As 2019 enters its final weeks, it seems timely to start looking at what sectors are poised to close out the year with a bang.
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For this first installment, we’re concentrating on industries that attracted both high funding totals and a lot of individual funding rounds. The methodology, which we’ll detail more below, 1 focuses most heavily on North American startups and attempts to avoid the distortive effects of single supergiant rounds on funding totals.
We ended up focusing on four sectors that are attracting rising funding: Fintech, real estate, insurance and automation. All are seeing particular traction at the late stage, where checks are largest.
Below, we unpack the numbers and trendlines for each industry in more detail:
Fintech And Banking
This seems to be the year that every startup decided to become a bank. And every venture capitalist decided to write a check to one or more of those startups.
Much of the funding went to “neobanks,” a fancy term to describe upstart digital banks working on everything from savings and checking accounts to mobile debit cards. Many are focused on bringing banking services to both consumers and businesses that have previously been underserved by traditional banks.
Investors are apparently banking on some big returns. Companies focused on fintech, banking and mobile payments in North and South America brought in $11.7 billion in 2019, per Crunchbase (see query). That’s up from $9.2 billion in all of 2018, per Crunchbase.
It wasn’t just a handful of giant investments either. This year’s funding was spread across more than 700 known rounds for startups.
Still, supergiant rounds did help boost the totals. One of the best known upstart banking brands, Chime, pulled in an astonishing $700 million across two mega-rounds this year, pushing its valuation to $5.8 billion. Brazil’s Nubank, meanwhile, raised a whopping $400 million in a single July round.
Real Estate And Property Management
The single biggest headline generator in the venture-backed real estate space for 2019 was undoubtedly the implosion of WeWork and its ill-fated IPO. But setting that debacle aside, other trendlines for the real estate startup sphere this year have been pretty positive.
As of early December, investors had pumped just over $5.2 billion into an assortment of U.S. startups. The largest funding recipients include Knotel, the furnished workspace rental provider, Knock, the online home-selling platform, and Compass, a tech-enabled real estate brokerage. Altogether, those three companies raised nearly $1.2 billion in funding rounds this year alone. Other potentially less capital-intensive areas of “proptech” also attracted investors’ favor, including a bevy of property management software providers.
Insurance is a startup sector that’s been growing steadily for a few years now, and it hit its highest funding levels to date in 2019.
As of mid-December, U.S. companies in the insurance and insuretech categories secured just over $4.75 billion in seed through late stage funding (see query). That’s up from $3.4 billion in 2018.
A huge wave of seed-stage insurance startups launched three to five years ago, and that’s one of the reasons big financings and investment totals are rising so much. Hot companies in that cohort are rapidly maturing, and they’re seeking ever-larger later-stage rounds. Corporate venture arms of established insurance companies are also active in the space, contributing to rising valuations.
Clover Health, a provider of health plans for Medicare recipients, closed the largest funding round, a $500 million Series E. Root Insurance, which offers car insurance with rates tied to driver behavior, raised $350 million, while Lemonade, a home and renter’s insurance provider, pulled in $300 million.
Automation is essentially shorthand for getting technology to do something that used to require a human. In the dawn of the industrial age, this generally entailed huge, heavy machines voraciously sucking down fuel. Today, it’s likely a software program capable of running on a pocket-sized device.
To that end, automation software developers are securing rising sums of venture capital. In 2019, U.S. companies in the space pulled in $2.89 billion in known funding, per Crunchbase data. (See partial list.), exceeding 2018 levels. This year’s total is expected to rise higher in coming months as more late-reported funding rounds get added to the database.
Familiar names topped the list of largest funding recipients. UiPath, which develops software to automate repetitive tasks for office workers, pulled in $568 million in Series D financing, bringing total funding to date to $1 billion. Rival Automation Anywhere, meanwhile, closed on a fresh $290 million last month.
It’s Not All Up
Overall, 2019 is shaping up as yet another really strong year for U.S. venture funding. The rise of supergiant funding rounds, a robust fundraising environment for well-regarded venture firms, and growing momentum across a host of hot sectors are all factors contributing to keeping the investments flowing.
But while this piece highlights standout sectors, it wasn’t all rosy in startup-land this year. That’s why, for the next installment in this end-of-year series, we’ll look at sectors that posted significant declines in 2019.
For now, though, we’ll end on an optimistic note, observing that while everything was up, automation, real estate, fintech and insurance all posted pretty impressive venture funding tallies.
Illustration: Li-Anne Dias.
We use Crunchbase categories for the searches, sometimes standalone categories and sometimes combining several, potentially along with relevant keywords. We focused on U.S. data for all the categories but fintech, for which we also included Latin America. Also of note are year-over-year comparison for round counts. A high percentage of seed and early stage fundings are subject to late reporting, meaning they don’t get into the Crunchbase dataset until weeks or months after they officially close. ↩
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