This past month was a tough one for the fintech space, which shrunk by nearly 2x compared to last month. Layoffs are continuing across all industries, mortgage rates are at 2008 levels and there’s a misery index confirming that US households are hurting.
Below are our observations for June 2022, including year-on-year and month-to-month comparisons as well as leading industries and companies most deserving of attention.
General Overview
This June, the total number of companies that raised funding was 1,236, compared to 1,053 in June of last year. This is a 17% year-on-year increase. The total funding raised was $26.3 billion, with a 21% year-on-year decrease; last year, June clocked in at $33.42 billion.
Leading Countries
*based on the number of companies that raised funding (not total funding)
1. USA — with 641 companies (20% year-on-year increase), $15.99B in cumulative investment (18% year-on-year decrease) and a median deal size of $7.2M (37% year-on-year decrease)
2. UK — with 95 companies (5% year-on-year decrease), $2.03B in cumulative investment (30% year-on-year decrease) and a median deal size of $5.02M (33% year-on-year increase)
3. India — with 77 companies (88% year-on-year increase), $840M in cumulative investment (127% year-on-year increase) and a median deal size of $4M (74% year-on-year increase)
4. Canada — (up one spot) with 59 companies (97% year-on-year increase), $720M in cumulative investment (21% year-on-year decrease) and a median deal size of $3.02M (76% year-on-year decrease)
5. Israel — (new to list) with 45 companies (32% year-on-year increase), $1.07B in cumulative investment (27% year-on-year decrease) and a median deal size of $15M (5% year-on-year increase)
Conclusion: Fewer companies are getting access to investment capital — 11% less than last month. The total capital raised in June has subsequently decreased by 21%. More companies have raised capital compared to last year but the average deal size has gotten smaller. Israel has joined the ranking, taking Germany’s slot.
Leading Industries
1. Fintech
135 companies accumulated $3.99B in investment, an 11% year-on-year decrease.
The top 3 biggest funding rounds are attributed to Optcapital (financial services company specializing in deferred and incentive compensation) - $585.4M (total funding: $912M), StrideUp (digital home fintech that provides shared ownership mortgage plans) - $343.6M (total funding: $345.7M) and Settle (fintech platform that automates B2B payments and provides working-capital solutions for businesses) - $280M (total funding: $376M).
2. Biotechnology
119 companies accumulated $3.39B in investment, a 20% year-on-year increase.
The top 3 biggest funding rounds are attributed to Xenon Pharmaceuticals (biopharmaceutical company focused on the development of novel medicines via a proprietary discovery platform)- $287.5M (total funding: $942.6M), DBV Technologies (clinical-stage biopharmaceutical organization) - $192.2M (total funding: $243.3M) and Day One Biopharmaceuticals (biotech company focusing on developing new cancer therapies) - $172.5M (total funding: $362.5M).
3. AI
110 companies accumulated $1.92B in investment, with no year-on-year change.
The top 3 biggest funding rounds are attributed to Zoovu (AI content discovery platform) - $169M (total funding: $183M), Ataccama (AI-powered enterprise platform for data and metadata) - $150M (total funding: $150.5M) and Coralogix (SaaS platform using ML algorithms to facilitate delivery and maintenance processes for software providers) - $142M (total funding: $238.2M).
4. Healthcare
85 companies accumulated $953M in investment, a 31% year-on-year decrease.
The top 3 biggest funding rounds are attributed to Capital Rx (wellbeing innovation organization that helps oversee drug store benefit plans) - $106M (total funding: $203M), Diabeloop (clinical gadget organization for diabetes and shut circle framework) - $75.3M (total funding: $129M) and Tomorrow Health (tech-driven home healthcare company that focuses on the way home-based care is ordered, delivered and paid for) - $60M (total funding: $92.5M).
5. Ecommerce
84 companies accumulated $1.7B in investment, a 5% year-on-year increase.
The top 3 biggest funding rounds are attributed to Razor Group (global consumer holding company that partners with ecommerce merchants to acquire and scale brands) - $400M (total funding: $959.8M), Rohlik (grocery delivery company that offers a 90-minute same-day delivery service) - $231.5M (total funding: $611.2M) and Magic Eden (NFT marketplace for users to discover, trade and create NFTs) - $130M (total funding: $159.5M).
Conclusion: The capital raised in the fintech space shrunk by nearly 2x compared to last month. Biotechnology is gaining momentum moving, from 4th to 2nd place this month with +$1B in total funding vs. last month.
Monthly Highlights
Measurable, Verified Misery
If you’re wondering how things are going with the global economy, here’s a recap: not great.
Key stock market indexes like The Dow Jones Industrial Average, the tech-heavy Nasdaq Composite and the S&P 500 had their worst week since 2020, symbolizing our official entry into bear market territory.
Inflation has hit 8.6% in the US and 8.1% in Europe. Money ownership is getting more expensive by the minute. Mortgage rates are at their highest since 2008 and interest rates are going up, with the Fed recently announcing the largest interest rate spike since 1994. Attempts at fighting inflation by slowing down the economy don’t look promising.
Practically everything is amplifying concerns about an impending recession. The chances of one taking place by Q1 2024 are at 71.7%. The misery index — an aptly-named summary of inflation and unemployment rates measuring American households’ economic well-being — is rising. And the higher it gets, the bigger the misery. So that’s neat.
Taking the ‘Fun’ Out of Funding
All of the numbers above have very real consequences — just ask the tech space. There was a 23% drop in VC deal activity between Q1 and Q2 2022, a significant shift from the humble 1.4% drop between Q4 2021 and Q1 2022.
Andreessen Horowitz’s analysis indicates that the revenue forecast of public software companies is down by 60%, with fintech and consumer internet companies being down 70–80%. Since this represents a big risk for investments, VC funds will struggle with raising money to invest — making it difficult for founders to raise capital.
As a result, Fidelity Investments marked down the valuations of Stripe, Reddit and ByteDance. Other consequences include:
- Hard times ahead for transportation giants Uber and Lyft. The average fare is higher than ever and Q1 saw 20% fewer riders and 35% fewer trips compared to Q1 2019. Lime shut down operations in South Korea due to regulatory pitfalls.
- The delivery market and leaders like Instacart, DoorDash and Deliveroo, which earned billions in revenue during the pandemic, have experienced slashed valuations, stock fluctuation and consumer interest decrease.
- One of the biggest fintech startups, Klarna, is considering raising at a $15 billion valuation, a notable shift from its $45 billion valuation in 2021.
- The education space, which also saw growth during the pandemic, is seeing stock values of public edtech companies like Duolingo and Coursera dropping.
- Makeup giant Revlon filed for bankruptcy protection, citing its debt load and supply chain challenges.
- Neo brokers are experiencing a substantial decrease in accumulated funding: $7.6 billion last year versus the year-to-date $528 million figure. Robinhood shares jumped 14% following news that crypto trading platform FTX is considering acquiring the company. And after being valued at $5 billion last year, crypto trading app BlockFi is raising a “down-round” hoping for new funds at a reduced valuation of $1B.
Layoffs: The Sequel
Possibly the worst trend of 2022 continues as massive layoffs hit more and more companies.
- Netflix - laid off 300 people, its second layoff spree in two months; lost more than 200,000 subscribers in Q1 and expects to lose 2 million in Q2
- Spotify - slowing down hiring by ~25% but still intends to add to its headcount this year as it hopes to make audiobooks its next big thing
- Tesla - laid off 200 Autopilot workers (mainly hourly employees) while shutting down its San Mateo office after already letting go ~10% of salaried employees
- MasterClass - cut 20% of its team (about 120 people) to “get to self-sustainability faster”
- Bird - laid off 23% of its staff; e-scooter startup Superpedestrian will lay off 35 employees, and Voi laid off 35 full-time workers
- Coinbase - laid off 18% of its workforce (about 1,100 people); cryptocurrency trading platform Gemini laid off 10% of its staff
- Redfin and Compass - a combined 920 layoffs amid dropping demand in housing due to increased mortgage rates
- More layoffs (percent of staff): email client Superhuman (22%); clothing subscription Stitch Fix (15%); security unicorn OneTrust (25%); healthcare unicorn Ro (18%); social app IRL (25%); insurtech PolicyGenius (25%); fintech Wealthsimple (13%); virtual healthcare Carbon Health (8%); a16z-backed collab video messaging Loom (14%); mapmaker TomTom (10%); Pokémon GO developer Niantic (8%)
Could All of This Make Sense?
Let’s look at things from a different perspective. Salesforce is enjoying a healthy 24% quarterly revenue increase and the CEO of Binance.US told employees that the company is growing faster than ever. In fact, according to TechCrunch, startup layoffs are increasing at a slower pace compared to early 2020 pandemic days.
The VC slowdown feels more striking mainly due to last year’s record-breaking performance, and the stock market had been hitting historical valuations. So maybe we’re just thrashing around between extremes until we finally chillax on neutral ground.
Daily Dose of NFT Mayhem
You’ve seen the onslaught of “crypto market crash” news. Weekly NFT sales have declined by over 70%, going from one million units to a quarter-million since peaking in early 2022.
Bitcoin prices dropped to below $23k, its lowest point since 2020, which inevitably caused a massive value drop of Etherium. The value of the global crypto market went below $1 trillion this month for the first time since January 2021.
Still, this hasn’t stopped tech giants from adopting NFTs on their platforms — perhaps because crypto remains the highest funded fintech market of Q1 2022.
Meta has started using Facebook to test NFTs with select US creators following the May announcement that they’ll be doing so on Instagram. The company now also sells digital outfits from designers like Prada and Balenciaga for metaverse avatars.
Microsoft, Meta, Adobe, Nvidia, Ikea and Epic Games are among 30+ companies to join the Metaverse Standards Forum to establish standards for metaverse tech and develop new tools. The absence of Apple here indicates that the company isn’t fully on board the hype train just yet.
Definitely getting comfy on the hype train are eBay, which acquired NFT marketplace KnownOrigin, and Shopify, which launched Tokengated commerce as a way to reward VIPs.
As always, it’s a mixed bag. To the left, you’ll see investors expecting the worst in the medium-term. To the right, Forbes reports a more optimistic outlook for crypto’s future. And somewhere in the middle, New York is ruffling some crypto feathers after passing a moratorium on Bitcoin mining.
Sentient AI? Sure, Why Not
With reports about Google-developed AI coming to life, we figured we’d dive in and do some definitely-not-paranoid research about the space.
Pinterest announced it will acquire The Yes, a shopping platform utilizing AI to allow users to shop personalized feeds. Cruise has officially been permitted to charge customers for driverless taxi rides in San Francisco on select streets, at night and during good weather.
In an effort to improve its audio tech game, Spotify is acquiring Sonantic, the AI voice platform that gave Val Kilmer a voice in the “Top Gun: Maverick” movie.
And finally, biotech startup Meta Pharmaceuticals (not that Meta) raised $15 million to develop new autoimmune drugs with the help of AI. If we were paranoid, robots choosing which pills we’ll be popping would be a bit daunting. But, again, we’re not paranoid. At all. Everything is fine.
Startups to Watch
($80.2M in funding) Veo has designed a camera and cloud-based subscription service to record and automatically compile highlights of sports games. The video content can then be accessed and shared on Veo’s platform. Right now, the company is expanding its US operations and enhancing the scope of its technology.
($10.7M in latest funding) A wellness app offering live wellness classes as a way of delivering a “personal trainer anywhere,” Buddyfit is currently furthering its international expansion plans and doubling its team’s size.
($5.5M in latest funding) A digital payment platform that allows anyone to split payments for online purchases across multiple combinations of debit and credit cards, Kasheesh will use its funding to fuel hiring efforts alongside scaling its platform.
($3.5M in latest funding) Ivella is a developer of banking and financial apps helping couples split their expenses. Its new capital will serve to fuel the company’s ongoing development.
($40M in latest funding) The LA-based soccer technology company aims to disrupt and elevate the soccer experience through user-centered technology. Its new funds will be used to double the number of its facilities in the US and to open a site in the UK.
