Based on the data provided by Crunchbase, we analyzed the financing share of the 16 major entrepreneurial categories in the last five years, and learned about the development trend of the seed wheel and the A-round financing market. The investment range of the two markets is compared by investment area, which is expressed as a percentage of the total annual investment. Where blue represents seed investment, red represents a round of investment.
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In just five years, the industry's share of a-round and seed-round financing has fallen from 15% to 5%, and it has also revealed a dominant network effect on Facebook and Google, which has been snubbed by investors.
Analysis of the industry in the above two markets accounted for a larger share. The start-up companies that produce analytical products account for about 10% of the seed wheel and a round of financing.
The term big data was widely used in 2012 and, according to Google Trends, Big data peaked in 2015, with 2.5% of the market share in 2010 increasing to more than 7.5% per cent of the 2015 a-round financing market. In the past four years, seed investors ' interest in big data has remained virtually unchanged, while the interest of a-round investors has continued to grow.
Cloud computing, including the basic products used by developers to build services, has accounted for almost 4% of the share of investment over the past five years, down from 2013 and 2014.
In the last three years, the share of digital media accounted for a revival of growth from 2% to 4%. However, a round of investors did not show a strong interest in this, at least for the present situation. As a result, digital media in the A-round investment market in 2016 could be an investment area where breakthroughs can be achieved. In the past, the problem faced by digital media companies was the valuation at the time of exit. Digital media companies have a lower expected income multiplier than traditional software companies, but the huge growth created by new entrants such as Upworthy is impressive, so it could also attract investors to reconsider.
As a long-standing investment category, e-commerce has maintained a constant 15% share in the A-round financing market, but its share in the seed market has declined, falling from 15% to below 10% in 2015. E-commerce companies need more development money, in part because their profit structure is lower than software companies, and their own business operations require a lot of liquidity. Its decline in seed market share may indicate that seed investors want to increase capital costs over the next few years, so e-commerce companies are no longer attractive and have no follow-up funding.
Since 2010, the share of education startups in the seed market has grown, from 6% to 10% in 2015. During this period, two outstanding educational companies have been listed: 2U, a $1.3 billion SaaS online university company, Instructure, a $550 million learning management system enterprise. Disclosure: Redpoint Company is an investor of 2U company. In the past five years, seed investors have invested about 4% of their capital, but a round of investors have not followed suit.
FinTech, including all start-ups in the Bitcoin ecosystem, had a good and bad financing situation within five years, with the 2014 Dragsaw declining and the winners of the initial financing on a massive increase in subsequent rounds of investment, but the new company desperately starved for capital, and 2015 was the iconic year.
Game investment continued to fall, from 7% to less than 2%. Exit from this field is worse than expected, except King.com. At the same time, some excellent companies, such as Angry Birds's parent company Rovio, are under pressure to compete in an increasingly competitive ecosystem and diversify their products, or to be acquired or marketed.
Hardware/software combination classes, including Fitbit and other connected devices, reached more than 5% in the 2014 A-round financing ratio and fell below 4%. Although hardware software portfolio companies are encouraged to go public, these companies do not maintain a high rate of income in the open market. GoPro lost 73% of its market capitalisation in 2015, and Fitbit dropped 44% from its August 2015 highs.
Health and social welfare companies continued to receive an increasing number of early capital in 2014 years, with a slight decline in 2015. Investment interests peaked before and after Obamacare was approved.
Spurred by the great success of Uber and Airbnb's two companies, the trading platform's share of financing has soared from 2.5% in the seed round to 10% now. Uber is the world's largest taxi company, but does not own any taxis; Airbnb is the world's largest hotel operator, but does not own any real estate. Astronomical growth and scale have illustrated the investor's pursuit of novelty in the investment category, while the A-round investors have been stable at 5% of the investment share. Given the level of interest of seed investors, I predict that a-round investment share will grow in 2016 for such trading platforms.
SaaS companies have a similar trajectory to the above-mentioned trading platforms, with seed investments exceeding the A-round investment, but their share has risen from 5% to 15% and 10% respectively. Readers understand that less than 2% of traditional software market capital is transferred to SaaS companies (including private-sector groups), so the opportunities here are still quite large. ( Cloud Technology, the SaaS solution provider for all life cycles, not only helps traditional software vendors transform fast SaaS, but also helps SaaS vendors to build a one-stop SaaS business. The Cloud Technology SaaS service Platform enables traditional software vendors and SaaS vendors to enter the SaaS era quickly and easily, with the recognition of users and industry insiders. )
In the area of securities investment, the investment of a-round investors is much more than the seed round. A round of investors investing in securities companies each year is about 4-6%, while seed investors are less than 1%. If prompted by a sustained growth gap and data leaks, we anticipate a growth in portfolio investment.
Social-networking investments, given the dominance of Facebook in such investments, have reduced investment in social networks from 15% to 5% in early investors, excluding Snapchat. This decline in investment and the advertising industry is a huge link to the explosion. The relationship between these two types of companies is complex; social media companies can generate proprietary data assets to create an impeccable advertising platform. Facebook's focus on the two ecosystems has increased as the network effect has grown, and investors have found fewer opportunities in both categories.
To sum up, 2016 big data, education, trading platform and SaaS four areas of investment activity is stronger. Investment in the three areas of advertising, gaming and social networking in 2016 may be similar to 2015 unless these markets become disrupted. Companies in the digital media and fashion sector may be entering the A-round investment market through the seed investment market. In addition, it remains to be seen whether seed investors will follow a round of investor peers in securities investments.
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In 2016, which business areas are more popular? SaaS is one of them!