- The State of the Global Startup Economy
- Ecosystem Lifecycle Analysis
- Global Startup Ecosystem Ranking 2022 (Top 30 + Runners-Up)
- Rankings 2022: Top 100 Emerging Ecosystems
- Global Startup Sub-Sector Analysis
- Why Founders Should Be Open and Direct About Their Values
- What You Need to Know Before You Start Fundraising
- Diversity in Startups: When it Helps and When it Hurts
- Three Essentials To Creating a Strong Sense of Community in Emerging Ecosystems
- How to Get Mentoring Right
- Europe Insights, Rankings & Ecosystem Pages
- London’s Tech Scene: A World-Class Ecosystem Competing on a Global Scale
- Discover Portugal: An Unbeatable Value Proposition for Startups
- How Startups are Creating a Future-Proof Economy in Rotterdam
- North America Insights, Rankings & Ecosystem Pages
- Local Connectedness Is Driving Indiana’s Thriving Startup Ecosystem
- Oceania Insights, Rankings & Ecosystem Pages
- How La Trobe University is Accelerating Startup Success
Global Startup Sub-Sector Analysis
- Since the GSER 2021, there has been an overall slowing in the growth in Series A deal count (a general downward movement from 2021 to 2022) but a marked acceleration in the growth in Exit Value (a large rightward movement from 2021 to 2022 — see following Global Sub-Sector Lifecycle charts). The rapid growth in exits has boosted the venture asset class and resulted in all-time records in fundraising and investments by VC firms.
- Cybersecurity has received growing attention, as a side effect of the huge increase in hacked and breached data as well as acceleration in digital transformation and remote workforces.
- All sub-sectors have accelerated in growth overall, with the largest growth in AI & BD, Blockchain, Fintech, and Advanced Manufacturing.
- AI & BD is growing rapidly and becoming a core element of almost a quarter of startups. Its five-year growth rates were 51% in Series A deal count and 104% in exit count.
- Cleantech is the only sub-sector that has seen a considerable increase in count across both Series A (by 35%) and exits, spurred by an urgency to address climate change, which is in turn fostering increased investor focus.
- Advanced Manufacturing Series A funding has grown by 70% over five years, driven by global supply chain issues and a focus on improving efficiency and productivity through automation, monitoring, and failure prediction.
Global Trends in Startup Sub-Sectors
The impact of the COVID-19 pandemic continues to be reflected in sub-sector trends. In the period considered, global supply chains were heavily disrupted, as they continue to be in 2022. AI & BD and Advanced Manufacturing saw growth as manufacturers, logistics companies, and retailers all aimed to improve the efficiency and productivity of their processes. Examples include Silicon Valley-based Nuro, the developer of a fully autonomous, on-road vehicle used for autonomous delivery, which raised $600 million in a late-stage funding round in 2021; and 4paradigm, a Beijing AI platform that raised $750 million in 2021.
More broadly, AI & BD’s increasing overlap with other industries both in terms of amount invested and deal count demonstrates how much machine learning is a part of many aspects of our daily lives. Data-driven decision-making and algorithmic processes are quickly becoming the norm.
As the pandemic accelerated the digital transformation and remote learning became the new normal in much of the world, the growth of Edtech is perhaps not surprising. The U.S and China invested the most in Edtech venture capital deals, with India third. India is second behind the U.S. in the amount invested in Edtech at seed stage. However, China’s strong position may be impacted by the nation introducing prohibitive Edtech policies.
As of July 2021, Chinese companies teaching academic curriculum must be nonprofit and can’t pursue IPOs or take foreign capital. Listed companies are prohibited from issuing stock or raising money in capital markets to invest in tutoring institutions, and foreign firms are banned from acquiring or holding shares in tutoring institutions, among other restrictions. Given that the nation is home to more than 400 million students — the largest Edtech market globally — these policies have real potential to slow growth in the sub-sector.
Blockchain has seen a 91% growth at early-stage funding over the last five years, and 12% since last year. The technology continues to be mainly used in the banking and financial services sector, where it is transforming traditional models. However, Blockchain-based solutions are also being used to build more resilient supply chains, ensure secure health data exchanges, and improve the hospitality industry, among many other applications.
Percentage Change in Early-Stage Funding Deals Over Five YearsFastest-Growing Sub-Sectors
AI & BD (53%)
Declining Sub-SectorsAdtech (-29%)
Digital Media (-27%)
Sub-Sectors in Growth Phase
The four sub-sectors in the Growth stage are increasing in size at an astounding pace, with an average 64% rise in number of early-stage funding deals over five years and an average 71% growth in exits.
Edtech has moved from the Mature phase last year to Growth this year, a reflection of 67% growth in the Exit count and a 44% growth in Series A count. Overall, Edtech startups grew 5%, which is a representative of a rise in the number of scaleups.
Among Growth-phase sub-sectors, AI & BD is the largest, comprising 24% of all global startups. The sub-sector has grown 74% since last year, with 84% in AI. The huge percentage increase in growth is a reflection of the total VC amount invested.
Sub-Sectors in Mature Phase
The sub-sectors in the Mature phase have changed somewhat since last year’s report. Cybersecurity, Cleantech, Gaming, and Life Sciences remain in the Mature phase, and Fintech has moved from Growth to Mature. Edtech and Agtech & New Food have moved from Mature to Growth.
Collectively, the Growth-phase sub-sectors saw growth of 37% in Series A funding and 31% in exits over the past five years.
Sub-Sectors in Decline Phase
In the last five years, Adtech and Digital Media underperformed compared to other startup sub-sectors, indicated by a decrease in the growth rates of Series A deals and exits.