TLDR:
- New industry-focused funds are targeting out-of-favor startup sectors that saw steep funding declines.
- Sectors such as consumer products, apps, gaming, and cybersecurity are receiving fresh attention from investors.
Startups in sectors that experienced significant declines in funding are now receiving attention from new industry-focused funds. U.S. venture firms have raised fresh capital to invest in areas such as consumer products, apps, gaming, and cybersecurity, where funding levels remain below peak levels. This trend, coupled with a modest increase in first-quarter venture investment, suggests that some sectors may have hit a cyclical low in the previous year and are poised for growth. Among the sectors attracting new funding, the article highlights:
- The app economy: Despite a decrease in venture investment in app startups, Andreessen Horowitz has allocated $1 billion from its latest fundraise to an apps-focused fund, emphasizing the potential for AI-driven tools in this sector.
- Gaming: Fundraising for gaming startups has picked up, with Bitkraft Ventures and Andreessen Horowitz closing significant funds to capitalize on the resurgence in early-stage dealmaking.
- Consumer products: Consumer-focused startups, particularly in direct-to-consumer models, have not been favored by investors, but some firms like Maven Ventures are continuing to invest in seed-stage software startups focusing on new consumer behavior and trends.
- Web3: Startups related to Web3, including those in the crypto and blockchain sectors, are seeing increased funding, with San Francisco-based Hack VC securing $150 million for a new fund and several companies achieving unicorn status in recent deals.
- Cybersecurity: After a multiyear low, cybersecurity funding in the U.S. has seen a rebound, with funds like Ballistic Ventures raising significant capital to exclusively invest in this sector.
While AI remains a dominant investment theme, investors are also turning their attention to sectors that have been out of favor, indicating a positive outlook for these previously overlooked startup sectors.
