Follow The Money – Seed Financing Trends

Tom Tunguz shared some great data on seed financing trends.

Fintech, Blockchain, Food and Beverage and Artificial Intelligence funding have continued to grow relentlessly since 2010. Tom explains:

Hot Spaces

Artificial Intelligence – yes, it’s a buzzword but it’s more than that. AI or Machine Learning is a new technology that will benefit nearly every type of sector and we’re still in the very earliest innings. Eight years ago, there were nearly zero AI startups seeded. Today, that number is 400 and the chart is a classic S-curve, tapering after a period of intense growth.

Blockchain – another exponential curve that shows growth from 0 to 200 startups in eight years. Blockchain is clearly the category with the steepest slope. We can’t predict when the curve will resemble an S, but given the trajectory, it won’t be soon.

FinTech – challenger banks, new electronic stock brokers, AI-powered investment advisors; startups are besieging the incumbents of this regulated world and assailing them in ever greater numbers.

Food and Beverage – the way we eat and farm is evolving quickly. Vertical farming, novel protein sources which replace meats, branded water in a can that resembles beer so you won’t be lampooned at a party. Consumer preferences are evolving and startups are rising to meet the demand.

Software – up more than 3x, Software is a perennial category. Automating expensive internal processes in novel ways is Levi’s 501 jean of the startup world: a stylish classic that will never go out of style.

In my opinion, the banks have done the worst job of reading these trends. They have continued to mostly ignore blockchain and fintech and their underperforming stocks will continue to suffer.

I think Coke, Pepsi, Starbucks, Nestle’s and Procter and Gamble have done a much better job positioning themselves for a future with so many challengers and consumer preference changes.

As I have been saying on this blog for 12 years, the public markets and seed markets are very connected. The best public companies take advantage of this data to make sure they stay relevant and on top.