VC Funding Trends March '22

The past month saw a 141% year-on-year increase in funding, there may be a slowdown in total VC activity around the corner, the food-delivery sector has reached “winner takes all” stakes and NFTs are hitting a financial lag.

March also traded Canada for France in the list of top industries, with India showing incredible results compared to 2021, pushing Germany to fourth place.

Below are our observations for March 2022, including year-on-year and month-to-month comparisons as well as leading industries and companies most deserving of attention.

General Overview

This March, the total number of companies that raised funding was 1,766, compared to 733 in March of last year. This is a 141% year-on-year increase. The total funding raised was $45.75 billion, with a 120% year-on-year increase; last year, March clocked in at $22.57 billion and doubled both the companies and funding compared to January and February.

Leading Countries

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

1. USA — with 987 companies (168% year-on-year increase) and $32.32B in cumulative investment (114% year-on-year increase)

2. UK — with 184 companies (127% year-on-year increase) and $4.71B in cumulative investment (147% year-on-year decrease)

3. India — (up one spot) with 115 companies (259% year-on-year increase)and $2.46B in cumulative investment (925% year-on-year increase)

4. Germany — (down one spot) with 59 companies (79% year-on-year increase) and $1.28B in cumulative investment (44% year-on-year increase)

5. France — (new to list) with 47 companies (114% year-on-year increase) and $1.35B in cumulative investment (187% year-on-year increase)

Conclusion: France is back in the top 5 and India shows spectacular performance compared to last year, while Canada — last month’s 3rd top performer — got booted out.

Leading Industries

1. Fintech

234 companies accumulated $10.93B in cumulative investment and saw a 195% year-on-year growth.

The top 3 biggest funding rounds are attributed to Segro (a REIT [Real Estate Investment Trust] and leading owner, manager and developer of modern warehouses and light industrial property) - $1.27B (total funding: $3.49B), Ramp (a finance automation platform helping businesses spend less time and money) - $750M (total funding: $1.4B) and ConsenSys (builds Ethereum blockchain infrastructure and applications ranging from developer tools to enterprise solutions) - $450M (total funding: $725M).

2. AI

157 companies accumulated $4.97B in investment and saw a 54% year-on-year growth.

The top 3 biggest funding rounds are attributed to Cruise (self-driving car company and the autonomous driving unit of General Motors) - $2.1B (total funding: $15.1B), Astronomer (a developer of modern data orchestration tools, powered by open source platform Apache Airflow) - $213M (total funding: $282.9M) and ConcertAI (developer of medical research tool suite intended to design and deliver care-based oncology research and data analytics) - $150M (total funding: $300M).

3. Ecommerce

134 companies accumulated $4.48B in investment and saw a 39% year-on-year growth.

The top 3 biggest funding rounds are attributed to Fanatics (sports merchandise retailer that manufactures fan gear and jerseys across retail channels) - $1.5B (total funding: $4.19B), Roofstock (online marketplace for investing in leased single-family rental homes in a transparent and low-friction way) - $240M (total funding: $365.3M) and Society Brands (tech-enabled consumer products company that acquires ecommerce native brands that primarily sell on Amazon and their own DTC sites) - $204M (total funding: $204M).

4. Biotechnology

129 companies accumulated $4.12B in investment and saw a 20% year-on-year growth.

The top 3 biggest funding rounds are attributed to Ascendis Pharma (biotech company applying its innovative prodrug technology to build a fully integrated rare disease company) - $500M (total funding: $585.7M), Travere Therapeutics (discovers and develops drugs for the treatment of debilitating and often life-threatening diseases) - $275M (total funding: $592.5M) and Innoviva (a healthcare-focused asset management company that develops biopharmaceutical drugs in the antibiotic, respiratory and digestive realms) - $225M (total funding: $225M).

5. Healthcare

121 companies accumulated $2.11B in investment and saw an 83% year-on-year growth.

The top 3 biggest funding rounds are attributed to Owens & Minor (distributor of medical and surgical supplies) - $500M (total funding: $1B), Saluda Medical (global medical device company revolutionizing the field of neuromodulation with an emerging portfolio of therapies driven by advanced closed-loop tech designed to treat debilitating neurological disorders) - $125M (total funding: $249.5M) and American Nitrile (leading USA-based manufacturer of premium nitrile gloves for medical, non-medical and industrial uses) - $105M (total funding: $105M).

Monthly Highlights

The Startup Meltdown

PitchBook dropped a report this month looking at the market trends that helped drive the 2021 VC boom. The report hints that there is a slowdown afoot in total VC activity; in the US, it’s been decelerating every month since its late-2021 highs. We very well might be seeing the early stages of “it was fun while it lasted.”

PitchBook reports around $235 billion in total volume in its records for Q4 2021 and $161 billion in Q1 2022. Compared with the same period last year ($170B in Q1 2021), the difference isn’t that drastic. Presumably, a lot of early-2022 deals are in reality late-2021 deals, meaning that this year's Q1 data is slightly skewed. The second quarter may prove more illustrative of where the market truly is.

What About Toronto, eh?

The tech industry has been on the lookout for the next Silicon Valley, with Miami and Austin being the most prominent candidates for the role. However, as per The NY Times, Toronto is growing faster than both of those cities, and now hosts the third-largest tech hub in North America, behind New York and Silicon Valley.

Apart from Drake and The Weeknd, Toronto also boasts top talent in research and engineering from the University of Toronto and the University of Waterloo. The city is the tech hub for big tech players — including Canada’s own Shopify, Google, Apple and Stripe — and its immigration policy has made it a true melting pot, with ~50% of its residents born outside the country. This combination of academia, Big Tech and a diverse population has fostered novel collaborations, like Uber’s self-driving car lab and Google’s “neural networks” lab.

But hold your moose. Toronto still has a long way to go. Between 2021 and 2022, Toronto startups garnered $5.4 billion in investments compared to $132 billion for startups based in Silicon Valley. Sorry.

A Dish Best Served Cold

The food-delivery sector is another case of a pandemic success story grounded in a mismatch between valuations and the value of niche startups. But, as always, the market is a just ruler, and leading companies in the industry are facing their comeuppance.

Instacart reduced its valuation from around $39 billion to $24 billion, representing a roughly 38.5% decrease in the company’s worth.
DoorDash (which acquired STRV client Caviar back in 2020, wink) has also seen its price-sales ratio fall from last year’s highs, along with its stock prices (from $246 to $109 in the past 6 months).
Delivery Hero has seen its value fall to around €41 per share, from last year’s share price of around €130.
Deliveroo has suffered since its IPO last year, losing about 65% of its value, measured from its trailing 52-week high.

The food-delivery battle is now a “winner takes all” war. All this anticipation making anyone else hungry?

Another One Bites the Dust

Following the VC cooldown, the NFT hullabaloo might have come to a halt as average price (dropped to below $2,000 vs. an all-time high of almost $6,900 on Jan. 2) and daily sales (down 83% since Jan. 31) decline.

At the beginning of March, OpenSea’s trading volume was down 30%. The decline has only accelerated since Russia invaded Ukraine. With Mark Zuckerberg confirming that NFTs are coming to Instagram soon, we may see the blockchain tokens go mainstream. It’ll be interesting to see how the situation evolves throughout 2022 and we will surely keep you posted. For now, all our Cool Cats and Doodles and Thingamajigs are safe.

NFT MVP

In other NFT news, Yuga Labs — the parent company behind Bored Ape Yacht Club — acquired the rights to CryptoPunks and Meebits, both owned by Larva Labs. Across the three widely-popular collections, Yuga owns the rights to ~$5.5 billion in NFTs, which is ~22% of the current total NFT market cap. So don't be surprised when you start seeing headlines about Yuga Labs’ inevitable anti-monopoly lawsuit.

Startups to Watch

Hydrow

($55M in funding) The so-called “rowing equivalent of Peloton,” Hydrow develops a connected indoor rowing machine designed for full-body workouts. It offers a connected rowing machine and around 4,000 exercise classes, with virtually all of them taking place on the water rather than in a gym or classroom. This allows you to row in sync with the instructor taking the class.

Space Runners

($10M in funding) Space Runners is the first Metaverse fashion brand focused on cross-chain fashion items that can be plugged into any metaverses and games. In its first collection with former NBA Champions Kyle Kuzma and Nick Young, it launched the NBA Champions Sneaker Collection in December — which sold 10,000 NFTs in nine minutes. Space Runners now has over 500,000 members across Discord, Instagram and Twitter.

Pianity

($6.5M in funding) Pianity is a music NFT platform where musicians and their communities gather to create, share, trade and collect limited-edition tracks. With Pianity, fans and collectors can “give back” to artists by purchasing these tracks, which are indefinitely stored on the blockchain. The platform redistributes 50% of its earnings in tokens to all active users each week.

Immerse

($9M in funding) Immerse is a virtual reality language teaching and learning platform in the Metaverse. It is used in partnership with the world’s top language schools to deliver VR English language learning experiences to students in the Asian, European and Latin American markets.

Dance

($22.1M in funding) Dance is an e-bike subscription service where users pay a monthly fee that covers their bikes and provides an all-inclusive support package. The subscription includes a bike concierge, maintenance and theft replacement insurance — all via the company’s own hardware and software which allows for fast repairs through its warehouse and logistics setup.

The 2022 VC Investor Ranking – Preliminary Results

STRV partner Dealroom.co is wrapping up its fifth annual Global Venture Capital Investor Prominence ranking and we’re able to share a sneak peek at the preliminary results (we will share the final list next month). Its methodology uses attributes like the number of unicorns and future unicorns backed by investors, how early investment into a unicorn was made and the number of investment rounds in the last 12 months.

A record-smashing 2021 has meant a lot of movement among the players, with some funds riding the wave. Here’s how the top of the global combined ranking is shaping up, with ranking shifts compared to the previous year:

Top 10 Global Venture Capital Investors