Data-driven startups deal flow is rising
At Serena Capital, we just announced the launch of the first European fund dedicated to data driven-businesses and Artificial Intelligence. Serena Data Ventures will invest 80 millions euros in ~30 startups which core business is related to value-added services created thanks to data, in seed and early-stage.
Without any communication about our dedicated fund, almost 1/3 of our Deal Flow in 2016 was already data-oriented.
Among the Top 3, Software, Fintech and Marketing are the most important categories (in terms of number of startups received — not amount raised). There is no real “leader” since the first category gathers 11,4% of the total deal flow : sectors around data are really fragmented, that is showing that data is everywhere and can be leveraged in any industry.
Software category includes mostly B2B SaaS startups selling to Enterprise accounts, horizontal solutions which are not focused on a particular type of business. These big companies have huge data sets that are undervalued and puting data in the core process of their decision-making allows the elaboration of a real long-term asset.
Finance-related start-ups (Fintech, but also regtech, insurtech, blockchain) represent 17% of the Data Ventures deal flow : more and more applications are using data in order to provide financial services and insurance companies with value-added products.
- Fintech start-ups are more related to B2B, like services for SMBs (lending, FX, invoices, …).With the evolution of regulation (DSP2), lot of B2C startups have emerged but they are facing difficulties to find an efficient Business Model (including PFM, Robo-advisor or Light Banking). In B2B fintech startups, we also see a lot of solutions that aim at helping banks to digitalize (simplify process, improve agility, reduction of costs …)
- Blockchain is emerging in 2016 and we will probably see more applications and business cases in 2017 : still in the stage of POC most of the time, and momentum of education of the market.
- Insurtech startups are mostly focusing on their customers : improve their onboarding, journey, user experience and know them well in order to make customised products. Some niche markets are developing : verticals around insurances (car, weather, …) or new distribution channels (fully web, …)
- As regards Regtech : banks and insurance are facing stronger regulations around compliance, KYC, etc. and they need startups to help them being updated without spending too much money.
Marketing is the third category that is the most represented : evidence of this lies in the necessity for all businesses to know more their customers and sell the right product in the right moment to the right person. With the huge amount of data on the internet right now, brands need tools to follow their products, customers reviews, reputation, …
For the rest of our data-deal flow, it is more fragmented but we can notice some outlines :
- IoT is rising : it concerns mostly B2C and consumer electronics (connected devices from cigarettes pack to smart-sleep masks). A lot of devices are becoming “smarter” but we have to be careful as Devin Coldeway or Jacques Touillon are saying : without Machine Learning, these devices just collect data without providing users with relevant insights. Artificial Intelligence is more about recommandations rather than telling you that you have consumed 10 litres of water for your shower today.
- We separate IoT from smart home and smart cities : smart home is mainly related to energy and security while smart cities is more about predictive maintenance or sophisticated sensors. Until now, we see more value in the latter category : it is easier to see the immediate effect of cost reduction or efficiency whereas for B2C there is less adoption in the long run.
- MedTech is turning into Healthtech : we are not a medtech fund but almost 8% of our datadeal flow this year was health-related. The trend is that we use more technologie, algorithms and machine learning to help doctors, rather than pure chimical analysis. We have seen some connected devices in Healthtech as well, but most of the time connected to platforms which aim at helping doctors and patients. We also considered as Healthtech the startups more focused on the wellness.
- Chatbot : a looooot, either framework either really specific offers by industry, mostly customer support.
- All things in “tech” : adtech, agtech (use data to improve agricultural yields), edtech (around adaptative learning), regtech (analysing compliance rules faster), …
- New wave for Business Intelligence : more datavisualisation and new ways of using the data (discovering and reporting tool). The market is also changing because there are a lot of tools available for SMBs and also targeting non-data-scientist users.
- Security : with the rise of cloud applications, the need for security has increased as well since some companies are still reluctant to leave the on-premise mode. Security and privacy of data are a huge challenge for all sizes of companies.
- Transport : optimizing journeys for all types of transportation (from containers to bicyle deliverers) and improve supplychain by matching offer and demand at the right moment. Solutions around autonomous cars are also rising.
- Human Ressources : the eRH sector is developing with the use of data because it is easier to match the right candidates with the right companies, to score your candidates, reduce time and costs.
Well, 2016 was really exciting so we hope 2017 will be even better thanks to our Serena Data Ventures new fund. If your startup fits with our strategy, please join the adventure and send us your deck to contact@serenacapital.com.
Léa
ps: don’t hesitate to recommend or share this to other data-entrepreneurs :)
***
About Serena Capital
We are a capability-driven investor, bringing operational value to our portfolio companies and to the ecosystem.
More about our unique approach: https://blog.serenacapital.com/join-the-dark-side-971de57fa73
Find out more at www.serenacapital.com
