Global Impact VC Funding - Q1 2022 Update

$24.8B of Impact Venture Capital in Q1 2022, focused on Climate, Education and Health Technology on-pace for $100B full year trend.

$11.2B of Climate Tech Venture Funding for Q1 2022. EU and China pacing ahead, US on-trend and global momentum for $45B full-year if VC momentum holds.

In the first week of January, we shared our full-year analysis of 2021 Global Climate Tech VC, reaching 2.5x pre-pandemic investment levels in 2021, accelerating startups young and older around the world with over $37B of venture funding. Fuelled by a massive US and EU investment surge, Indian investment progressing and China accelerating after moderating from it’s 2018 investment leadership position, 2021 also closed out with 45 ClimateTech Unicorns and 61 Mega Rounds ($100M+) over the prior 12 months.

Q1 2022 was a strong start to the year for Climate Tech with another $11.2B of venture funding deployed, doubling that of it’s impact peers education technology at $4.5B for the quarter and beating Health Tech for the first time at $9.1B. Based on our Open-Source, Global Climate Tech Landscape definitions, the top clusters by total funding for Q1 included Solar, Vehicles, Micro Mobility, Batteries, Residential, Smart Farming, Nuclear, Hydrogen, Aircraft, Sustainable Packaging, Carb Capture, Textiles, Data, Water and Meat and Seafood. All in all, 27 mega-rounds ($100M+) represented $6.2B of the $11.2B in total for Q1 (just over half), showing just how strong the quarter was with late-stage growth funding < $100M.

Whilst it is unlikely we will see 2022 VC investment levels to continue at this rate, on a straight-line basis, 2022 would be approaching $50B of Climate Tech VC. With such a strong tailwind and sentiment towards climate and sustainability, Climate Tech is the strongest candidate in impact and most likely to weather more challenging investment trends through the rest of 2022.

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Digital health venture funding hit the skids in the first quarter as the funding market slowed from 2021’s breakneck speed. Investment activity remained at near historic highs but a fast start to the year was followed by a sharp correction, as investors grew cautious due to wider market volatility and the lackluster performance of public digital health companies and SPAC vehicles.

Global venture capital funding contracted by 13% in the first quarter however digital health in particular felt the headwinds of market volatility, concerns around global energy supply, supply chain disruptions and the continued presence of Covid-19 variants around the world. This contraction must be seen in the context of 2021’s bumper year for digital health which saw more capital deployed than the five years 2013-2017 combined. Many of the largest deals to complete in the US market focused on clinical workflow, with standout deals also seen in wellness, patient empowerment and population health.

French startup Doctolib’s $549M funding round (valuing it at $6.4B) was the most eye-catching digital health deal of the quarter. The deal makes Doctolib the highest valued French startup across all sectors. In the US the value-based kidney care platform Somatus raised $325M as it continues its mission to reduce the ongoing cost of managing chronic kidney disease and preventing instances of kidney failure. Another significant factor in the Q1 slowdown is undoubtedly the lamentable performance of public digital health stocks.

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Global EdTech secured $4.5B of Venture Funding in Q1 2022, up on Q1 2021, but representing a slightly lower run rate than the full year for 2021. Take a step back to include workforce training, performance management and capability development and capture new forms of 'growth debt' financing and you'll find nearly $7B of growth capital in Q1 re-imagining how we up-skill, re-skill and unleash human capital.

The world continues to evolve, markets are changing and for now, EdTech is still enjoying strong support and demand from investors. Q1 2022 was whispered to be ‘soft’ and ‘waning’ after a record-setting 2021, and in some markets that was certainly the case. Most major markets did gently moderate investment levels, however, they remain very high compared to long-term historical levels and whilst the market has strong momentum, there is more uncertainty in today’s financial markets than this time last year.

Through this note we’ve shared our traditional quarterly chart pack on Venture Funding in EdTech, adopting strict definitions to isolate Venture Capital deployed within a generally accepted definition of “Education Technology”, spanning early childhood, through K12 and post-secondary into traditional workforce training. In addition this time however, directly below we’ve shared a chart from our Analytics Studio (Customer Link) that expands beyond our strict EdTech definitions into broader adjacencies that capture investment in categories some would argue like beyond EdTech such as Workforce Capability Development, Performance Management and Talent Acquisition. In addition to broadening the scope, we’ve seen an increasing trend in Growth Debt Funding and Private Equity meets Venture Capital that we have traditionally excluded from strict ‘EdTech VC’ analysis.

This broader, more expansive analysis represents nearly 2x more funding than our traditional strict EdTech definitions, a total of $95B of growth funding over the last 5 years and $7B of investment in Q1 2022 versus $4.5B with a narrower, EdTech focused lens. With this insight in mind, we’ll be holding taxonomy workshops through Q2 in New York, London and Sydney to refine the Global Learning Landscape and in turn, inform and re-shape the way we segment and analyze learning technologies and human capital development.