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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Series B funding as a market sentiment indicator

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When we look at macroeconomics indicator, inflation is one of the most important metrics to keep in mind as a litmus of the market’s status and sentiment. Inflation paints a picture of the current status of consumer’s confidence as supply and demand go through a temporary unbalance. When inflation rises quickly, currencies lose value and investors tend to change money allocation according to their own investment strategy. But in this column I want to focus on another indicator that could offer a clue to where investors are placing their bets in times of inflation. I am referring to the Series B rounds.


Series B are rounds of funding for companies with proven technology or product, that are about to begin further scaled. At this stage capital invested usually represents a safer bet. Series B are unlikely to exit, and therefore even when the market is bearish, companies can focus on growth. So far in 2022, there have been more than 50 Series B worth $100 million each in the United States alone.


2021 was a record year for Series B rounds, with close to 2,000 deals closed reaching a total of nearly $60 billion in funding. 2022 started on a good note with January well on track to outperform 2021 monthly average, at $5 billion. However, funding dropped in February, perhaps due to concerns around the tense situation in Ukraine. Both February and March struggled to reach $4 billion a month, and although the number of deals closed in March was the highest this year, with more than 100, the funding was not exceptional. April showed a different trend, with just above 80 deals, but overall summing up to more than $4 billion, as the second best month in 2022. May, however showed sign of sluggish investment, with the same amount of deals closed as April, but less than $ 4 billion raised. And finally June, which to date is by far the worst month in the past eighteen months. At the time of this column being written, less than 60 deals have been closed, with the total amount raised hardly reaching $3 billion, summing up the first half of the year at $24 billion.


The good sign is that funding in H1, 2022 is greater than a full year in 2017, 2018, and 2019, but still lower than 2020. Overall 2022 seems on track to be the second best year for Series B in the past 5 years. As for the main trends, food-tech and artificial intelligence seem to be the biggest catalysts. For example, the largest B round in the first half of 2022 went to Anthropic, a San Francisco-based artificial intelligence (AI) research company that attracted $580 million in April. The startup - which just became a unicorn with valuation exceeding $1 billion - pledged to use the funds to build an infrastructure aimed to explore and improve the safety properties of computationally intensive AI models.


The second largest Serie B round went to Eikon Therapeutics, a Hayward, California-based company which develops technology to analyse single molecule protein behaviour in living cells. In January they raised $518 million. Lastly, 13 companies claimed to have raised Series B funding for crypto and NFT related projects.


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