face.
- Canva debuted a suite of visual tools for work that could eventually rival Adobe’s Creative Cloud.
- Apple’s iPhone has officially overtaken Androids, claiming 50% of the US market share — along with releasing the new iPhone 14 and iOS 16.
- Patagonia’s founder is giving away the $3 billion company to a collective whose goal is to contribute the brand’s annual $100 million in profits to fighting climate change.
- Zoom has been quietly developing email and calendar tools.
- An unauthorized party claiming to be the same 18-year-old who hacked Uber leaked gameplay footage of “Grand Theft Auto 6,” which isn’t expected to be released until 2025.
- Spotify has launched audiobooks and put 300k titles up for individual purchase — a new model for the subscription streaming platform.
- Peloton Row, the company’s long, long, long-awaited rowing machine, is up for preorder starting at $3,195. It’s eight feet long but can be stored vertically.
- Slack announced “Canvas,” a feature that lets users create and edit live documents without leaving Slack.
- The NBA relaunched its app with a TikTok-like vertical video feed that includes a “For You” tab with personalized highlights.
- Google released new ways to search, including a multi-search feature and an immersive view in Maps.
- Twitter announced that its “edit” button will allow users to edit tweets up to five times in 30 minutes, and will pilot in New Zealand.
Startups to Watch
($58M in latest funding) Podimo is an open podcast platform that offers a subscription service for creators. The company intends to use the funds for market expansion, content and enhanced investments in tech and product.
($7.9M in latest funding) Niftify is a platform where users create, sell, buy and swap NFTs. It has released a no-code NFT store and NFT marketplace platform builder, allowing anyone to create and operate custom NFT stores and marketplaces, and letting creators mint and launch NFT collection on their websites and under their domain names. The company intends to use the funding to transform into a tech platform providing tools for NFT stores.
($2M in latest funding) Sintra is a social-powered NFT investment app that will leverage its new funding to accelerate product testing and development of new in-app features, and to drive comprehensive recruitment and marketing efforts — tied to Sintra's rich pipeline of activity.
($1.5M in latest funding) ZERO10 is a fashion-tech company building AR platforms for fashion brands, ecommerce and physical retailers. Essentially, it is a digital clothing “try-on” solution. Its plans with the recent funding remain unknown.
($100k in latest funding) Curastory is a video content creator tool that helps student-athletes by connecting them with brands in need of video content. The $100k comes from Google and consists of non-dilutive funding, hands-on support and enhanced Google visibility — allowing Curastory to accelerate its growth and help thousands of creators worldwide.
