The Global Startup Ecosystem Report: Cleantech Edition

Global Startup Sub-Sector Analysis

Key Findings

  • Deep Tech (Advanced Manufacturing & Robotics, Blockchain, Agtech & New Food, AI & Big Data) remains the fastest growing group globally. Fintech also has experienced substantial growth in the last five years.
  • Startup sub-sectors in the Growth Phase are increasing Series A funding deals at the impressive rate of 107% over five years. Mature Phase sub-sectors have grown 33% over the same period. Decline Phase sub-sectors have declined by 28%.
  • Fintech, which was in the Mature Phase in 2019, is demonstrating a resurgence in Series A funding that is more characteristic of the Growth Phase, indicating new investments and innovation in this sub-sector.
  • Similarly, Edtech and Gaming, both on the edge of the Decline Phase in 2019, have experienced an increase in Series A funding that returned them to the Mature Phase.
  • Series A growth rates are higher than in 2019. Exit growth rates slowed in the five-year period ending in 2020.

Figure 1. Global Sub-Sector Lifecycle by Count of Series A Deals and Exits

Global Trends in Startup Sub-Sectors

The COVID-19 pandemic has created shifts in some sub-sectors, and also revived several that were previously in decline, such as Gaming and Edtech. It caused deviations from typical lifecycle patterns, as seen in the growth of Life Sciences and — in Fintech — of insurance and lending. As sectors that directly related to tackling the pandemic grew, others, including Cleantech, experienced a decline in investment. However, Cleantech has since bounced back, a reflection of the growing recognition of the importance of tackling climate change.

Figure 1 illustrates the current view of sub-sector phases based on our 2019 methodology. It provides a summary of global exit and funding event counts and shows the relative share of each sub-sector as a percentage of the global startup population. Figure 2 offers an alternate perspective on the impact of sub-sectors globally: it measures their growth based on the amount of investment and exit value in each sub-sector. This second graph largely reflects the growth of sub-sectors in ecosystems with higher amounts of dollar investment and the impact of large exit events on growth. The bubble size in Figure 2 represents the ecosystem value added by a given sub-sector and indicates how attractive it is for global investors.

Interestingly, measured by both number of events and amount of funding, certain sub-sectors continue to stand out. AI & Big Data, for example, and Advanced Manufacturing & Robotics are experiencing high growth by both metrics. These two lifecycle views also reveal which sub-sectors are generating outsized ecosystem value compared to their peers. For example, Life Sciences, which comprises just 8% of global startups, added $183 billion in ecosystem value in 2020 — the second highest amount after AI & Big Data.

Figure 2. Global Sub-Sector Lifecycle by Amount of Series A Deals and Exits

For more detailed sub-sector analysis, explore the Global Startup Ecosystem Report 2021 and our other sub-sector reports.

Please see the Methodology section for a full list of sub-sectors and their definitions. Note that sub-sectors are neither mutually exclusive nor comprehensive. Some startups operate in sub-sectors we did not cover. In addition, data from patents indicates a clear convergence of technologies, with AI, for example, increasingly interacting with other fields. Over time we expect a similar convergence of startup sub-sectors.