ENTREPRENEUR NEWS ROUNDUP: OCTOBER 21, 2021
Startup Investment on Pace to Shatter Records in 2021
A strong third quarter for private equity investment indicates that startups are driving the economic recovery
Despite the ongoing pandemic’s uncertainty (I recently heard someone refer to October as the 22nd month of 2020), startup funding remains strong. Equity investment in 2021 has already set records in just three quarters, according to the Quarter 3 Pitchbook-NVCA Venture Monitor.
While mega-deals account for much of the increase in investment — this year has already seen nearly 600 VC deals worth more than $100 million — there is also more momentum for early-stage startups. Seed round funding has nearly matched the amount raised in the entire year of 2020, which was already a record year, and angel funding has nearly matched the all-time high in amount raised. Furthermore, the average deal size is increasing. The average seed investment deal in 2021 was $3.8 million, up 20% from last year. Both Andreessen Horowitz and Greylock have just announced new seed-focused funds with a combined investment of nearly $1 billion in early-stage companies, indicating that large VC firms are taking notice.
The Venture Monitor does identify a number of external threats to the startup funding ecosystem, which we will keep an eye on in this blog over the next few months.
- The continuing uncertainty surrounding the Covid-19 pandemic
- Employees fleeing the labor force
- Inflation reaching a 30-year high
- Pending legislation that would raise taxes on startup investments
Startups to Watch
If there’s one thing we’ve learned from what’s been dubbed the “Great Resignation,” it’s that today’s workers are expecting more from their employers. Today, we’ll look at recently funded startups that are tackling the challenges that businesses face when it comes to recruiting, training, and retaining employees.
Bites
Bites is a startup that aims to revolutionize the way businesses train their frontline employees. Rather than sending employees to long, boring training sessions, employers can use the Bites platforms to create short, engaging videos that meet them where they are. Think of it as a cross between business training and TikTok. Short videos are assembled into “playlists” for new hires, and each lesson is followed by a quiz to ensure retention. The SaaS is a subscription-based service that is extremely cost-effective (free for up to 25 users, and $150 per month for businesses with up to 300 users). Unilever, H&M, and HP are among the 500 companies that have already signed up for the service, which was founded in 2017. Bites recently raised $5 million in seed funding led by Vertex Ventures Israel, with participation from Surround Ventures, Oryzn Capital, Lyra Ventures, and J-Ventures.
SparkPlug
SparkPlug is an employee rewards program that aims to increase employee retention by making achievement fun and engaging. Retailers who provide clear and attainable goals have 31% lower turnover, and since SparkPlug connects directly to the business’ POS, employees receive real-time information about their sales performance and commissions. The platform launched in March 2020 and has already paid out over $500,000 in incentives to frontline workers. SparkPlug recently announced $2.5 million in seed funding from TenOneTen Ventures, Argonautic Ventures, and several angel investors.
Hofy
Remote work is clearly here to stay, but it has brought with it new challenges for workplace management. Hofy allows businesses to rent chairs, desks, and IT equipment to new remote-only employees, and handles all repairs and maintenance. For a small fee, Hofy allows you to purchase any rented equipment outright. Hofy will even help companies create branded welcome boxes to give new hires a great first impression. Hofy has raised $15.2 million in funding led by Stride.VC.
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