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2 minute read / Jan 18, 2021 /

The Fastest Growing Sectors of Startup Fundraising in 2020

From time to time, I chart the fastest growing categories of startup investment in the US for seed through Series C. Here are 2015, 2017, This year, I was certain the categories would have been influenced by COVID19.

I analyzed Crunchbase data and looked for the startup categories that grew fastest in terms of funding rounds year-over-year, provided there were at least 10 rounds in that category.


Quantum computing topped the list with a doubling of rounds. The leader doesn’t have much to do with COVID ostensibly but is likely propelled by increasing interest in the technology because of recent advances in quantum computing design and manufacture.

Dating is next, followed by battery companies, doubtlessly benefiting from the surge of electric vehicle sales and boom in consumer electronics. Video conferencing is no surprise: it’s the new office for many information workers.

Music streaming, test and measurement, and quality assurance initially baffled me. But let me explain: music streaming includes companies empowering musicians to hold live digital events supplanting the coliseum experience with high definition video and audio at home.

Testing & measurement is a broad category that includes home diagnostics companies for medical testing, electronic sensors for measuring hardware and equipment, and even application performance monitoring. By virtue of the importance of data when working remotely and the breadth of applications of that data, this category popped into the top 10.

Quality Assurance is truly about the automation of certain parts of software testing. The automation of QA is a secular trend that perhaps accelerated with more software engineers working from home.

Life insurance and emergency medicine certainly fit the COVID-19 narrative.

Developer APIs includes a litany of different developer tools and services. And with many developers working remotely full time, perhaps they express greater interest in other services as a result of being sheltered-in-place, but that seems spurious to me. Rather, this category is buttressed by an ever increasing number of software engineers searching for the best way to accomplish a goal with a new tool, API, or service.

Maybe 6 of the 10 fastest growing startup categories are influenced by the pandemic with the others (Quantum Computing, Battery, Quality Assurance, and Developer APIs) fueled by other waves.

The question for 2021 will be: how will vaccinations and a return to normalcy change consumer and enterprise buying behaviors, and consequently, startup financing rates in different categories? If you have a hypothesis, send me a tweet at @ttunguz.

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