Software solutions have entered all aspects of life in the digital age, with millions of individuals and businesses relying on operating systems and apps to carry out daily tasks. The entire sector’s growth has been followed by the increasing number of software startups searching for a way to raise capital and expand their growth.
According to data gathered by Buy Shares, the combined value of funds software startups raised over time hit $176.7bn in February, a 27% increase year-over-year.
$40.8B of Investments Amid the COVID-19 Crisis
Recent years have witnessed a surge of investments into software startups. By the end of 2014, the companies operating in this field raised $16bn, revealed the Crunchbase data. In the next twelve months, this figure jumped by almost 70% and hit $27bn.
The growing number of investments continued in the following years, with the cumulative value of funds surging to $87.4bn in the fourth quarter of 2018.
Statistics show that 2019 witnessed strong investment activity in the software industry, with companies raising $40bn in funding rounds. The cumulative funding amount hit $127.4bn that year.
However, 2020 delivered a new record, as software startups raised another $40.8bn amid the COVID-19 crisis, the biggest annual funding value so far. The cumulative funding value hit $168.2bn in December 2020, and this figure rose by another $8.2bn in the last two months.
The Crunchbase data show that most funding, or $38bn, was raised in Series B funding rounds. Series A funding rounds delivered $31.2bn of investments, and software startups raised another $12.9bn in seed funding.
US Companies Raised Almost 65% of Total Funding Value
Statistics show that North American companies convincingly lead in the total value of investments, with $117.2bn in funding rounds so far. The US software startups raised $112.1bn or almost 65% of that value, with California, San Francisco and New York as the leading hubs.
Asian companies raised $38bn in funding rounds, ranking as the second-leading region globally. European software startups follow with $18.3bn worth of investments so far.
At the beginning of February, the US data analysis and AI company, Databricks raised $1bn in Series G funding round, the biggest investment in the last year. The $1 billion funding, that increased the company`s valuation to $28 billion, will be used to fuel its merger and acquisition strategy with a focus on machine learning and data startups.
In January, the Chinese AI giant 4Paradigm raked in $700 million in a Series D funding round, the second-largest investment in the last year. The company plans to use the proceeds to speed up its business layout across major industries and build an AI-enabled enterprise-level ecosystem.
The security platform for the cloud generation, Lacework, has closed a $525 million worth Series D funding round the same month, increasing its valuation to more than $1 billion, the third-largest investment in the last twelve months. The company explained it would use the funds for product development and international expansion, especially into Europe.