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 a 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 crazy “unicorn” valuations have slowed down a lot, and startups with poor numbers are having trouble getting follow-on rounds.
But one area where the funnel has been turned completely off? On-demand startups, which provide real-world services at the touch of a button on your smartphone (think Uber for X startups). 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.
The on-demand sector has fallen out of favour, as investors question whether customers will pay full price for these services once the companies turn off the subsidies they have used to gain customers.