Using PitchBook data and analysis generated through Georges Doribot (our AI team member and research tool that helps our team find new, innovative startups to back)–Colin Beirne and Lauren Xandra set out to quantify the fastest rising and falling startup categories.
When it comes to buzzy startup categories, the past ten years have seen a shift away from mobile, social/platform software, and application software, and towards cryptocurrency & blockchain, fintech, and artificial intelligence & machine learning.
In 2011, one in five startups identified themselves as a “mobile” company. Now, one in five startups identify as a “fintech.” And with good reason. According to CB Insights, in 2021, fintech accounted for $1 of every $5 of global venture funding, and the global fintech unicorn count hit 235 (up 108% from 2020).
In the same decade, cryptocurrency/blockchain has experienced meteoric growth (+3530% from virtually nonexistent in 2011), representing 16% of the startup ecosystem.
The third startup category experiencing the most accelerated growth over the past decade is AI/ML–up 85% over the past ten years. The AI/ML trend peaked in 2017, when 20% of new companies founded identified as AI/ML companies. In 2021, this figure was down to 10%; perhaps due to some of the hype departing from pure-play AI companies as top-performing VCs dedicated over 6x more early-stage and seed deal value to Web3 and decentralized finance than AI and ML, according to PitchBook.
At Two Sigma Ventures, we look for exciting intersections of large markets that we believe can be innovated with data science and/or advanced computing breakthroughs. The rapid application of fintech to real life, bolstered by continued innovation in deep tech, is an area we’re excited to continue to follow and back.
Some Two Sigma Ventures investments innovating in this space include Socure, a real-time predictive analytics platform that delivers the most accurate and robust identity verification and fraud risk prediction solution in the market; Nelo, a buy-now-pay-later platform that is unlocking e-commerce for consumers in Mexico, and C3, a decentralized spot and derivatives platform that is accessible from multiple blockchains.*
Please feel free to reach out with your take on our perspective, or to share your vision for a game-changing future of commerce company.