As we make our way through Q1 of 2019, let’s look back on 2018 and analyze how funding in the retail technology sector compares to previous years. The graphic below shows the total annual retail technology funding amounts over time.
As the graphic demonstrates, 2018 was a record year for retail technology funding at almost $18B. It represents a 30% increase from the previous year’s funding. In addition, retail technology funding grew at a CAGR of 43% over the past 5 years. Some of the largest funding events in 2018 include a $1.5B round for Go-Jek, a $1B round for Swiggy, and a $717M round for Huitongda.
The retail technology industry has seen $82B in total all time funding. Let’s now examine the investors financing the retail technology sector and identify the most active firms.
The graphic below highlights retail technology investors based on the number of investments made in the sector. If an investor participates in two investment rounds in the same company (such as a Series A and Series B), that would qualify as two investments for this analysis.
As the graphic demonstrates, 500 Startups has made the most investments in the retail technology sector with 92 investments. Y Combinator follows with 85 investments. Examples of companies that 500 Startups has invested in include Carousell, Goldbelly, Womply, and ToutApp. The two CVCs rounding out the list include GV and Intel Capital.
Last quarter we examined retail technology funding trends and saw that its funding is shifting to later-stage events. Now we are conducting a thorough inspection on our retail tech research platform to compare funding by category. Our analysis reveals two important observations:
The Last Mile Logistics category leads the sector in Q2 funding
The Last Mile Logistics category also leads the sector in all-time funding
We’ll explain these observations with some graphics and discussions below.
The Last Mile Logistics Category Leads Retail Technology In Q2 Funding
To start off, let’s review the amount of funding raised this quarter by each category within retail technology.
The above graphic shows that the Last Mile Logistics category leads the sector in Q2 funding with $1.3B. Its funding is almost twice the funding of the next category, Marketing Platforms at $0.7B.
Last Mile Logistics companies are innovating on the last phase of the supply chain. They work on moving goods from a local retailer to a consumer’s home. Some example companies in this category include Instacart, DoorDash, Bigbasket, and Deliveroo.
So we’ve observed how different retail technology categories stack up in their Q2 funding. But how do these categories’ funding compare with each other historically? Let’s investigate that in the next section.
The Last Mile Logistics Category Also Leads in All-Time Funding
The graph below shows the all-time funding for different retail technology categories. The Q2 funding and growth rates of these categories are also highlighted.
The bar graph indicates that the Last Mile Logistics category also leads the sector in total funding at $19B. This is almost twice the funding of the next category, Marketing Platforms at $10B.
The Last Mile Logistics category is the clear retail technology leader in not only Q2 funding but in all-time funding as well.
Funding amount percentages are shifting to mid and late-stage events
Funding count percentages are shifting to mid and late-stage events
We’ll explore these takeaways in some more detail below.
To help set the stage, the graphic below highlights retail technology funding amounts over time. As you can see, the sector’s overall funding experienced a burst of growth from 2012 to 2017.
Retail Technology Funding Amount Percentages Shifting to Later-Stage Events
Let’s examine the retail technology funding amounts by round as a percentage of the total, which show changes independent of the total funding amount by year.
The above graph shows that the funding amount percentages in Seed and Series A rounds dropped relative to the other round types. In addition, the funding amount percentages in all the other rounds stayed constant or increased.
Specifically, Seed and Series A funding amount percentages fell by over half from 32% to around 13%. On the other hand, Series C and Late Stage funding amount percentages grew from 24% to over 40% during the same time period.
We see that the funding amount percentages by round indicate a shift from early-stage to mid and late-stage events from 2012 to 2017. Would the funding event count graph show the same trend? Let’s examine that in the next section to find out.
Retail Technology Funding Count Percentages Shifting to Later-Stage Events As Well
The below graph shows the retail technology funding counts by round as a percentage of total events.
This graph supports our previous conclusion from the funding amount graph. In particular, Seed and Series A funding count percentages dropped significantly from 80% to under 50%. The funding count percentages in all other rounds increased by various magnitudes from 2012 to 2017.
Conclusion: Retail Technology Sector Matures As Funding Shifts to Later Stages
In summary, we have seen retail technology funding amounts and events shift from the early-stage rounds to the later-stage rounds. These observations led us to conclude that the retail technology is in the maturing phase.