附近上门

To conduct a retrospective of startup so-called聽 鈥渨inners and losers鈥� as the world claws its way out of the pandemic would be insensitive at best.

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At the highest level, everyone across every industry has lost so much. Most importantly, of course, are the lives lost, but painful also has been our sense of safety, community and prosperity.

That said, here at 附近上门 News our job is to have a laser focus on startups, industries and venture capital. With that in mind, our team looked at which of those sectors were able to thrive as a result of these unprecedented global circumstances. And naturally, which were hit the hardest.

Like everyone else, we hope the horrible aspects of this season in human history end quickly and that those in business who were broken will rise from the ashes just as others were able to fan the flames of success.

Below we鈥檝e included some insight from our reporters who (like all of you) have watched firsthand what the pandemic has done (or not done) to the startups in the sectors they cover. We hope you will benefit in some small way from their perspectives.

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Cloud, network and cybersecurity companies flourish

By Senior Reporter Chris Metinko

The pandemic and its lockdown forced many businesses to send their employees home 鈥� presenting an unprecedented opportunity for cloud, network and cybersecurity companies to showcase their wares and likely change how people work forever.

鈥淎s it relates to working from home, having more robust cloud and network and security services just makes too much sense,鈥� said , managing director at .

Companies were forced to accelerate their digital transformation as they rapidly adopted the cloud and all its offerings. While companies scrambled to embrace , the and , tools around attracted investors鈥� attention as DevOps teams used the platform for automating deployment of applications to scale operations and maintain critical software for cloud-based services. Companies that help with the management and deployment of the platform, like , and others that help secure it, like , which closed a $525 million round valuing the company at more than $1 billion 鈥� all piqued investor interest.

Cybersecurity in general and cloud security in particular also saw increased investor appetite, and that likely will continue, said , a partner at .

鈥淭he pandemic really opened up the attack surface,鈥� he said. 鈥淭hat made cloud security red hot.鈥�

As enterprises sought more tools and solutions to keep their workforce secure at home and in the cloud, investors reached into their pocketbooks to back those security tools. Companies such as , , and all have raised rounds of more than $200 million in the last 12 months.

Collaboration tools such as took off as the pandemic rolled on, as witnessed by willingness to pay $27.7 billion for in late November as workforces migrated to new tools and used existing tools far more extensively.

Telstra鈥檚 Sherman said he believes people have begun to appreciate what happens between each other not just in a physical sense, but also in a computer system sense as it concerns going from one system of record to another.

鈥淚 think you will see fragmentation in the collaboration space because there is a lot of work to do there,鈥� he added.

That is not to say all enterprise software connected with investors during the pandemic. Venture capitalists pointed to 鈥減oint-of-sale鈥� software solutions for retail businesses, as well as commercial real estate tech, as places where slowdowns occurred during the year.

While retail solutions may start to reconnect with investors once more shoppers are back in stores, it could be a tough slog for commercial real estate software as many businesses are moving to a remote work model or hybrid, and office space may be plentiful.

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E-commerce and fintech stand out

By Reporter Christine Hall

We already know the pandemic shifted the way we all shop, but a new study shows that the e-commerce industry is poised for its first $1 trillion year in revenue by 2022, according to the latest report.

And, while we were all at home, we were all refreshing our surroundings. Big beneficiaries of that trend were home goods startups, , partner at , told me.

鈥淎s we were spending more time at home, we noticed that couch we couldn鈥檛 stand before was starting to drive us crazy,鈥� Stern said. 鈥淔or a lot of people, their bedroom also became their office.鈥�

Two of Peterson鈥檚 portfolio companies, , a sustainable home goods company, and furniture brand , saw boosts from people reallocating their travel budgets to invest in their homes, she said.

Meanwhile, more people wanting a fresh look for their homes resulted in many furniture startups receiving investor attention:

• Direct-to-consumer outdoor furniture brand followed up a with $10.5 million in Series A funding in January;
• Furniture rental service raised $9 million in seed funding last September;
• announced a $15 million Series A in May; and
• raised a $30 million Series B in August.

Although it is not yet known if this attention will sustain as people return to an office, Stern said there is potential, but not at the same 2020 rate.

Despite what seemed like a flurry of investment activity, for e-commerce technology startups 鈥� those with a focus on 鈥渆-commerce platforms鈥� and 鈥渞etail technology鈥� 鈥� deals and dollars fell both globally and in the U.S. in 2020, according to 附近上门 data.

Investors poured $2.4 billion into 128 U.S. deals within the space in 2020, compared with $2.5 billion in 195 deals in 2019, according to 附近上门 data. Globally, that was $4 billion in 363 deals in 2020, compared with $5.1 billion in 534 deals the year prior.

While our numbers showed a decline in that area, Stern believes e-commerce infrastructure will sustain due to the big shift in overall commerce to online, and product returns will be one of those winners, too, she said. Last year鈥檚 Black Friday shopping broke records, but experts also acknowledged the amount of returns that were going to result. Startup companies did, too.

As a result, we saw companies, such as , raise $4 million in seed funding to develop a circular commerce platform that facilitates returns and resales of oversized products for e-commerce retailers. Meanwhile Peterson portfolio company , which automates the returns processing for , is focused on making online returns less cumbersome.

鈥淭he exchange experience is important to get right as e-commerce grows,鈥� Stern said. 鈥淲e normally go into a store, bringing in an item for return often to get something else, but that value is lost online. Typically, the exchange on e-commerce involves returning an item and then making a new purchase. Instead, Loop Returns is bringing exchanges into the flow.鈥�

As spending behaviors shifted to alternative forms of entertainment, one of the big beneficiaries of the pandemic in the fintech sector was the neobank, , partner and COO at, told me.

In particular, , offering a mobile phone app to help members avoid bank fees and save money automatically, $485 million in Series F funding last September, and challenger bank , which raised funding last November, were examples of companies that were branchless in a time when it was impossible, or at least difficult, to go to a bank branch due to the pandemic, he said.

鈥淭hat accelerated the shift to digital banks,鈥� Batsiyan added. 鈥淥f the portion of people getting stimulus checks, they also had better data and infrastructure to provide that, as well as stand out in customer experience.鈥�

Business banking also saw a boost: Companies, including brought in a $15 million Series A round earlier this year after having success with the government鈥檚 Paycheck Protection Program loans. Performing core activities like that through digital mechanisms is going to stick around, he said.

Batsiyan also saw a boom in fintech infrastructure as legacy banks accelerated their core infrastructure investments, either building from scratch, or in most cases partnering with fintech startups to gain the same capabilities of digital banks.

Investments into this area over the past year include:

• Brazil-based, which raised a $3.3 million seed round to help financial institutions create their own internal financial technology businesses faster and more effectively; and
• , developer of a tool to connect certain financial institutions — such as credit unions and community banks — with fintech companies, received $12.4 million in seed funding.

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The future of work evolves and food delivery thrives while entertainment/travel suffer

By Reporter Sophia Kunthara

Companies that fall into the 鈥渇uture of work鈥� category were clear winners and saw their businesses accelerate in the past year as companies had to rethink everything about work — how we do it, where we do it from, and what tools we need to succeed. And the success companies associated with the future of work saw likely wasn鈥檛 just a temporary boost because of the shift to working from home, according to managing director .

鈥淚 think some industries had a permanent positive stage, anything that helps with employee communication, anything that helps with employee productivity,鈥� Smerklo said.

And with health care top of mind for the past year, anything having to do with preventative care, such as telehealth visits with a doctor or at-home testing, did well during the pandemic, as did e-commerce.

Like remote work, because people were forced to do it and realized the convenience of it, it鈥檚 unlikely things will go back to the way they were pre-pandemic. Fewer people will want to drive to the doctor, wait in the waiting room, and wait for a lab test when they can do it at home.

鈥淭hat genie鈥檚 not going to get put back in the bottle,鈥� Smerklo said.

The industries hit hardest in the past year were live entertainment and travel, according to Smerklo, although he believes those were more of temporary hits. Coming out of the pandemic, there will likely be pent-up demand for live concerts and leisure travel, so those industries will probably recover.

One industry Smerklo thinks could see some compression post-pandemic is food delivery. Food delivery companies charge a premium price for convenience, but it鈥檚 something people could let go of once they feel comfortable eating at restaurants again.

Home fitness is another area to watch, as many people have purchased equipment (like a ) to work out from home. Smerklo said he鈥檚 unsure how long it will take for people to get back to working out in big gyms, sweating with lots of other people.

, managing director of , said the social component of some activities could draw people back to group activities.

鈥淭he things that I don鈥檛 enjoy, maybe I don鈥檛 enjoy going to the grocery store, maybe I don鈥檛 enjoy picking up my food, maybe those are the things that we continue on with and accelerate 鈥� but I think we all appreciate more the mental health that comes from being around our social groups,鈥� Robinson said.

Zoom was a clear winner of the pandemic, but Robinson suspects that life post-pandemic won鈥檛 be as Zoom-centric.

鈥淚 think Zoom will be a linchpin for everything we do, but it won’t be the way we do everything,鈥� he said.

Raising capital changes

By Senior Reporter Chris Metinko

Even as the pandemic was changing how people worked, relaxed and socialized 鈥� it also was changing how startups raised money. Without in-person meetings — pitch decks were replaced by Zoom and handshakes over dinner were replaced by simple head nods on a computer screen.

鈥淚s it better or worse?鈥� Sherman asked. 鈥淚 think the answer is yes. I like not schlepping all over the world. I like being able to get a lot of calls done efficiently.

鈥淗owever, I miss the human contact,鈥� he continued. 鈥淚 miss having kind of an intuitive feel about people by just being in the same room as them.鈥�

Sherman said while he does believe more investing work will be done through Zoom calls, it also likely will put added emphasis and importance on the time VCs do spend looking at potential investments and portfolio companies in person.

鈥淚t will make me both plan for and appreciate spending more time with entrepreneurs and cherish that time,鈥� he said. 鈥淢aybe instead of meeting with them like a handful of times physically (in a year), maybe only meeting with them once but spending a lot more time to kind of make it a more meaningful experience.鈥�

, managing partner at , added while the pandemic at first caused uncertainty, it also has shown a new way to do things.

鈥淭he first two months we were all sitting around and wondering if we could invest if we could not go out for a meal,鈥� she said. 鈥淏ut then it changed and there have been benefits.鈥�

She said one of those benefits was doing more reaching out to previous investors of a company she was looking at 鈥� helping to reconnect and build new relationships in the VC world. In general, she said last year just created a lot of more 鈥渢ouch points鈥� 鈥� as well as time 鈥� to learn more about companies and the founding team.

Notaras agrees while in-person meetings will come back, it may be different than in the past.

鈥淢y theory is that maybe all this time we were over-indexing on face-to-face contacts.鈥�

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