Startup Funding Trends 2016

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Startup Funding Trends

2016 Mid-Year Report

The intersection of entrepreneurialism and early-stage investing is where breakthrough and transformative technologies are found. As the global SaaS funding platform for the sourcing and management of early-stage investments, Gust has an unparalleled view of the innovation landscape. To date more than 400,000 startups have collaborated with more than 60,000 active early-stage investment professionals through the Gust platform. This mid-year report seeks to provide a landscape view of the startup and early-stage investor ecosystem.

Applications for Startup Funding

Breakdown of Funding Applications

By Company Stage

  • Jan-Jun 2016
  • Jul-Dec 2015
  • Jan-Jun 2015
    • Idea Stage

    • In Development

    • Full Product Ready

    • Revenue Stage

The number of funding applications submitted by startups through the Gust platform is indicative of the vibrancy of the startup and early-stage ecosystem. In 2016, the number of funding applications has continued to grow by double-digit percentage points than in the previous year. In the first half of 2016, 21% more funding applications were submitted than in the second half of 2015, with a 79% increase over the same period one year earlier.

Throughout 2015 and the first half of 2016, among startups who reported the stage of their venture to Gust, the ratio of funding applications coming from startups in the Idea Stage, In Development Stage, Full Product Ready Stage, and Revenue Stage has remained fairly constant. Looking at these stages across the first half of 2016, those in the Full Product Ready Stage and the In Development Stage led the pack of applications, making up 42.8% and 40.7% respectively. Meanwhile, the number of applications coming from startups in the Revenue Stage, which are ventures that are already generating revenue but still looking for funding, rose from 5.5% of all applications in Q3/Q4 2015 to 8.7% in Q1/Q2 2016, nearly returning to the 9% share of applications they represented in the first half of 2015.

Breakdown of Funding Applications

By US States

  • Jan-Jun 2016
  • Jul-Dec 2015
  • Jan-Jun 2015
    • California

      22.1%

    • New York

      17.2%

    • Florida

      8.8%

    • Illinois

      4.6%

    • Massachusetts

      3.8%

    • North Carolina

      3.1%

    • Texas

      2.8%

    • Pennsylvania

      2.5%

    • New Jersey

      2.5%

    • Oregon

      2.4%

    22.1%
    17.2%
    8.8%
    4.6%
    3.8%
    3.1%
    2.8%
    2.5%
    2.5%
    2.4%
    • California

      20.0%

    • New York

      17.2%

    • Florida

      11.3%

    • Colorado

      4.2%

    • Illinois

      3.9%

    • Texas

      3.5%

    • Georgia

      2.7%

    • Virginia

      2.7%

    • Massachusetts

      2.6%

    • Michigan

      2.4%

    20.0%
    17.2%
    11.3%
    4.2%
    3.9%
    3.5%
    2.7%
    2.7%
    2.6%
    2.4%
    • New York

      19.6%

    • California

      18.0%

    • Florida

      9.5%

    • Texas

      4.4%

    • Colorado

      3.5%

    • Illinois

      3.2%

    • Washington

      3.1%

    • Pennsylvania

      2.8%

    • Massachusetts

      2.7%

    • Georgia

      2.5%

    19.6%
    18.0%
    9.5%
    4.4%
    3.5%
    3.2%
    3.1%
    2.8%
    2.7%
    2.5%
    United States

Funding applications are submitted from all across the United States, but the states containing Silicon Valley and Silicon Alley continue to be locked in a heated battle for first place title. In the first half of 2015, New York leapt ahead of California by 2 percentage points. However, California reclaimed its dominance. In the first half of 2016, California lead New York by 5 percentage points, after a nearly 30% increase in the number of funding applications from the state.

Elsewhere in the US in the first half of 2016, North Carolina, Pennsylvania, New Jersey, and Oregon joined the ranks of the top 10 states with the highest number of funding applications, displacing Colorado, Georgia, Virginia, and Michigan. Florida continues to hold onto the number 3 spot, followed by newcomer Illinois, which climbed the ranks from the number 6 spot over the last two half year periods.

Breakdown of Funding Applications

By Country

  • Jan-Jun 2016
  • Jul-Dec 2015
  • Jan-Jun 2015
  • United States

    52.4%

  • India

    8.2%

  • United Kingdom

    5.1%

  • Canada

    4.6%

  • France

    4.3%

  • Spain

    3.7%

  • Brazil

    2.6%

  • Russia

    1.3%

  • Australia

    1.2%

  • Ukraine

    1.2%

52.4%
8.2%
5.1%
4.6%
4.3%
3.7%
2.6%
1.3%
1.2%
1.2%
  • United States

    53.2%

  • India

    10.0%

  • Canada

    4.4%

  • France

    4.1%

  • Brazil

    4.0%

  • United Kingdom

    2.5%

  • Ukraine

    2.4%

  • Australia

    1.8%

  • Spain

    1.7%

  • Russia

    1.3%

53.2%
10.0%
4.4%
4.1%
4.0%
2.5%
2.4%
1.8%
1.7%
1.3%
  • United States

    59.2%

  • India

    6.5%

  • France

    5.1%

  • Canada

    4.2%

  • Brazil

    3.7%

  • United Kingdom

    2.0%

  • Australia

    1.7%

  • Spain

    1.4%

  • Israel

    1.0%

  • Ukraine

    0.8%

59.2%
6.5%
5.1%
4.2%
3.7%
2.0%
1.7%
1.4%
1.0%
0.8%
United States

The United States remains the leader in total funding applications, but its lead continues to shrink with more applications coming from countries like France, Canada, and the United Kingdom. The number of funding applications originating in France increased by 26% while those in Canada grew by 23%. India, which has held onto the number 2 spot, saw a 2% drop in the number of funding applications over the previous half year period.

For the first time in the past 18 months, the United Kingdom replaced Brazil to become one of the top five countries with the largest number of funding applications.

Breakdown of Funding Applications

By Industry

  • Jan-Jun 2016
  • Jul-Dec 2015
  • Jan-Jun 2015
  • Consumer Products & Services

    Consumer Products & Services

    13.9%

  • Internet Web Services

    Internet Web Services

    12.8%

  • Healthcare

    Healthcare

    9.4%

  • Entertainment

    Entertainment

    7.8%

  • Software

    Software

    6.9%

  • Lifestyle

    Lifestyle

    6.1%

  • Industrial-Energy

    Industrial Energy

    5.8%

  • Mobile

    Mobile

    5.2%

  • Technology

    Technology

    5.1%

  • Business Products & Services

    Business Products & Services

    4.2%

  • Consumer Products & Services

    Consumer Products & Services

    13.9%

  • Internet Web Services

    Internet Web Services

    13.0%

  • Entertainment

    Entertainment

    9.9%

  • Healthcare

    Healthcare

    9.0%

  • Software

    Software

    6.8%

  • Technology

    Technology

    6.4%

  • Business Products & Services

    Business Products & Services

    5.8%

  • Lifestyle

    Lifestyle

    5.1%

  • Industrial-Energy

    Industrial Energy

    4.7%

  • Mobile

    Mobile

    4.0%

  • Consumer Products & Services

    Consumer Products & Services

    14.1%

  • Internet Web Services

    Internet Web Services

    13.6%

  • Entertainment

    Entertainment

    9.1%

  • Healthcare

    Healthcare

    8.5%

  • Lifestyle

    Lifestyle

    6.8%

  • Mobile

    Mobile

    6.6%

  • Software

    Software

    6.1%

  • Financial Services

    Financial Services

    5.5%

  • Industrial-Energy

    Industrial Energy

    5.2%

  • Technology

    Technology

    4.6%

The top 5 industries submitting funding applications has remained constant over the last year with Consumer Products & Services holding the lead at roughly 14% of total application submissions. Following its lead in the top 5 over the same time period are Internet Web Services, Healthcare, Entertainment, and Software.

Technology and Business Products & Services fell from the number 6 and number 7 spot in the second half of 2015 to the bottom of the top ten list in the first half of 2016. Continuing its pattern of representing only a small share of funding application requests, Financial Services has remained outside the top ten list since it fell from the eighth position in the first half of 2015.

The Funding Landscape

  • 19%

  • Startups Applying for Funding
    from Foreign Investors

More than 80% of startups tend to look for funding within their home country. However, through Gust’s global platform, startups also have the opportunity to submit funding applications to investors all around the globe.

Breakdown of International Funding Requests

By Country

    • United States

    • India

    • Canada

    • Other countries

Investors who received funding applications from foreign startups were spread across 24 countries. 63% of the funding applications that were submitted to investors outside of the startup’s home country originated from just three countries: the United States, India, and Canada. The United States leads the pack representing 46% of all foreign funding requests.

  • 17%

  • Investors Investing Outside
    of their Home Country

In the first half of 2016, 17% of investors invested in startups from a different home country, a percentage nearly equal to that of the percentage of startups seeking funding from foreign investors.

Investors Investing Outside of their Home Country

By Country

    • United States

    • France

    • Canada

    • Other countries

Among the 64 countries with investors that have invested outside of their home country, the top 3 countries are the United States, France, and Canada, representing nearly 60% of all foreign investments.

The Founder Profile

The Founder Profile

In a self-reported survey of over 10,000 respondents that took place over the first half of 2016, Gust found that around 4 out of every 10 startup founders on the Gust platform are female. 31% of founding teams consisted of founders who self-reported as a minority group, and 12% of respondents reported they were veterans of the armed forces. According to the survey, the number of self-reported first time founders was nearly twice as many as those who self-reported as repeat founders, meaning that they had previously founded another startup.

Gust by the numbers

  • 400,000+

    Startups

  • 60,000+

    Investment Professionals

  • 40,000+

    Accredited Investors

  • 190+

    Countries

  • 45+

    Industries

Source:
Gust

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