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Winners & Losers of COVID-19 Series: Winners – Private Markets

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As part of my “Winners & Losers of COVID-19” series, I wanted to dig into the private funding market.

I used data from Crunchbase to get an understanding of how much funding has been raised during the last 7-8 months, and what “Organization Industries” (as Crunchbase puts it) are getting funded the most.  In short, what company categories are seeing an influx of capital (and in another installment, which are not).  

Founders keeping it cool with 2 months left in the bank

The Crunchbase data isn’t 100% complete (some funding rounds do not have associated funding amounts), but it gives us some directional data and some understanding of where money is flowing during this unique time.

First, let’s dig into total funding by month since the start of the pandemic in March.

Total Funding – March-September

MonthFunding – $ Billions
March ‘20$43
April ‘20$154
May ‘20$183
June ‘20$256
July ‘20$212
August ‘20$107
September ‘20$164
Total Funding Amounts in $ Billions

Unsurprisingly, private funding was down in March; but started to pick up fairly quickly starting in April and May, and peaking in June.   

This speaks to the bifurcation of the economy that has been widely covered.  On the surface, it appears that the economy is struggling and traditional commerce has come to a halt.  But certain sectors are booming, and that is reflected in the private funding markets as well.  While the stock market recovered post March for certain sectors, so did the private markets.  

In my last article, I already covered where the money is flowing in the public markets.  Now let’s dig a little into where exactly capital flowed in the private markets.  

Early Stage vs. Late Stage

In recent years, It has been parroted that less capital is going to new, early stage start-ups.  Dollars are flowing instead to later stage funding rounds.  I wanted to look and see if that is bearing out in 2020.

First, let’s take a look at the number of funding rounds split by Early Stage vs. Late Stage.  I broke things down into “Pre-Seed, Seed, Series A, Series B” and “Series C & Beyond”.  

Number of Funding Rounds

MonthFunding Rounds (Total)Pre-Seed, Seed, Series A, Series BSeries C & Beyond% Pre-Seed, Seed, Series A, Series B
March ‘202,6641,5591,10559%
April ‘202,2601,2341,02655%
May ‘202,2531,2001,05353%
Jun ‘202,3151,2601,05554%
July ‘202,0131,08792654%
August ‘201,9311,10083157%
September ‘202,2411,2021,03954%
October ‘20 (thus far)1,13065048058%
Number of Funding Events by Stage

It’s pretty remarkable that the percentage of Early Stage companies that are represented in funding rounds remains consistent month over month.  We can see that the % of deals going to Early Stage companies declined slightly post March, but has started to pick back up, indicated by the percentage in August and October.  

With over 50% of the deals going to Early Stage companies, it looks at first blush that early stage companies are getting their shine.  However, the funding amounts tell a different story.  

Funding Amounts

MonthFunding (Total) – $ BillionsPre-Seed, Seed, Series A, Series B – $ BillionsSeries C & Beyond – $ Billions% Funding Pre-Seed, Seed, Series A, Series B
March ‘20$43$14$2933%
April ‘20$154$12$1428%
May ‘20$183$13$1707%
Jun ‘20$256$14$2425%
July ‘20$212$11$2015%
August ‘20$107$12$9511%
September ‘20$164$12$1527%
October ‘20 (thus far)$87$8$799%
Funding Amounts by Stage in $ Billions

The percent of funding going to Early Stage startups actually shows that the majority of capital is flowing to later stage deals.  90%+ of capital flowing in private funding is actually going to later stage deals on a monthly basis.  

Is this because there is less appetite for risk?  Or is it because investors can get better returns on “sure bets” in the later stages?  This is hard to say.

Some angel investors have quoted that they’d be lucky to get 1 successful exit out of 30 early stage bets. On top of that, these bets take a long time (sometimes decades plus) to bear fruit. For VCs looking to raise new funds or attract new LPs (investors in VC), this is not that attractive. The series C and beyond is more of a sure thing, gets more press, and thus more attention for their firms.    

Funding by Category

Now we can dig into which categories saw the most capital flow.  

Because Crunchbase doesn’t provide the cleanest data when it comes to industry vs. funding round (it shows multiple industries for each company listed), I used a work around to get a relativistic view of which industry categories were seeing the most funding.  

Every time an industry category was mentioned for a funding round, I counted that funding towards that industry category.  This means there was a fair amount of double counting.  

However, like I said, it gives us a good relativistic model to determine the winners post COVID.  I looked at the top 50 categories by funding amount for March through September.  Let’s see how things progressed:

Top Funding by Category

In order to parse some of this data into a more consumable format, I created some graphs around the top 30 categories in March, and saw how those progressed through September.

Top 10 Categories (from March):

It’s not a big surprise that internet businesses are seeing huge funding, but it is interesting that the graph seems to follow the same trajectory as the stock market for technology businesses.  Telecommunications also saw huge growth through July before fading.  

Given that the pandemic has only increased societal reliance on the internet and telecommunications, I would expect growth in these areas.  Although it is interesting that funding for these categories fell off in August and September.  Perhaps this reflected some confidence in a COVID recovery while cases were abating and vaccine trials appeared to be promising.

The rest of the categories that were in the top 10 in funding in March seemed to remain relatively flat but steady.  Healthcare and Biotechnology, interestingly, did not see huge funding in the private markets as I would have expected during this period.   

Top 11-20 Categories (from March):

Medical and Mobile categories saw significant upticks in the months following the announcement of the pandemic.  Unsurprisingly, e-commerce also saw a huge flow of funding post pandemic.  This mimics what we are seeing in the public markets, with e-commerce giants like Amazon dominating. Companies that were primarily brick and mortar have had no choice but to spin up e-commerce stores, and the market is rushing to ride this trend.

Pharmaceuticals also saw funding increase, which mimics the public markets as well.  9 out of the top 15 top gainers in stock price in the markets in 2020 have been Pharma companies. 

Top 21-30 Categories (from March):

Interestingly, the manufacturing category saw huge deal flow post March. This could be due to supply chain concerns being surfaced during the pandemic. The double edged sword of globalism is rearing its head – now no country wants to be too reliant on any other for key goods.     

FinTech and Mobile Payments saw big growth as well, which makes sense given the need for new methods of exchange with the rise of e-commerce.  Delivery was a big attracter of capital as well, which is a no-brainer while in person commerce is at a standstill.         

More Data

I drew up the raw data that I used for the graphs above in the tables below (if you want to look into it more deeply).  

Just taking a cursory look at the top categories by funding amount, internet and apps based businesses (investors appear to still be bullish here) have tended to dominate over the course of 2020.  It is interesting that in August – Real Estate and Property shot to the top of the list in terms of funding.       

March ‘20

CategoryFunding Amount
Internet$8,489,705,216.00
Animation$6,000,000,000.00
Real Estate$4,480,878,252.00
Telecommunications$4,285,195,603.00
Video$4,172,966,511.00
Health Care$4,130,176,063.00
Biotechnology$4,125,738,707.00
Information Technology$3,840,532,890.00
Software$3,805,357,620.00
Automotive$3,621,304,119.00
Medical$3,140,843,195.00
Mobile$2,827,993,021.00
Robotics$2,586,651,254.00
Property Management$2,515,547,411.00
Building Material$2,464,860,664.00
Payments$2,424,344,069.00
Autonomous Vehicles$2,378,576,360.00
E-Commerce$2,275,430,820.00
Financial Services$2,201,872,622.00
Pharmaceutical$1,947,726,706.00
Mobile Payments$1,830,223,545.00
Logistics$1,748,937,224.00
FinTech$1,596,426,153.00
Manufacturing$1,557,328,164.00
Delivery$1,477,681,314.00
Therapeutics$1,464,608,183.00
Art$1,443,022,933.00
Artificial Intelligence$1,416,816,989.00
E-Commerce Platforms$1,412,355,933.00
Food Delivery$1,224,794,688.00
Food and Beverage$1,212,143,720.00
Apps$1,204,129,296.00
E-Learning$1,159,192,341.00
EdTech$1,104,477,211.00
Finance$1,068,239,117.00
SaaS$1,015,487,569.00
Travel$958,756,737.00
Life Science$952,382,720.00
Enterprise$931,207,972.00
Media and Entertainment$862,222,059.00
Enterprise Software$807,094,950.00
Banking$784,826,060.00
Big Data$765,843,397.00
Hospital$756,245,271.00
Health Diagnostics$726,562,549.00
Information Services$708,891,007.00
Medical Device$681,400,769.00
Marketing$652,236,704.00
Cyber Security$648,091,861.00
Food Processing$609,545,967.00

April ‘20

CategoryFunding Amount
Internet$43,800,739,814.00
Apps$30,018,224,283.00
Transportation$29,457,937,208.00
Information Services$27,124,786,806.00
Travel$26,459,814,204.00
Telecommunications$25,736,087,094.00
Biotechnology$19,712,637,684.00
Health Care$19,141,613,092.00
Aerospace$15,857,986,734.00
Medical$15,471,469,955.00
Software$13,082,396,387.00
Manufacturing$12,805,426,145.00
Pharmaceutical$12,345,383,809.00
Animation$11,000,000,000.00
Air Transportation$10,516,552,887.00
E-Commerce$10,010,506,520.00
Financial Services$9,330,168,523.00
Leisure$8,828,159,295.00
Mobile$8,637,458,984.00
Automotive$8,198,445,209.00
Marketplace$6,929,933,896.00
FinTech$6,745,403,356.00
Hospitality$6,649,543,484.00
Food Processing$6,389,986,506.00
Delivery$6,140,140,134.00
SaaS$5,890,090,476.00
Electronics$5,881,950,043.00
Finance$5,755,281,146.00
Information Technology$5,566,715,052.00
Electric Vehicle$5,477,924,540.00
Payments$4,996,179,430.00
Retail$4,374,855,033.00
Agriculture$4,346,379,717.00
Mobile Apps$4,083,810,103.00
Banking$4,067,186,390.00
Enterprise$3,684,727,156.00
Farming$3,673,792,293.00
Coffee$3,518,633,168.00
Video$3,447,402,580.00
Enterprise Software$3,424,277,483.00
Food Delivery$3,370,542,963.00
Video Games$3,296,815,210.00
Restaurants$3,210,772,780.00
Artificial Intelligence$2,982,530,662.00
Consumer$2,897,550,720.00
Media and Entertainment$2,842,796,968.00
Real Estate$2,492,400,655.00
Energy$2,346,988,331.00
Delivery Service$2,331,138,842.00
Broadcasting$2,327,800,000.00

May ‘20

CategoryFunding Amount
Internet$57,456,519,370.00
Apps$54,596,659,362.00
Telecommunications$51,664,112,950.00
Information Services$50,858,990,468.00
Automotive$28,715,456,662.00
Electronics$25,147,525,504.00
Autonomous Vehicles$23,993,384,504.00
Biotechnology$21,165,628,499.00
Electric Vehicle$20,557,758,422.00
Innovation Management$20,476,201,630.00
Health Care$19,815,960,420.00
Transportation$17,940,486,804.00
Software$15,995,322,452.00
Manufacturing$12,266,221,087.00
Financial Services$12,220,109,522.00
Pharmaceutical$9,878,164,393.00
Finance$9,641,006,805.00
Medical$9,160,394,269.00
FinTech$8,980,299,138.00
E-Commerce$7,728,993,250.00
Health Diagnostics$7,443,909,969.00
Information Technology$7,375,895,626.00
Mobile$6,865,569,123.00
Life Science$5,994,653,976.00
SaaS$5,744,220,509.00
Aerospace$5,738,946,367.00
Biopharma$5,469,817,767.00
Medical Device$4,820,874,174.00
Consumer$4,780,308,729.00
Hardware$4,610,290,213.00
Gaming$4,550,556,805.00
Banking$4,475,367,440.00
Semiconductor$4,364,555,518.00
Therapeutics$4,079,045,943.00
Developer Platform$3,989,657,194.00
Computer$3,981,530,903.00
Logistics$3,911,967,793.00
Retail$3,857,855,344.00
Art$3,610,201,348.00
Auctions$3,578,000,000.00
Robotics$3,449,536,289.00
Artificial Intelligence$3,430,212,300.00
Consumer Electronics$3,304,668,246.00
Computer Vision$3,204,420,664.00
Food and Beverage$3,166,841,067.00
Augmented Reality$3,110,068,429.00
Wearables$3,052,500,191.00
Enterprise$2,977,213,368.00
Fashion$2,973,867,911.00
Enterprise Software$2,878,204,376.00

June ‘20

CategoryFunding Amount
Internet$107,179,609,952.00
Apps$105,688,103,661.00
Telecommunications$102,031,978,974.00
Information Services$99,794,321,945.00
Oil and Gas$57,353,464,765.00
Information Technology$19,181,012,609.00
Software$18,541,971,302.00
Biotechnology$16,562,430,874.00
Mobile$15,711,747,509.00
Energy$14,748,336,210.00
Industrial$14,154,255,024.00
Health Care$14,014,656,565.00
E-Commerce$10,334,147,934.00
Delivery$9,960,389,043.00
Pharmaceutical$9,250,080,225.00
Financial Services$8,551,770,306.00
Enterprise$8,497,995,251.00
Logistics$8,335,024,044.00
Biopharma$8,311,771,096.00
Enterprise Software$7,988,631,079.00
Food Delivery$7,387,484,273.00
Medical$6,883,153,646.00
Travel$6,572,491,173.00
FinTech$6,378,827,525.00
Transportation$5,753,332,112.00
Security$5,689,340,709.00
Mobile Payments$5,215,115,339.00
Marketplace$5,097,784,835.00
Education$4,912,271,055.00
Manufacturing$4,759,444,099.00
Air Transportation$4,697,160,663.00
Aerospace$4,609,955,525.00
Finance$4,563,765,090.00
Real Estate$4,227,754,771.00
Computer$3,892,294,255.00
Mobile Apps$3,782,516,698.00
Cyber Security$3,735,719,584.00
Big Data$3,723,325,292.00
E-Learning$3,646,106,918.00
Insurance$3,368,730,931.00
SaaS$3,135,878,567.00
Small and Medium Businesses$2,899,887,489.00
EdTech$2,825,556,264.00
Fraud Detection$2,767,301,955.00
Automotive$2,657,724,376.00
Higher Education$2,648,755,492.00
Local$2,532,158,303.00
Medical Device$2,445,105,905.00
Sports$2,424,402,115.00
Delivery Service$2,362,449,197.00

July ‘20

CategoryFunding Amount
Internet$88,839,596,250.00
Apps$82,551,711,997.00
Information Services$80,586,882,548.00
Telecommunications$77,013,303,615.00
Biotechnology$25,436,479,439.00
E-Commerce$25,233,641,199.00
Manufacturing$22,794,407,277.00
Medical$16,935,724,154.00
Health Care$16,414,158,441.00
Automotive$16,203,446,727.00
Retail$16,091,848,464.00
Software$15,651,634,908.00
FinTech$14,055,418,095.00
Financial Services$13,832,102,570.00
Electric Vehicle$13,177,527,716.00
Grocery$12,750,660,466.00
Finance$11,984,444,149.00
Enterprise$11,717,220,420.00
Enterprise Software$11,128,515,761.00
Information Technology$10,921,766,738.00
Mobile$10,895,798,795.00
Transportation$10,871,425,788.00
Pharmaceutical$9,245,300,903.00
Biopharma$8,431,592,841.00
Energy$8,237,015,771.00
Battery$7,545,435,042.00
Data Center$7,425,393,053.00
Data Center Automation$6,720,150,000.00
Database$5,545,485,555.00
Banking$5,235,611,764.00
Energy Storage$4,711,937,927.00
Bitcoin$4,662,163,581.00
Autonomous Vehicles$4,645,117,944.00
Electronics$4,163,946,150.00
Art$4,139,184,929.00
Genetics$3,802,793,987.00
Artificial Intelligence$3,780,424,805.00
Developer Platform$3,656,146,761.00
CleanTech$3,645,490,182.00
Gaming$3,518,702,312.00
Enterprise Resource Planning (ERP)$3,426,244,482.00
Clean Energy$3,308,520,974.00
Delivery$3,150,937,589.00
SaaS$3,136,993,080.00
Big Data$2,927,611,063.00
Asset Management$2,601,684,277.00
Medical Device$2,536,872,952.00
Health Diagnostics$2,530,221,538.00
Machine Learning$2,507,212,781.00
Delivery Service$2,464,222,649.00

August ‘20

CategoryFunding Amount
Real Estate$21,774,755,896.00
Commercial$21,360,390,922.00
Property Development$20,686,227,189.00
Commercial Real Estate$20,672,270,070.00
Coworking$20,645,784,331.00
Transportation$16,185,890,192.00
Manufacturing$12,935,392,198.00
Software$12,518,855,190.00
Health Care$12,120,122,972.00
Delivery$10,820,643,889.00
Food Delivery$10,429,127,755.00
Car Sharing$10,194,842,321.00
Mobile$8,063,285,782.00
Biotechnology$8,037,956,009.00
E-Commerce$7,807,835,462.00
Financial Services$7,769,094,163.00
FinTech$7,530,333,396.00
Apps$6,803,953,910.00
Finance$6,690,040,506.00
Space Travel$5,844,805,275.00
Aerospace$5,816,910,032.00
Retail$5,267,069,113.00
Information Technology$4,771,970,312.00
Automotive$4,137,525,268.00
Enterprise$3,985,783,788.00
Mobile Apps$3,922,599,476.00
Hospitality$3,885,255,470.00
Food and Beverage$3,751,159,725.00
Gaming$3,694,625,357.00
Education$3,666,178,577.00
Enterprise Software$3,602,124,900.00
Electric Vehicle$3,596,184,092.00
SaaS$3,572,141,955.00
Developer Platform$3,409,099,664.00
EdTech$3,265,782,457.00
E-Learning$3,084,784,805.00
Fashion$3,038,558,958.00
Autonomous Vehicles$3,036,700,530.00
Payments$3,027,800,977.00
Internet$2,949,051,654.00
Bitcoin$2,647,273,946.00
Leisure$2,581,813,260.00
Artificial Intelligence$2,577,509,749.00
Cryptocurrency$2,539,450,878.00
Agriculture$2,305,328,599.00
Consumer$2,227,565,127.00
Farming$2,224,314,647.00
Analytics$2,168,945,035.00
Medical Device$2,155,204,308.00
Sports$2,071,260,129.00

September ‘20

CategoryFunding Amount
Mobile$37,172,396,052.00
Apps$33,537,778,315.00
Transportation$30,010,706,056.00
Mobile Apps$29,654,108,653.00
E-Commerce$25,404,618,918.00
Retail$23,183,415,557.00
Internet$19,996,251,400.00
Software$18,418,269,602.00
FinTech$17,976,130,437.00
Financial Services$17,944,815,018.00
Finance$17,077,433,490.00
Consumer$16,900,741,804.00
Consumer Goods$13,384,757,061.00
Health Care$13,140,088,914.00
Biotechnology$13,048,060,450.00
Manufacturing$11,054,968,191.00
Energy$10,660,343,875.00
Marketplace$10,407,134,242.00
Payments$9,059,794,654.00
Information Technology$8,598,071,694.00
Clean Energy$7,808,557,766.00
Automotive$7,279,014,272.00
Pharmaceutical$7,261,633,933.00
Logistics$7,248,356,165.00
Medical$7,049,319,791.00
Telecommunications$6,560,627,401.00
Delivery$6,504,458,495.00
Electric Vehicle$5,701,885,521.00
SaaS$5,663,526,091.00
Electronics$5,499,206,166.00
Insurance$5,480,649,945.00
Banking$5,423,004,502.00
Therapeutics$5,310,646,161.00
Art$5,245,722,716.00
Food Delivery$5,192,131,645.00
Artificial Intelligence$5,025,364,479.00
Enterprise Software$4,809,782,251.00
Autonomous Vehicles$4,400,577,501.00
Biopharma$4,109,473,751.00
Lending$3,707,944,613.00
Education$3,506,778,250.00
Real Estate$3,372,536,901.00
Battery$3,317,841,538.00
CleanTech$3,317,663,232.00
E-Learning$2,920,196,382.00
Analytics$2,851,305,329.00
Medical Device$2,717,652,331.00
InsurTech$2,709,516,950.00
Food Processing$2,709,335,719.00
EdTech$2,663,096,933.00

~     

Interested in chatting about the private funding markets post-COVID? Reach out to me on Twitter Instagram  or LinkedIn.  

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By Michael S

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