Startup funding has definitely cooled off, but there’s a lot of debate about how dire the slowdown is.
Some startups with good numbers are still having no problem getting funded, and there’s a lot of money sloshing around for early (seed-stage and Series A) investments. At the same time, later stage investors who were funding bigger companies at crazy “unicorn” valuations have slowed down a lot, and startups with poor numbers are having trouble getting follow-on rounds.
One hard-hit area is on-demand startups, which provide real-world services at the touch of a button on your smartphone (think all those “Uber for X” startups). The on-demand sector has fallen out of favor, as investors question whether customers will pay full price for these services once the companies turn off the subsidies they’ve used to gain customers.
As this chart from CB Insights shows, funding for these kinds of businesses rose through 2014 and 2015, driven by huge deals in companies like Airbnb and Lyft, then fell off sharply in the fourth quarter of 2015.
- CB Insights