SaaS valuations cratered in early 2022. But these startups thrived.

VCs were still bullish on supply chain, recruiting and data startups despite the economic environment that chopped the valuations of newly public companies and late-stage enterprise startups.

Inflating a cloud labelled SAAS
While private equity has been investing in enterprise tech for decades, the confluence of several trends in the sector is making it more competitive than ever before.
Image: Getty Images; Protocol

Despite a volatile tech stock market so far this year that has included delayed IPOs, lowered valuations and declining investor sentiment, a few enterprise tech categories managed to keep getting funding. Data platforms, supply chain management tech, workplace software and cybersecurity startups all dominated the funding cycle over the past quarter.

When it comes to enterprise SaaS, the number of mega-deals — VC funding rounds over $100 million — spiked last year, according to data from Pitchbook. Partially driven by the onset of a pandemic that accelerated the need for everything from contact centers to supply chains to move into the cloud, the number of large VC deals tripled between 2020 and 2021. That growth has extended into this year, where the number of mega-deals has already outpaced all of 2020.

Over that quarter some of the largest deals were in logistics, like Project44’s $420 million funding or recruiting software Remote’s $300 million round. Still, a plethora of startups in those industries as well as data and cybersecurity managed to snag mega-deals.

Here are the major categories, as well as the key startups in each field, that investors continued to pour money into in 2022.

Ship it

The pandemic disrupted supply chains across the globe, making it nearly impossible for manufacturers to predict demand, while backing up shipping ports and overloading warehouses.

The supply chain industry is notorious for still working with pen and paper or Microsoft Excel spreadsheets, or at best outdated logistics software. That makes it exceedingly difficult to coordinate the movement of goods across a complicated global supply chain going through unprecedented changes.

Manufacturers, shippers and distributors now understand very well why they have to modernize their supply chains. That’s why tech that can help coordinate global shipping across land, air and sea were key targets for investors. Startups like Loadsmart and Convoy each raised $200 million or more to that effect, with Project44 closing more than $400 million for its global logistics platform.

Large SaaS giants are all in on logistics too: Amazon launched a $1 billion industrial fund to invest in logistics startups, and Shopify closed its largest purchase ever with its $2.1 billion acquisition of logistics platform Deliverr.

The talent race

The Great Resignation also shook up the enterprise tech world by spurring a race for talent. In response, investors have poured millions into software that can speed up the hiring process, from using chatbots to automate candidate outreach to mining resumes with data analytics.

AI-powered startups Eightfold and SeekOut hit unicorn status this year after raising hundreds of millions for software that can pull candidate data from recruiting sites and match them with open jobs. End-to-end recruiting platforms Gem and SmartRecruiters, which can take companies all the way from outreach to offer letter, also raised $100 million or more each to speed up the hiring process.

There’s also a well known software developer shortage, which is why companies have increasingly looked to outsource development to other countries. To that end, Remote, which streamlines the process for hiring international employees, was recently valued at more than $3 billion.

It’s all about data

The increased need for digital transformation following the pandemic created new demand for companies that needed to learn how to get value out of their existing data. From building better data pipelines to analyzing large data sets, investors were interested in tech that promises to make it faster and cheaper to manage vast amounts of data.

Startups like Astronomer, Starburst and Firebolt raised $100 million or more each to help enterprises with data orchestration, querying and warehousing. Astronomer focuses on helping build better overall data pipelines while Starburst positions itself as a faster SQL-based query engine, and Firebolt is trying to build better data warehouses than competitors like Google Cloud’s BigQuery and Snowflake.

Once that data is ready, it has a wide variety of downstream uses, from helping enterprises build customer profiles based on first-party data to driving better decision-making.

As enterprises grapple with the overwhelming amount of data they now collect, analytics engine Pyramid Analytics is helping companies use that data to drive better decision-making. The startup uses real-time intelligence and artificial intelligence to analyze financial statements or even build customer profiles.

In the same way, startups across health care, finance and customer support are using AI to help derive insights, find patterns and discover relationships in data. ConcertAI is using artificial intelligence to drive better outcomes in health care, Qraft to execute stock trading and Observe.ai and Uniphore to automate customer support interactions.

Secure the premises

From the fallout of the Log4j vulnerability last December to the recent Okta breach, the need for enterprises to bolster their security in spite of a cybersecurity talent gap has driven a wave of funding for new software.

The rise of the cloud and the proliferation of SaaS applications has powered the funding of cyberthreat detection and response startups like Axonius and SparkCognition, which help enterprises manage security across all their IT assets.

The shift towards remote-first workplaces increased the need for browser and email security, which is why investors have been paying attention to startups building virtual private networks and secured email communications. VPN startup Tailscale raised $100 million, while email-based security companies Abnormal Security and Material Security raised that or more. SaaS startup Island also closed a mega-deal for its enterprise-grade internet browser.

The need for identity and access management across a distributed workforce also drove the rise of startups like

Beyond Identity, which develops enterprise-grade multifactor authentication, and Teleport, which focuses on securing cloud infrastructure access.

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