What Startups Are Getting Funded Right Now (Pt.2)?

The Signal: Last month, we looked at 168 startups which received funding in the first month after the USA declared the coronavirus outbreak a national pandemic.

The feedback on that piece was very positive, so we are running a follow-up study to answer “What startups are being funded during the pandemic?”. 

The funding information is collected from Dan Primack’s indispensable (and free) business newsletter Pro Rata and this snapshot covers the period from April 7th to May 8th. Across 271 deals over this span, the industries that have received the most funding are Health Tech (18%), FinTech (10%), CyberSecurity (7%), Enterprise SaaS (7%), Logistics (4%) and Food (4%).

Geographically, California (31%) remains home to the largest number of companies followed by New York (11%), UK (7%), Israel (6%) and Massachusetts (5%).  (Google Sheet here)

The Opportunity: In the previous startup roundup, we highlighted companies that had “coronavirus tailwinds” (eg. macro trends accelerated by the pandemic) across a number of investment themes: 

• Online learning & training (Lessonly, Preply, Lingumi) 
• Remote work tools (Around, Orion Labs) 
• Resale & rebate offerings (Refurbed, Cazoo, Enable). 

The time around, we found 11 interesting companies across 4 themes (grocery & food delivery, enterprise cybersecurity, gaming & esports, pets): 

Grocery & Food Delivery
The explosive uptake for grocery and food delivery since the pandemic started can be seen in recent numbers released by Instacart, the $8B food-delivery startup.

Instacart’s pool of shoppers has spiked from 180k to 500k, with an expectation to hire 250k more. Further, business has been so robust, that the firm has already met its sales goals through 2022 according to Business Insider.

Over the past month, here are three notable grocery and food delivery startups that received funding. 

• Kurly (Food; latest round = $160m): As with other countries, South Korea has seen a surge in grocery delivery. Along with Coupang (“the Amazon of South Korea”), Kurly is a leading delivery service in South Korea.
• Buymie (Food; $2mn): This Irish grocery delivery company has been able to win market share with a highly localized offering, in-and-around Dublin. The service currently partners with European grocery behemoths Lidl and Tesco.
• Cheetah (Food; $36m): Prior to the pandemic, Cheetah did B2B whole delivery of supplies and ingredients to restaurants. Restaurant sales were hit hard in the past few months, so the company recently spun out a D2C offering — contactless delivery of basic grocery goods (fruit, drinks, dairy, meat, poultry, seafood, produce, snacks, and cleaning supplies).

Enterprise CybersecurityIT departments across the world have been dealing with security issues since the greatest work-from-home (WFH) experiment started a few months back.

Zoom, which was involved in perhaps the highest profile coronavirus-related cybersecurity failures, recently acquired Keybase to shore up its end-to-end encryption. 

Not surprisingly, there were a number of other notable cybersecurity deals in the past month.

• Bugcrowd (Cybersecurity; $30m): The largest tech companies in the world have bug bounty programs, whereby they pay outside individuals “bounty payments” for finding bugs and other weaknesses in their software. The rationale behind these programs is that there are an endless number of attack vectors and the “wisdom of the crowd” is needed to find them all. Bugcrowd — which bills itself as the #1 crowdsourced cybersecurity platform — provides tools to facilitate crowd-led bug identification.
• Living Security (Cybersecurity; $5m): Living Security address the cybersecurity threat from the human perspective (rather than software). The company does so by providing cybersecurity awareness training for company employees. The offering includes training courses and “immersive experiences” like escape rooms that teach cybersecurity basics.
• Randori (Cybersecurity; $20m): Randori helps companies find weaknesses in their existing cybersecurity and identify new threats. The company is able to do this through an automated service that mimics hacker tools used to find vulnerabilities and deploys existing cybersecurity exploits against cyber defenses. 

Gaming & EsportsThe cessation of live sports has been a boon for gaming and esports, which have seen rising usage and viewership numbers. 

Recent deal activity in the space includes news that talent and media group Endeavour Group will sell its $100m stake in Epic Games (maker of Fortnite). The sale will be part of a larger financing round that would value Epic Games at $15B.

Over the past month, there have been other deals offering solutions to various parts of the gaming & esports stack. 

• Opera Event (Gaming; $5m): Opera Event offers a platform that programmatically matches sponsors with the correct esports influencers for their product or service. This automation is much more scalable than more traditional person-to-person dependent sponsorship matching.
• FaZe Clan (Gaming; $40m): According to Forbes, FaZe Clan is one of the top 5 largest esports organization brands in the world. It started as an esports team but is expanding into lifestyle and apparel lines. The latest funding round into the company was led by music superproducer and Beats co-founder, Jimmy Iovine.
• Guilded (Gaming; $7m): Guilded is primarily a gaming chat service but, as demonstrated by Slack, chat is a great anchor to allow for wider service offerings. For Guilded, these additional offerings include integrated event calendars, community forums and voice chat. 

Pet Startups Getting Love 

Across the US, animal shelters are “emptying amid the coronavirus pandemic” as people adopt more pets. 

Catering to this trend are two pet-related deals: 

• Bought By Many (Pets; $98m): According to the Association of British Insurers, the average price of pet surgery is around £1,500 and the average pet insurance claim is over £750. These are pretty significant expenses and there are few pet insurance products. Bought By Many raised nearly $100m to provide a UK-solution for the space. There are likely similar opportunities in other Western markets.
• Spot & Tango (Pets; $4m): Spot & Tango is a D2C pet food brand that creates customizable dog and cat food meals made with ingredients “fine for human consumption” (there’s literally no way we’re eating this stuff, though). The company wins extra marks for naming its cat-line of food “Unkibble”.