Nikita Korobeynik8 min

STRV Tech Trends Report September '22

ProductSep 15, 2022

Introducing the STRV Tech Trends Report — the natural evolution of our VC Funding Trends, which we started one year ago and which has gradually morphed into a rundown of the month’s tech news from all fields, not just Venture Capital. In short: new name, same format.

The tech industry is scrambling everywhere except in Canada, where seed-stage companies appear to be having a blast. Facebook is struggling to stay relevant, unicorn founders pen sad goodbyes and Starbucks is entering web3 — as Tinder backtracks on its metaverse investment.

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

Chart-Sep-1--1-

This August, the total number of companies that raised funding was 1,276, compared to 811 in August of last year. This is a 57% YoY increase. The total funding raised was $27.45 billion, with a 7% YoY increase; last year, August clocked in at $25.68 billion. The median deal size was $5 million, a 23% YoY decrease compared to the $6.5 million in August of last year.

Leading Countries

*based on the number of companies that raised funding (not total funding)

Chart-Sep-2

1. USA — with 699 companies (61% YoY increase), $19.59B in cumulative investment (21% YoY decrease) and a median deal size of $6.83M (27% YoY decrease)

2. India(up one spot) with 94 companies (47% YoY increase), $732M in cumulative investment (11% YoY decrease) and a median deal size of $2.22M (22% YoY decrease)

3. Canada(up one spot) with 83 companies (196% YoY increase), $1.33B in cumulative investment (127% YoY increase) and a median deal size of $1.89M (59% YoY decrease)

4. UK(down two spots) with 71 companies (94% YoY increase), $1.66B in cumulative investment (183% YoY increase) and a median deal size of $4M (13% YoY decrease)

5. Germany(new to list) with 43 companies (13% YoY increase), $924M in cumulative investment (14% YoY decrease) and a median deal size of $5M (72% YoY decrease)

Conclusion: When compared to July and June, the numbers of funded companies and funds raised remain stabilized. The US continues to breed more tech companies, just with less money in the pipeline and smaller individual funding deals. Canada is a solid contender as it moves up in the rankings, strongly improving upon last year’s results. And despite the fall in rankings, the UK is doing much better compared to last year.

Leading Industries

Chart-Sep-3

1. Fintech

170 companies (57% YoY increase), $4.88B in cumulative investment (18% YoY decrease) and a median deal size of $9.5M (3% YoY decrease).

The top 3 biggest funding rounds are attributed to Propel Finance (specializes in a wide range of asset finance to meet the business needs of individuals and enterprises) - $591.5M (total funding: $591.5M), auxmoney (leading digital-lending platform for consumer credit in Europe) - $507.8M (total funding: $3.5B) and Yieldstreet (management platform providing institutional investors with access to income-generating investment products) - $400M (total funding: $728.5M).

2. Biotechnology

119 companies (148% YoY increase), $4.23B in cumulative investment (61% YoY increase) and a median deal size of $12.8M (36% YoY decrease).

The top 3 biggest funding rounds are attributed to Karuna Therapeutics (developer of drugs for the treatment of schizophrenia) - $750M (total funding: $1.12B), Cerevel Therapeutics (company unraveling the mysteries of the brain to treat neuroscience diseases) - $300M (total funding: $1.45B) and CinCor Pharma (clinical-stage biopharmaceutical company that develops treatments for cardiovascular diseases) - $225M (total funding: $418M).

3. AI

117 companies (43% YoY increase), $1.47B in cumulative investment (44% YoY decrease) and a median deal size of $3M (85% YoY decrease).

The top 3 biggest funding rounds are attributed to FiscalNote (uses AI and big data to deliver predictive analytics on government information to determine its impact)  - $250M (total funding: $625.5M), Pliops (creating a new product category enabling cloud and enterprise data centers) - $100M (total funding: $205M) and Anyscale (accelerates the development and productionization of any AI app, on any cloud, at any scale) - $99M (total funding: $259M).

4. Healthcare

87 companies (55% YoY increase), $983M in cumulative investment (2% YoY decrease) and a median deal size of $6.57M (35% YoY increase).

The top 3 biggest funding rounds are attributed to Alma (membership-based network for mental health care providers) - $130M (total funding: $220.5M), Axonics Modulation Technologies (pre-revenue company developing novel implantable neuromodulation) - $111.7M (total funding: $735.6M) and Northwest Specialty Hospital (physician-owned and operated medical facility) - $67.5M (total funding: $67.5M).

5. Ecommerce

77 companies (on par with last year), $677M in cumulative investment (67% YoY decrease) and a median deal size of $4.73M (1% YoY decrease).

The top 3 biggest funding rounds are attributed to Tamara (offers a buy now, pay later platform that enables customers to pay in installments)  - $100M (total funding: $215.6M), Paper Boat (ecommerce platform selling beverages based on scientific observation and analysis of nature) - $50.2M (total funding: $153.6M) and Verishop (premium lifestyle company offering everyday luxury in fashion, beauty, home and more) - $40M (total funding: $70M).

Conclusion: Compared to last year, most key industries have increased the number of funded companies. However, the total investment amount has shrunk — except for the Biotechnology sector, which continues to grow both in terms of the companies and collected funds.

Monthly Highlights

Improvise, Adapt, Overcome?

The turbulent world economy has become an essential part of most emerging tech companies’ strategic planning. It’s rough out there, you guys.

Experiencing the bright side of this year are Canadian startups (good karma for all the sorries?). Q2 saw the most capital invested into Canadian early-stage companies to date, with seed investments up by 30% from Q1 to Q2. Canada’s neighbor, however, is having less fun; in that same period, US seed funding dropped by 35%.

One Blockaccinno, Please

Is it a Second Life sequel? Real-life Matrix? Nope. Just the metaverse doing its thing. A quick digest of the latest developments in the world of virtual avatars.

  • The hottest story of the past month is Meta launching its Horizon Worlds platform in Spain and France with an, umm… quirky selfie of virtual Zuck at the Eiffel Tower. The image quality received mixed reactions from the general public, prompting Mark to react via a Facebook post with a promise of better graphics.
  • Tinder is abandoning its intentions to introduce Tinder Coins as an in-app currency and rethinking its metaverse dating aspirations due to “uncertainty about the ultimate contours of the metaverse” and the “more challenging operating environment." Additionally, after less than a year in the role, CEO Renate Nyborg will be stepping down.
  • Starbucks will make its web3 debut next month with coffee-themed NFTs. Customer benefits will likely be connected to Starbucks' current loyalty program.

(Not) Vibing With Zuck

Apart from gracing us with his virtual presence, Mark Zuckerberg is also busy working to keep Facebook relevant for the younger generation.

A new Pew survey found that only 32% of US teens aged 13-17 use Facebook (down from 71% in 2015), while 95% use YouTube, 67% use TikTok and 60% use Instagram and Snapchat. Content creator Jules Terpak spoke to TechCrunch on behalf of Gen Z and expressed that teens don’t find value in Facebook anymore, in part because it exudes “the energy of a spam email."

Facebook has been struggling to remain among the Top 10 apps on the US App Store as younger consumers shift to new social networking platforms like TikTok and BeReal – the #1 non-gaming app. This year, Facebook fell out of the Top 10 free iPhone apps 97 times.

Still, Zuck is far from bowing his head in defeat. Instead, he’s gathering ideas — or stealing them, depending on who you ask. Instagram is testing a new feature called Candid Challenges, which bears a striking resemblance to BeReal, the photo-sharing app popular among Gen Z.

As for experiments gone sour, Facebook is shutting down its live shopping feature (a decision paralleling that of TikTok) and is turning its focus on reels due to consumers' viewing behavior shifting towards short-form videos. A little late to the party, aren’t we?

Riding the Podcast Wave

It’s a Gen Z world, we’re just living in it. To please young consumers, YouTube is entering the world of podcasts, with select users already seeing a new podcast homepage. The move isn’t that surprising; while YouTube is a video-first beast, YouTube Music is no slouch, either — its last official report showed that the platform had more than two billion monthly users.

Although competitors are staying just as busy, a Cumulus Media analysis found that 24.2% of Americans turn to YouTube for podcasts, compared to 23.8% switching on Spotify and 16% hitting up Apple Podcasts.

YouTube has been following a solid gameplan. It hired a Head of YouTube Podcasting in 2021, offered podcasters and networks up to $300k to start making videos, analyzed the potential of audio ads and partnered up with NPR to nab 20 of its most trending podcasts.

But YouTube better hurry up, since Twitter is also integrating podcasts into its platform as a part of the revamped Spaces tab — already visible to a set global English-speaking audience.

Startups to Watch

Happy Health

($60M in latest funding) Happy Health is a mission-driven tech company and provider of Happy Ring — a wearable that detects stress and helps the wearer reduce it. The company intends to use the funds to accelerate growth and expand operations.

Overtime

($100M in latest funding) Overtime is a sports network that produces several sports-focused series and short-form content for the next generation of sports fans. The company intends to use the funds to grow OTE and OT7 (Overtime’s basketball and football leagues), create new sports leagues and key business verticals — including ecommerce and web3 — and continue to invest in short- and long-form digital content across numerous sports.

Triller

($200M in latest funding) Triller is an AI-powered music video app that enables anyone to make professional videos, effortlessly. The company said it has raised debt and equity ahead of the IPO.

Aero

($50M in latest funding) Aero is an air travel company that matches air travelers with premium seats and shared charters. The company intends to use the funds to drive global market expansion and to further answer increased demand on existing routes.

OneOf

($8M in funding) OneOf is a green NFT platform that connects fans and collectors to their favorite musical artists, athletes and brands. The company intends to use the funds to accelerate the development of its environmentally sustainable NFT marketplace and support its growth in the music, sports and brand verticals.

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