Deals to vehicle sales, financing, and leasing startups in 2017 have already exceeded total deal activity last year, while funding is also on track to exceed 2016 levels — in part due to the rise of car sales platforms abroad.
Legal tech startups have already reached a high in deal count this year, as technology aimed at automating high-cost, white-color professions gains investor attention.
By offering software solutions that streamline law offices’ workload, automating rote and repeatable work, projects that might have previously required hundreds of hours of human capital, could be accomplished much more efficiently.
With historically weak banks and many citizens without proper identification, India has always lagged in access to financial services.
A July 2017 Ernst & Young study found that 19% of India’s population of 1.2B were still unbanked — representing a huge opportunity for those fintech players nimble enough to cater to India’s unique market.
The wide availability of smartphones and more fintech-friendly government policies have paved the way for innovation, luring Google, Amazon, Alibaba, and other outside companies more deeply into the Indian payments space.
Now that Tesla, Volkswagen, Chevrolet, and other carmakers are selling electric vehicle (EV) models at sticker prices of $35,000 or less, electric vehicles could finally become affordable for the average car buyer. But even as costs come down, some people are still hesitant to buy EVs due to battery capacity and “range anxiety.”
When considering an EV purchase, all car buyers essentially have the same questions:
Founded in 1983, Intuit has built itself into a financial and accounting software giant with a product line catering to individuals, small businesses, and accountants.
But despite a market capitalization of over $37B, Intuit faces the threat of “unbundling” from a host of competitors who are attacking the incumbent in each of its individual product lines and services rather than head on across its entire portfolio.
The past quarter saw a record number of deals to VC-backed fintech companies globally, at 283. If the current run rate holds steady in Q4’17, global fintech investment dollars and deal activity could top new highs in 2017.
In 2017 year-to-date, deals stand at 825 worth $12.7B in funding.
Artificial intelligence is the future of big tech — and is already an integral part of the consumer and enterprise products at Facebook, Apple, Microsoft, and Google.
Now network connectivity providers like Cisco and Oracle are integrating advanced machine learning algorithms into their IT and cloud infrastructures, while GE has focused its efforts on AI for the industrial internet of things.
AI startups have played a huge role in advancing the internal R&D efforts at big tech companies:
Eleven years ago, tech giant Google announced its largest acquisition since it incorporated in a Menlo Park garage, paying $1.7B for YouTube, a video platform that at the time had fewer than 100 employees.
This includes six $1B+ acquisitions, such as marketing solutions provider DoubleClick ($3.1B, 2007) and navigation app Waze ($1.15B, 2013). More recently, the company made a big push into AI, acquiring UK-based DeepMind ($650M, 2014).
An explosion of new consumer finance brands is transforming how people save, spend, and manage their money.
Ninety-two million millennials will soon be in what Goldman Sachs calls their “prime spending years.” In aggregate, they command $1.3 trillion in annual spending. They have a deep antipathy to traditional financial institutions.
A host of startups have emerged to capitalize on this trend. These companies are making it easier to make a budget, invest, and buy stocks, as well as to get loans and credit cards.
The secrets of user growth
To build a successful personal finance management tool, it’s important to understand the dynamics of user acquisition and growth.
After an initial wave of disruption that witnessed online booking websites overtaking traditional travel agents, travel tech startups have progressively spread the digital revolution to other parts of the industry.
We used CB Insights data to identify over 95 private travel tech startups and mapped them across 9 main subcategories, from general booking & search services to a range of niche markets such as private jet booking, smart luggage, and more.
Today, nearly half of the world’s population has internet access. As this figure grows, so too will the complexity of networks and connectivity. To keep pace, ongoing innovations in information technology are increasing the efficiency and reliability of these ever-expanding networks. Software-defined networking, or SDN, in particular, has changed the way information moves around the world.
Using the CB Insights Platform, we surfaced 18 notable network technology startups developing systems to increase the reliability, efficiency, and security of data mobility while reducing costs. These companies vary widely in their offerings, but generally leverage software to manage network functionality.
Last year, development & operations startups reached an all-time funding high. While the sector is on pace to see fewer deals and dollars in 2017, investment activity remains strong.
Within the space, testing, monitoring, and containerization companies remain a focus for institutional investors. However, companies often provide a suite of services across multiple domains.
Using CB Insights data, we identified 75+ private companies in the development & operations industry that have raised disclosed equity funding in the past 24 months. We then categorized each startup into one of 7 main categories: product management, development, test & review, logging & monitoring, delivery & deployment, containerization, and code management.
The shift from traditional manufacturing to computer-enabled industry took nearly a century. But the shift from personal computing to billions of smartphones, massive networks, and the IoT has taken just a couple of decades.
And the next phase of technological evolution is already underway: advanced neural networks that learn, adapt, and respond to situations.
With AI and automation advancing at a breakneck pace, society’s capacity to respond is being stretched to the limit.
Today, there are 214 unicorn startups globally — private companies that have reached a valuation of $1B+.
Of these, the United States has taken the largest share of the world’s most valuable private companies, with 127 US-based startups reaching unicorn status since 2013. China follows in second place, producing 59 unicorn companies over the same time period.
The dietary supplement industry is unregulated by the FDA and prone to deceptive marketing tactics. And yet, more than $12B is spent every year — according to the NIH — on products ranging from pediatric vitamins to plant-based nutraceuticals purported to prevent aging.
The FDA defines dietary supplements as products containing ingredients such as vitamins, minerals, herbs, amino acids, and enzymes, often sold in forms such as tablets, capsules, softgels, gelcaps, powders, and liquids. Dietary supplements often lack the extensive federal oversight, years of clinical research, and intricate supply chain issues of their medical device and pharmaceutical counterparts. This relatively straightforward product development cycle, combined with an increasing consumer focus on personal wellness, has resulted in continued growth in the supplement sector.
Since 2012, the number of equity deals to tech startups in India has increased every year. Simultaneously, after aglobal dip in edtech investment activity in 2016, this year is on pace to bounce back in terms of both deals and dollars, as investors bet on education.
India’s edtech industry is still nascent, but in the country of 1.3B there are plenty of areas for startups to cover. And success stories in other emerging economies hint at potential growth in the future — in China, tutoring startup Yuanfudao reached a $1B unicorn valuation this past May, with more than $244M in disclosed funding from investors such as Tencent Holdings, Warburg Pincus, IDG Capital, and others.
Even now there are noteworthy companies gaining traction in India, with some even attracting attention from global investors — such as Tencent Holdings-backed BYJU’s, which offers a learning app for K–12 students as well as for users preparing for standardized tests such as the GRE, GMAT, JEE, and others.
One of the fastest-growing fintech startups in the US today is Stash Invest, or Stash. The New York-based savings and brokerage startup aims to make it easier for underserved, lower-income users to invest in the stock market.
Stash leverages education as a key differentiator among robo-advisors and uses a micro-investing model, which means users can make more frequent investments at fractional dollar amounts. The small dollar amounts has brought in large number of first-time investors — especially millennials — who had previously stayed out of the market.
Stash’s approach has gone viral among first-time investors who account for 60% of Stash’s customers, including customers in lower-income brackets that cannot afford a traditional wealth manager and are hesitant to invest all of their savings at once.
Silicon Valley is where the greatest number of tech startups get their start and where a good deal ultimately fail.
Given the brutal odds of getting funding — and even tougher odds of exiting — we analyzed the VC funding funnel by region to see what percentage of companies in each region were able to raise funding between Series A through Series E rounds, and what percentage ultimately exited.
We selected 8 different top tech hubs based on total deals (Boston, China, Germany, India, New York, Silicon Valley, LA, and the UK) and found that Boston and New York ranked just above Silicon Valley as the top regions where a startup is likeliest to receive a second round of funding. LA, Germany, the UK, China, and India all ranked below Silicon Valley.
Travel tech companies in emerging markets have been making the headlines recently, from the successful IPO of Despegar, the Latin American travel tech unicorn, to the $500M raised this year by Indonesian online travel portal unicorn Traveloka Indonesia.
In addition to their unicorn status and focus on emerging markets, both Despegar and Traveloka Indonesia also have a well-known common investor: US-based leading online travel company Expedia.
In an industry that was one of the first to be disrupted by the internet, corporate and VC investor interest in the travel tech space has grown as startups continue to attack existing travel markets — and create new ones as well.
While Apple has had plenty of success in consumer hardware, it has stayed away from 3D printing. Aside from one patent application in 2014 focused on printing multicolored 3D objects, and another for a rapid prototyping technique using liquid metals, Apple hasn’t made any noteworthy plays in the space.
But a newly secured patent could be used to make 3D printing a piece of Apple’s augmented reality initiative: The tech giant recently acquired a patent (US 9,776,364)for an AR-compatible 3D printing system.
The patented technology plugs a gap in current 3D printing techniques: Existing methods have provided no solution for new objects or materials to be 3D-printed onto existing or unfinished objects. For example, printing a new handle onto an existing cup.
As our vehicles become more automated and battery powered, we’ll spend less time at the fuel pump and less money on gas. But even electric cars — or bikes, or boats for that matter — can run out of juice, and charging stations aren’t widely available yet.
With a newly granted patent, Amazon could use the drones from its Prime Air fleet to keep you and your Tesla from getting stranded if you cruise too far out of town.
The e-commerce giant just won approval for an invention that would allow it to use its drone fleet to deliver energy to vehicles, both at rest and while they move — just like fighter jets refuel large aircraft in flight.
Big CPG players have stepped up their M&A and investment activity in recent years. Since late 2015, General Mills, Campbell Soup, and Kellogg’s have all launched or invested in venture capital funds to foster startup innovation.
Other corporates have made major acquisitions. Danone announced a $12.5B acquisition of WhiteWave Foods in October 2016, while the very next month PepsiCo acquired kombucha startup KeVita and Dr. Pepper Snapple Group acquired antioxidant beverage startup Bai Brands for $1.7B.
More recently, Nestlé paid up to $500M for a majority stake in coffee startup Blue Bottle Coffee just last month. The company was valued at $700M at the time of acquisition. Prior to the deal, Blue Bottle had raised $116M in disclosed funding, from investors running the gamut from large corporates and CVCs (Nestlé, Morgan Stanley, Google Ventures), to high profile VCs (Lowercase Capital, Index Ventures), to a bevy of celebrity investors (Bono, Jared Leto, Tony Hawk), among others.
This month Strava announced a new range of indoor activities that can also be tracked at select gyms, plus a partnership with connected bike company Flywheel. Strava signed a similar deal with connected bike company Peloton last year.
We were saddened to hear about last night’s tragic events in Las Vegas, where we know many of you on this newsletter are planning to be for the ITC conference this week. Our thoughts are with the victims and families of all those affected.
Infrastructure for insurance tech
In July, Markel acquired publicly-traded “fronting” carrier State National for $919M (or 14.5 times its estimated 2018 earnings). In discussing the acquisition on its Q2’17 earnings call, Markel co-CEO Richard Whitt III described that the move could help provide a conduit into “the insurtech space”:
Just as driverless cars and trucks are bringing huge changes to the auto industry, and drones are disrupting everything from emergency response to conservation, autonomous ships are becoming the next major transportation innovation.
A number of startups and governments are piloting “unmanned marine vehicles” or crewless cargo boats, with the potential to disrupt the $334B shipping industry.