The startup boom times are over - have VCs fallen in love with new industries?
Took a look at how capital was invested into companies split by the 11 broad industries we track at Carta in 2021, then compared that to the relative share in 2023 (through November). All data from US startups, from priced seed rounds to Series E+.
Couple notes up top - these are broad categories and each contains a couple of sub-segments, so if you don't see your industry listed it's probably part of a bigger set.
Also no AI listed. It's the story of the year, for sure, but it plays across many industries!
There was much less investment overall in 2023 than in 2021. This doesn't take that volume drop into account, we are simply looking at the share of pie given to each industry.
𝗕𝗶𝗴𝗴𝗲𝘀𝘁 𝗦𝗵𝗶𝗳𝘁
Despite coming in first, the standard SaaS category—containing things like cybersecurity, data analytics, martech, etc—fell from 38% of investment to 30%.
𝗥𝗶𝘀𝗲𝗿𝘀
Energy went from 2.5% of capital invested to 10.2% - major increase. Driven by some large late-stage rounds but also a number of early-stage bets.
Biotech moved into second place overall at 17.2% of all capital invested. Holding up the Boston and San Diego ecosystems as well!
Hardware bumped from 5.3% to 10.2% of capital as investors seemed to look more favorably on non-software businesses for the first time in awhile.
𝗙𝗮𝗹𝗹𝗲𝗿𝘀
Fintech lost luster this year, moving from 13% of capital invested in 2021 down to 6.6% of capital in 2023. That figure does not include Crypto.
Consumer also gave up ground, dropping below 10% of capital invested for the first time in 5 years on Carta. Within Consumer, the segment for DTC/Retail fell the most sharply.
So what does this tell us? It seems like during this downturn, investors have been a bit more open to "real-world" industries. Sectors like Hardware, Biotech, and Energy deal with atoms instead of bits.
I guess playing on "hard mode", as those industries had been described, is back in vogue.
The wildcard is of course AI. Investment into AI companies exploded on a relative basis this year (although ChatGPT only arrived on the scene late last year, so the comparison is a little muddled).
I'd bet the AI craze holds steady in standard software sectors and actually expands into more atoms next year as well.
More data like this every Thursday in our Data Minute newsletter! Link in graphic for those interested.
#cartadata #venturecapital #startups #fundraising #SaaS #founders
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