Chamath Muthukuda

ella-don-sRQxXA5QqtE-unsplash

Esports November Scorecard: Team Liquid joined the crypto craze with Coinbase deal

<div>
 <ul>
 <li>
 
 Next-gen Climate &amp; Energy startups raised USD 2.1 billion, recovering from a three-year low in Q2 (+35% QoQ)
 
 </li>
 <li>
 
 We observed 28 product updates (vs. 32 in Q2) and 60 partnerships (vs. 71 in Q2)
 
 </li>
 <li>
 
 The US passed legislation to separate nuclear fusion from fission
 
 </li>
 </ul>
 
 
</div>

<div>
 
 
 <ul>
 <li>
 
 Next-gen Climate &amp; Energy startups raised USD 1.5 billion, recovering from a three-year low in Q2 (+35% QoQ)
 
 </li>
 <li>
 
 We observed 28 product updates (vs. 32 in Q2)
 
 </li>
 <li>
 
 We observed 60 partnerships (vs. 71 in Q2)
 
 </li>
 <li>
 
 There were three M&amp;A deals (vs. seven in Q2)
 
 </li>
 <li>
 
 The US passed legislation to separate nuclear fusion from fission
 
 </li>
 </ul>
 
 
</div>

Next-gen Climate & Energy (Q3 2024): CCUS and hydrogen in spotlight; investors remain cautious ahead of US elections

<div>
 
 
 <ul>
 <li>
 
 The US digital health sector closed with 
 USD 4.3 billion
 across 
 223 rounds
 in Q3 2024, down 31% from a record-high funding in Q2
 
 </li>
 <li>
 
 Funding was dominated by 
 Next-gen Medical Devices
 startups, with overall focus in clinical development solutions similar to Q2
 
 </li>
 <li>
 
 GenAI
 
 and AI 
 continued to influence partnership activity to accelerate drug discovery and clinical development
 
 </li>
 </ul>
 
 
</div>

Digital Health (Q3 2024): Overall funding stabilizes as Next-gen Medical Devices rebound

<div>
 <ul>
 <li>
 
 Overall funding declined this quarter following a wider market slowdown, but demand is expected to drive future funding and M&amp;As amidst a bullish venture space.
 
 </li>
 <li>
 
 Product launches focused on GenAI and AI once again.
 
 </li>
 <li>
 
 Several state privacy laws went into effect and a Swiss-US data privacy framework was approved.
 
 </li>
 </ul>
 
 
</div>

<div>
 <ul>
 <li>
 
 Abnormal Security's USD 250 million Series D marked a return to form for email security funding.
 
 </li>
 <li>
 
 Mastercard to acquire threat intelligence firm Recorded Future for USD 2.6 billion.
 
 </li>
 <li>
 
 GenAI and AI automation take the spotlight in the product space.
 
 </li>
 <li>
 
 Big Tech returns to the fore with the bulk of partnerships.
 
 </li>
 <li>
 
 Several state data privacy laws went into effect; Swiss-US privacy framework approved.
 
 </li>
 </ul>
 
 
</div>

Cybersecurity (Q3 2024): Funding drops sharply, Wiz declines Alphabet’s 11-figure check

Providing a seamless consumer experience is one hope for bringing back brick and mortar retail, automated stores are being built to do just that.

Automated Stores

<div>
 <ul>
 <li>
 
 Lowest funded quarter: 
 Overall funding in the Retail Tech sector dropped nearly 96% YoY and 86% QoQ
 
 </li>
 <li>
 
 Sales partnerships dominated Retail Tech collaborations
 
 </li>
 <li>
 
 Product updates focus on AI and automation
 
 </li>
 <li>
 
 AI-enabled smart carts are expected to become the preferred automation tool over self-checkouts
 
 </li>
 </ul>
 
 
</div>

Retail Tech (Q3 2024): Funding hits a low, partnership activities continue to grow

Reinforcing recycling, rerouting refuse, and reducing wasteflows

Waste Recovery & Management Tech

<div>
 <ul>
 <li>
 
 Funding slowed (-25% QoQ and -72%YoY) to USD 1.2 billion
 
 </li>
 <li>
 
 Collaborations reached their highest in three years
 
 </li>
 <li>
 
 Battery recycling activity showed signs of recovery
 
 </li>
 </ul>
 
 
</div>

<div>
 
 Funding&nbsp;
 
 <ul>
 <li>
 
 Circular Materials funding slowed 
 to USD 1.2 billion (-25% QoQ and -72%YoY) as a result of fewer large funding rounds and moderation in the number of rounds observed. Nearly all of the funding was earmarked for facility expansion and product development. Debt funding accounted for 59%, with bio-based packaging company Stora Enso&rsquo;s 
 <a href="https://sp-edge.com/updates/31420">
 ~USD 472.7 million
 </a>
 round and Indorama Ventures&rsquo; 
 <a href="https://sp-edge.com/updates/31105">
 USD 200 million
 </a>
 loan from the International Finance Corporation (IFC) to establish large-scale plastic recycling plants in Asia.
 
 </li>
 </ul>
 
 Partnerships
 
 <ul>
 <li>
 
 Collaborations reached their highest in three years
 , maintaining a strong momentum from mid-2023
 .
 Product development partnerships were at the forefront (~67% of total partnerships), while the bio-based industrials and bio-based packaging segments comprised most collaborations (~32%). Highlights included 
 <a href="https://sp-edge.com/updates/31826">
 Braskem
 </a>
 &rsquo;s first commercial sale of pyrolysis oil and 
 <a href="https://sp-edge.com/updates/32293">
 Carbios
 </a>
 licensing its PET bio-recycling technology.
 
 </li>
 <li>
 
 Notable incursions to the US market
 included joint ventures (JVs) from Indian battery recycler
 <a href="https://sp-edge.com/updates/34365">
 Lohum Cleantech
 </a>
 and German bio-based packaging company
 <a href="https://sp-edge.com/updates/34206">
 PAPACKS
 </a>
 .&nbsp;
 
 </li>
 </ul>
 
 
 
 Product updates
 
 <ul>
 <li>
 
 Product launches focused on bio-based materials 
 (~61% of total product updates), including 
 <a href="https://sp-edge.com/updates/33123">
 Lignin Industries
 </a>
 commercializing its novel bioplastic product. Several incumbents committed to incorporating circular materials into their products, including 
 <a href="https://sp-edge.com/updates/32530">
 BASF
 </a>
 switching to bio-based Ethyl Acrylate (EA) from Q4 2024 and 
 <a href="https://sp-edge.com/updates/33089">
 The LEGO Group
 </a>
 committing to use circular inputs for its bricks. We believe the shift is driven by regulatory pressures around recycling, and the 
 <a href="https://www.evonik.com/en/news/press-releases/2023/11/circular-economy--at-least--1-billion-in-additional-sales-by-203.html">
 economic potential
 </a>
 that circular chemicals offer as sustainable solutions are increasingly valued by the market.
 
 </li>
 <li>
 
 Battery recycling activity showed signs of recovery 
 and was focused on establishing recycling facilities. Highlights included
 <a href="https://sp-edge.com/updates/34366">
 ERI
 </a>
 , which opened its first battery recycling plant, and
 <a href="https://sp-edge.com/updates/33091">
 ProtechLiB
 </a>
 , which developed a compact container-sized recycling plant for automotive batteries.&nbsp;
 
 </li>
 </ul>
 
 &nbsp;
 
 
 M&amp;As
 
 <ul>
 <li>
 
 Three incumbent-led acquisitions in the recycling space 
 focused on technology integration and expanding geographic presence. The targets ranged from construction material recycling (
 <a href="https://sp-edge.com/updates/31263">
 Mark Desmedt
 </a>
 ) to plastic recycling (
 <a href="https://sp-edge.com/updates/32944">
 APK AG
 </a>
 ) and e-waste recycling (
 <a href="https://sp-edge.com/updates/34367">
 Telecycle
 </a>
 ).
 
 </li>
 </ul>
 
 
 
 Regulations
 
 <ul>
 <li>
 
 California passed a landmark textile recycling law 
 to ensure producers are accountable for textiles recycling. The bill is set to come into effect on January 01, 2030. The State also signed a bill to ensure EV battery manufacturers are responsible for managing end-of-life processes, but was later vetoed by the Governor of California on October 01, 2024.
 
 </li>
 </ul>
 
 &nbsp;
 
 
 Outlook
 
 <ul>
 <li>
 
 Geopolitical uncertainty may be a near-term dampener: 
 Rising tensions in the MENA region and looming US presidential elections may lead to a brief slowdown in activities in the Circular Materials space. As outlined in our Insights on industries affected by a 
 <a href="https://sp-edge.com/insights/33022">
 Republican
 </a>
 or 
 <a href="https://sp-edge.com/insights/34027">
 Democratic
 </a>
 presidency, sustainability rollbacks may be likely in the former case, while the latter will be more beneficial to a greener, sustainable future from a policy perspective. Nevertheless, we believe 
 battery materials will still be a winning industry
 as 
 <a href="https://www.csis.org/analysis/friendshoring-lithium-ion-battery-supply-chain-battery-cell-manufacturing">
 onshoring the battery minerals supply chain
 </a>
 is treated as a matter of national importance, as US trade policy focuses on minimizing its reliance on Chinese exports. The 
 <a href="https://www.energy.gov/mesc/battery-manufacturing-and-recycling-grants">
 US Department of Energy
 </a>
 allocated USD 3 billion in funding for battery recycling, and startups like 
 <a href="https://sp-edge.com/updates/30554">
 Princeton NuEnergy
 </a>
 and
 <a href="https://sp-edge.com/updates/32852">
 Electra Battery Materials
 </a>
 will likely emerge winners regardless of political outcomes.
 
 </li>
 <li>
 
 Incumbents are ramping up efforts to advance circularity efforts amid regulatory pressures:
 Our Circular Materials Quarterly Insight for
 <a href="https://sp-edge.com/insights/31521">
 Q2 2024
 </a>
 highlighted the role that regulatory tailwinds can play in advancing circular materials. Notably, this quarter, the State of California moved to introduce legislation to establish producer accountability for textiles and EV batteries. We believe these regulations are pushing apex-level advocacy bodies and leading industry participants to advance circular solutions. Examples include 
 <a href="https://recyclinginternational.com/commodities/textiles-recycling/european-concern-for-future-of-textile-recycling/58469/">
 EuRIC Textiles
 </a>
 for textile recycling in Europe, and 
 <a href="https://www.fastmarkets.com/insights/california-bill-ev-battery-recycling/">
 Ford Motor and United Auto Workers
 </a>
 voicing support for California state legislature to have battery manufacturers accountable for EV battery recycling, as well as global chemical manufacturer 
 <a href="https://sp-edge.com/updates/32530">
 BASF
 </a>
 committing to exclusively offer bio-based EA from Q4 2024.
 
 </li>
 </ul>
 
 
</div>

Circular Materials (Q3 2024): Collaborations thrive amid slowed funding and changing regulations

A new wave of meat, fish, and poultry alternatives are driving this hyper-growth industry into the mainstream

Plant-based Meat

<div>
 <ul>
 <li>
 
 AgriTech &amp; Food Tech funding fell 45% QoQ
 , largely due to slowdowns in the PBM and CCM sectors.
 
 </li>
 <li>
 
 Incumbent activity ramped up, 
 with higher involvement in both new product launches and partnerships.
 
 </li>
 <li>
 
 Regulatory crackdown on CCM continued, 
 while several companies secured approvals for commercialization of their offerings.
 
 </li>
 </ul>
 
 
</div>

<div>
 
 Regulations
 
 <ul>
 <li>
 
 The crackdown on cultivated meat continued
 ,
 
 as Nebraska Governor Jim Pillen signed an 
 <a href="https://sp-edge.com/updates/33098">
 executive order
 </a>
 restricting cultivated meat across several fronts, bringing the total number of statewide anti-CCM regulatory measures to five (joining Florida, Alabama, Ohio, and Iowa). However, 
 <a href="https://sp-edge.com/updates/32587">
 UPSIDE Foods
 </a>
 , one of the first companies to get regulatory approval to sell CCM in the US, retaliated against Florida bill 
 <a href="https://sp-edge.com/updates/29008">
 SB 1084
 </a>
 , which has criminalized cultivated meat in the state.
 
 </li>
 </ul>
 
 Funding
 
 <ul>
 <li>
 
 AgriTech and Food Tech investments decreased by 45% QoQ. 
 However, AgriTech funding increased 230% QoQ (excluding Nutrien&rsquo;s mega funding round in Q2), with tech-driven sustainable farming solutions remaining an investor hotspot. Smart Farming and Vertical Farming companies such as
 <a href="https://sp-edge.com/updates/31821">
 
 Monarch Tractors
 </a>
 and
 <a href="https://sp-edge.com/updates/33321">
 
 80 Acres Farms
 </a>
 attracted substantial funds.
 
 </li>
 </ul>
 <ul>
 <li>
 
 PBD&amp;E startups accounted for 47% of total Food Tech funding
 , with
 <a href="https://sp-edge.com/updates/33988">
 
 Helaina
 </a>
 and
 <a href="https://sp-edge.com/updates/33423">
 
 Formo
 </a>
 recording notable early-stage funding raises earmarked for alternative dairy protein development. Overall funding for the sector fell 29% QoQ, largely due to weak performances from PBM (-48% QoQ) and CCM (-90% QoQ).
 
 </li>
 </ul>
 
 Product updates
 
 <ul>
 <li>
 
 PBM product activity slowed (15 vs. 39 in Q2) from a two-year high last quarter. 
 We believe this could be due to PBM startups extending their product development time frames as they gear up for Veganuary 2025. PBD&amp;E startups saw a marginal increase and launched several industry firsts, such as 
 <a href="https://sp-edge.com/updates/32896">
 quinoa-based milk
 </a>
 and 
 <a href="https://sp-edge.com/updates/31285">
 vegan spray cheese
 </a>
 . Similarly, Smart Farming startups recorded an uptick and launched several analytical tools (
 <a href="https://sp-edge.com/updates/31991">
 Veris Technologies
 </a>
 , 
 <a href="https://sp-edge.com/updates/33662">
 EOS Data Analytics
 </a>
 , 
 <a href="https://sp-edge.com/updates/33720">
 LandScan
 </a>
 ) to enhance farming operations.
 
 </li>
 </ul>
 <ul>
 <li>
 
 Incumbents in both AgriTech and Food Tech ramped up activity
 , launching 19 products (vs. 13 in Q2). Notable launches included 
 <a href="https://www.foodingredientsfirst.com/news/nestle-innovates-plant-based-alternative-for-hybrid-minced-meat-recipes.html">
 Nestl&eacute;
 </a>
 &rsquo;s PBM extender, 
 <a href="https://agfundernews.com/exclusive-elmhurst-1925-enters-alt-meat-market-with-launch-of-the-worlds-cleanest-chicken-alternative">
 Elmhurst 1925
 </a>
 &rsquo;s first alternative meat launch, 
 <a href="https://www.outlookbusiness.com/news/syngenta-unveils-genai-system-to-boost-farm-productivity">
 Syngenta
 </a>
 &rsquo;s launch of its Cropwise AI platform, and 
 <a href="https://www.globalagtechinitiative.com/digital-farming/bayer-unveils-new-fieldview-hardware/">
 Bayer
 </a>
 &rsquo;s new FieldView hardware.
 
 </li>
 </ul>
 
 Partnerships
 
 <ul>
 <li>
 
 <a href="https://inc42.com/buzz/cropin-partners-google-gemini-to-launch-genai-platform-for-helping-customers-manage-farms-globally/">
 Gen AI
 </a>
 , 
 <a href="https://sp-edge.com/updates/31971">
 AI
 </a>
 , 
 <a href="https://sp-edge.com/updates/32869">
 robotics
 </a>
 , and 
 <a href="https://sp-edge.com/updates/31670">
 IoT
 </a>
 integrations took the spotlight
 ,
 
 as partnership activity saw a notable uptick (68 vs. 44 in Q2). Incumbents such as Ajinomoto, Alphabet, Fonterra, and CNH were at the forefront of these partnerships. 
 <a href="https://sp-edge.com/updates/31154">
 Beyond Meat
 </a>
 &rsquo;s relaunch of its &ldquo;Beyond The Orange Chicken&rdquo; with Panda Express and 
 <a href="https://sp-edge.com/updates/33616">
 Aleph Farms
 </a>
 &rsquo; collaboration with Chef Eyal Shani for the debut launch of its cultivated beef product were also noteworthy. Vertical Farming startups focused on geographical expansion in the 
 <a href="https://sp-edge.com/updates/31684">
 Middle East
 </a>
 and 
 <a href="https://sp-edge.com/updates/33325">
 EU
 </a>
 regions.&nbsp;
 
 </li>
 </ul>
 
 M&amp;A
 
 <ul>
 <li>
 
 We observed 12 deals in Q3 (vs. 4 in Q2). 
 <a href="https://sp-edge.com/updates/31546">
 Tate &amp; Lyle&rsquo;s acquisition of CP Kelco
 </a>
 for USD 1.8 billion and 
 <a href="https://sp-edge.com/updates/32292">
 AIP
 </a>
 &rsquo;s USD 700 million acquisition of AGCO&rsquo;s Grain &amp; Protein division were notable. While most deals were ​​strategically driven, focusing on scaling production, improving market position, and farm activity digitization, 
 <a href="https://sp-edge.com/updates/32893">
 Naplasol
 </a>
 &rsquo;s acquisition of Mycorena stood out, as it followed the latter's bankruptcy.
 
 </li>
 </ul>
 
 Outlook
 
 <ul>
 <li>
 
 AI adoption in Food Tech gathers momentum. 
 In Q3, we saw several instances of this, such as 
 <a href="https://sp-edge.com/updates/31971">
 Microsoft&rsquo;s partnership with Danone
 </a>
 to optimize supply chain operations and 
 <a href="https://sp-edge.com/updates/32160">
 Shiru&rsquo;s collaboration with Ajinomoto
 </a>
 for AI-driven ingredient development. Similarly, in Q2, we saw collaborations between 
 <a href="https://sp-edge.com/updates/29115">
 Alpeh Farms and Bioraptor
 </a>
 to optimize cultivated seafood production using AI, while 
 <a href="https://sp-edge.com/updates/29883">
 ABB and Pulmuone
 </a>
 teamed up to automate the research and production of lab-grown foods with robotic solutions. Food Tech companies will continue to 
 <a href="https://forum.effectivealtruism.org/posts/ugXuCHeGFDtZipzKD/what-ai-could-mean-for-alternative-proteins">
 leverage AI
 </a>
 for product formulations, efficiency improvements, and cost reductions, focusing on addressing consumer pain points such as (1) price premiums and (2) drawing parity with traditional counterparts with regard to elements like taste and texture.
 
 </li>
 <li>
 
 Global climate agenda to propel AgriTech innovations: 
 Driven by international treaties and accords such as the 
 <a href="https://unfccc.int/process-and-meetings/the-paris-agreement">
 Paris Agreement
 </a>
 and 
 <a href="https://unfccc.int/kyoto_protocol#:~:text=In%20short%2C%20the%20Kyoto%20Protocol,accordance%20with%20agreed%20individual%20targets.">
 Kyoto Protocol
 </a>
 , food and agri companies are ramping up efforts to reduce emissions and water usage and increase overall sustainability. In Q3, we saw several initiatives, such as Danone&rsquo;s partnerships with 
 <a href="https://sp-edge.com/updates/33852">
 Ajinomoto
 </a>
 and 
 <a href="https://sp-edge.com/updates/34044">
 Zoetis
 </a>
 to develop solutions aimed at GHG emission reduction and sustainable dairy farming. Additionally, 
 <a href="https://sp-edge.com/updates/33076">
 Ginkgo Bioworks
 </a>
 collaboratively developed sustainable biocontrols for Brazilian agriculture with Vitales, 
 <a href="https://sp-edge.com/updates/33047">
 Veolia
 </a>
 launched a rock dust fertilizer claimed to help counter climate change by capturing inorganic carbon dioxide, and 
 <a href="https://sp-edge.com/updates/33660">
 SweGreen
 </a>
 developed in-store hydroponic farming systems that reportedly use up to 99% less water than traditional farming methods, eliminate the need for pesticides, and reduce transport emissions.
 
 </li>
 <li>
 
 The US CCM industry is at a standstill: 
 The repercussions of restrictive CCM regulations introduced in Q2 were felt during Q3. All CCM funding rounds originated outside the US, and product activity was limited to ingredients and technology, which did not fall under the scrutiny of the aforementioned regulations. In the past 12 months, we observed several companies, including
 <a href="https://sp-edge.com/updates/32014">
 
 Gourmey
 </a>
 and
 <a href="https://sp-edge.com/updates/29598">
 
 Vital Meat
 </a>
 , applying for regulatory approval in the EU and the UK, while
 <a href="https://sp-edge.com/updates/28578">
 
 Meatable
 </a>
 and
 <a href="https://sp-edge.com/updates/31970">
 
 Mosa Meat
 </a>
 held approved cultivated meat tasting events in Europe. With the market for cultivated meat poised for
 <a href="https://vegconomist.com/studies-and-numbers/cultivated-meats-e80-billion-2050-key-hurdles-government-investment-new-report/">
 
 growth
 </a>
 amidst favorable
 <a href="https://sp-edge.com/updates/27839">
 
 reforms
 </a>
 , CCM companies are likely to shift their focus to Europe until regulatory headwinds in the US are settled.
 
 </li>
 </ul>
 
 
</div>

AgriTech & Food Tech (Q3 2024): Sustainable farming fuels AgriTech momentum; Food Tech funding activity wanes amid CCM crackdown

<div>
 <ul>
 <li>
 
 Funding plummeted, but Cloud-native Tech was a bright spot
 
 </li>
 <li>
 
 Edge hardware innovation continued
 
 </li>
 <li>
 
 Red Hat integrated GenAI into OpenShift
 
 </li>
 <li>
 
 Cloud-native Tech leads a subdued quarter for M&amp;A
 
 </li>
 </ul>
 
 
</div>

<div>
 
 
 <ul>
 <li>
 
 Funding plummeted, but Cloud-native Tech was a bright spot
 
 </li>
 <li>
 
 Edge hardware innovation continued
 
 </li>
 <li>
 
 Red Hat integrated GenAI into OpenShift
 
 </li>
 <li>
 
 Cloud-native Tech leads a subdued quarter for M&amp;A
 
 </li>
 </ul>
 
 
</div>

Cloud Tech (Q3 2024): AI advances in Edge and Cloud Optimization; Cloud-native Tech leads funding and M&A

<div>
 <ul>
 <li>
 
 XR funding remained stagnant: 
 Startups raised USD 111 million across 13 rounds, up 5% QoQ and down 66% YoY. 
 
 </li>
 <li>
 
 Funding for MEPs plummeted: 
 MEP
 
 startups
 
 raised a mere USD 9 million across two rounds&mdash;an 83% QoQ and an 80% YoY drop.
 
 </li>
 </ul>
 
 
</div>

<div>
 <h1>
 Key takeaways
 </h1>
 
 
 
 
 <ul>
 <li>
 
 Product updates
 
 <ul>
 <li>
 
 The Meta Connect 2024 conference ushered in new extended reality (XR) devices and Quest ecosystem improvements: 
 We tracked 13 device announcements in the industry, including 
 <a href="https://sp-edge.com/companies/5">
 Meta
 </a>
 &rsquo;s budget-friendly 
 <a href="https://sp-edge.com/updates/33984">
 Quest 3S
 </a>
 mixed reality (MR) headset and a prototype of its first augmented reality (AR) glasses, 
 <a href="https://sp-edge.com/updates/33980">
 Orion
 </a>
 . The company also introduced software updates to enhance XR content development, such as 2D and spatial app 
 <a href="https://sp-edge.com/updates/33979">
 support
 </a>
 on the Quest Store and a 
 <a href="https://sp-edge.com/updates/34041">
 passthrough API
 </a>
 to create better MR experiences. GenAI updates included Meta&rsquo;s 
 <a href="https://sp-edge.com/updates/32504">
 vFusion3D
 </a>
 for 3D object creation and tools from 
 <a href="https://sp-edge.com/companies/206645">
 Snap
 </a>
 to generate Snapchat Lenses, 3D characters, and images.&nbsp;
 
 </li>
 <li>
 
 Metaverse platforms (MEPs) Meta and Genies advanced digital avatar technology:
 Meta launched its 
 <a href="https://sp-edge.com/updates/33985">
 AI-powered avatar system,
 </a>
 which offers users enhanced customization options such as fine-tuning eye size, nose shape, and body shape. Digital avatar creation platform Genies is also making strides with its
 <a href="https://sp-edge.com/updates/31405">
 Creator and Partner Network
 </a>
 , helping brands commercialize avatars through collaborations with tech firms like 
 <a href="https://sp-edge.com/companies/817977">
 Anything World
 </a>
 and 
 <a href="https://sp-edge.com/companies/1976399">
 Soundful.
 </a>
 &nbsp;
 
 </li>
 </ul>
 </li>
 </ul>
 
 
 <ul>
 <li>
 
 Partnerships
 
 <ul>
 <li>
 
 Snap focused on Spectacles 5, while Apple explored new MR use cases: 
 Snap announced a slew of entertainment-focused partnerships to boost the adoption of its newly launched 
 <a href="https://sp-edge.com/updates/33644">
 Spectacles 5
 </a>
 AR glasses (
 <a href="https://sp-edge.com/companies/90475">
 LEGO Group
 </a>
 , 
 <a href="https://sp-edge.com/companies/3115515">
 ILM Immersive
 </a>
 , 
 <a href="https://sp-edge.com/companies/216010">
 Niantic
 </a>
 , and 
 <a href="https://sp-edge.com/companies/1133517">
 Wabisabi Games
 </a>
 ). However, developer interest may be limited by the glasses' small field of view (FOV), short 45-minute battery life, and costly leasing model. 
 <a href="https://sp-edge.com/companies/1658">
 Apple
 </a>
 &rsquo;s 
 <a href="https://sp-edge.com/updates/32239">
 partnership
 </a>
 with 
 <a href="https://sp-edge.com/companies/449414">
 Synchron
 </a>
 marked the first-ever use of the Vision Pro headset to help manage amyotrophic lateral sclerosis (ALS), highlighting new MR applications enabled by technological advances.
 
 </li>
 <li>
 
 Roblox and Fortnite continued to dominate experience launches:
 We tracked 29 brand collaborations for MEPs (29 in Q2 2024), with 
 <a href="https://sp-edge.com/companies/22278">
 Roblox
 </a>
 and 
 <a href="https://sp-edge.com/companies/288018">
 Epic Games&rsquo;
 </a>
 Fortnite each accounting for 11 virtual world launches. However, brand launches in 
 <a href="https://sp-edge.com/companies/969295">
 The Sandbox
 </a>
 metaverse were negligible (3), with collaborations absent in Horizon Worlds and 
 <a href="https://sp-edge.com/companies/322187">
 VRChat
 </a>
 .
 
 </li>
 </ul>
 </li>
 </ul>
 
 
 <ul>
 <li>
 
 M&amp;A
 
 <ul>
 <li>
 
 XR&rsquo;s five acquisitions focused on enhancing user engagement and expanding product functionality:
 This notably included 
 <a href="https://sp-edge.com/companies/43035">
 Scandit
 </a>
 &rsquo;s 
 <a href="https://sp-edge.com/updates/33474">
 acquisition
 </a>
 of 
 <a href="https://sp-edge.com/companies/554852">
 MarketLab
 </a>
 to strengthen its AR retail shelf management solutions and 
 <a href="https://sp-edge.com/companies/426622">
 Interplay Learning
 </a>
 &rsquo;s 
 <a href="https://sp-edge.com/updates/33810">
 acquisition
 </a>
 of 
 <a href="https://sp-edge.com/companies/826762">
 ITI
 </a>
 to expand into virtual reality (VR) training programs for construction operators.&nbsp;
 
 </li>
 <li>
 
 Daybreak Game Company's acquisition of Singularity 6 highlighted a trend toward platform consolidation in the MEP sector,
 particularly as 
 <a href="https://sp-edge.com/updates/32420">
 Singularity 6
 </a>
 faced significant financial distress.&nbsp;
 
 </li>
 </ul>
 </li>
 </ul>
 
 
 <ul>
 <li>
 
 Funding&nbsp;
 
 <ul>
 <li>
 
 XR funding remained stagnant: 
 Startups raised USD 111 million across 13 rounds, up 5% QoQ and down 66% YoY. Funding held steady amidst investor fervor for AI-backed startups, as showcased on Y Combinator&rsquo;s 
 <a href="https://techcrunch.com/2024/09/27/ai-dominated-both-yc-demo-day-and-startup-news/">
 Demo Day
 </a>
 . Notably, despite flagship headsets from incumbents, startups 
 <a href="https://www.techradar.com/computing/virtual-reality-augmented-reality/rokid-max-ar-glasses-review-another-passable-pair-of-smart-specs">
 struggled
 </a>
 to deliver compelling products at an affordable price point, dampening investor confidence.&nbsp;
 
 </li>
 <li>
 
 Funding for MEPs plummeted: 
 MEP
 
 startups
 
 raised a mere USD 9 million across two rounds&mdash;an 83% QoQ and an 80% YoY drop. However, the broader metaverse industry attracted 
 <a href="https://www.theinfinitereality.com/news/infinite-reality-closes-350-million-investment-acquires-landvault-in-450-million-deal-valuation-soars-to-5-1-billion">
 significant investments
 </a>
 , signaling long-term potential for MEP startups.
 
 </li>
 </ul>
 </li>
 </ul>
 
 
 <ul>
 <li>
 
 Outlook
 
 <ul>
 <li>
 
 Integrating GenAI capabilities into MR headsets: 
 Hardware manufacturers are ramping up MR headset launches, leveraging computer vision through passthrough cameras. Meta's Quest 3, featuring &quot;
 <a href="https://sp-edge.com/updates/31404">
 AI with Vision
 </a>
 ,&quot; allows users to interact with real-world objects&mdash;offering outfit recommendations, restaurant suggestions, and explanations of books or historical events. Apple is likely to introduce similar features for the Vision Pro via Apple Intelligence integration. The next phase of GenAI integration may bring real-time spoken language translation and enable users to generate images and videos inspired by their surroundings.
 
 </li>
 <li>
 
 Established MEP players such as Roblox and Fortnite are expanding their ecosystems:
 Roblox is focusing on 
 <a href="https://venturebeat.com/games/roblox-reveals-insights-about-its-emerging-game-genres-exclusive/">
 emerging genres
 </a>
 such as life simulation, horror, and open-world action while promoting user-generated content (UGC), and Fortnite is increasing engagement through Creative Mode, which allows players to create their own experiences and host social events. In addition, 
 the adoption of 
 <a href="https://sp-edge.com/updates/33985">
 GenAI
 </a>
 is expected to streamline UGC development and enhance non-player character (NPC) interactions across platforms. Moreover, the expansion of
 cryptocurrency derivatives into non-US regions,
 such as the recent launch of the 
 <a href="https://decrypt.co/238988/australia-second-spot-bitcoin-etf-asx">
 DigitalX Spot Bitcoin ETF on the ASX
 </a>
 , could provide an environment for Web3 MEPs to thrive.
 
 </li>
 </ul>
 </li>
 </ul>
 
 
</div>

XR and MEP (Q3 2024): XR continues MR push, MEPs focus on avatar solutions

<div>
 <ul>
 <li>
 
 Overall funding volumes declined sharply amid investor caution
 
 </li>
 <li>
 
 Complementary offerings rose alongside AI-related product launches
 
 </li>
 <li>
 
 Regulators focused on promoting transparency and consumer protection
 
 </li>
 </ul>
 
 
</div>

<div>
 
 This Edge Insight focuses on notable activities related to the sectors covered by SPEEDA Edge under the FinTech vertical from July 2024 to September 2024 (Q3 2024): FinTech: Banking &amp; Infrastructure, FinTech: Blockchain, FinTech: Payments, Wealth Tech &amp; Sustainable Finance, and InsurTech.
 
 <hr/>
 <h1>
 Key takeaways
 </h1>
 <ul>
 <li>
 <h3>
 Regulations
 </h3>
 <ul>
 <li>
 
 Regulators focused on promoting transparency and consumer protection with specific disclosure requirements and stringent record-keeping for non-bank players: 
 The US Consumer Financial Protection Bureau (CFPB)'s 
 <a href="https://sp-edge.com/updates/31763">
 proposed rule
 </a>
 to classify paycheck advance programs as consumer loans aims to ensure that workers understand the fees involved, addressing potential concerns around hidden costs. Similarly, the US Federal Deposit Insurance Corporation (FDIC)'s 
 <a href="https://sp-edge.com/updates/33754">
 new rule
 </a>
 on third-party deposits strengthens record-keeping and reconciliation practices, which is critical to safeguarding consumer funds and maintaining trust in non-bank financial intermediaries. These regulatory moves highlight a 
 growing emphasis on stricter oversight for non-bank players
 , ensuring that they meet higher standards of disclosure and security. This would ultimately promote a safer, more transparent financial ecosystem.
 
 </li>
 </ul>
 </li>
 </ul>
 
 
 <ul>
 <li>
 <h3>
 Funding
 </h3>
 <ul>
 <li>
 
 Overall funding volumes declined sharply amid investor caution: 
 We tracked a decline in funding volumes in the FinTech sector in Q3 2024. Funding totaled 
 USD 3.3 billion
 , representing a 
 69% decrease YoY
 and a 
 50% decline QoQ
 . This marks the 
 lowest funding recorded
 over the 
 past 12 months
 , as all sub-sectors within the space faced similar declines.&nbsp;The decrease can also be attributed to 
 fewer completed mega deals
 , with only nine finalized, compared with 17 in Q3 2023. This softening of the investor climate can be a result of 
 increased caution among investors
 , who anticipated rate cuts for most of the quarter alongside political risks from the upcoming US elections.
 
 </li>
 </ul>
 </li>
 </ul>
 
 
 <ul>
 <li>
 <h3>
 Product updates
 </h3>
 <ul>
 <li>
 
 Complementary offerings rose alongside AI-related product launches, driven by automation and insights: 
 AI-related product launches sustained their momentum in Q3 and were prominent in the 
 Business Expense Management
 , 
 Capital Markets Tech
 , 
 Financial Wellness Tools, 
 and 
 InsurTech: Infrastructure 
 industries, primarily targeting customer needs for automation and insights. Notable solutions included financial coaching chatbots from 
 <a href="https://sp-edge.com/companies/365556">
 BrightPlan
 </a>
 and 
 <a href="https://sp-edge.com/companies/613875">
 Pocketnest
 </a>
 to provide individuals tailored financial advice, fully automated accounts payable platforms from 
 <a href="https://sp-edge.com/companies/746175">
 Airbase
 </a>
 and 
 <a href="https://sp-edge.com/companies/410068">
 Stampli
 </a>
 to eliminate discrepancies and enhance accuracy of matching POs, and enhanced insurance claims management tools from 
 <a href="https://sp-edge.com/companies/812928">
 Five Sigma
 </a>
 and 
 <a href="https://sp-edge.com/companies/570493">
 CLARA Analytics
 </a>
 to reduce claims processing times and cost for the carrier and claimant.&nbsp;
 
 </li>
 </ul>
 </li>
 </ul>
 
 
 <ul>
 <li>
 <h3>
 Partnerships
 </h3>
 <ul>
 <li>
 
 Activities centered around enhancing existing product portfolio:
 Most partnerships within FinTech aimed at forging alliances to develop and/or add new features to 
 complement existing offerings
 and 
 expand market reach
 . However, compared with previous periods, we saw a 
 decline in AI-related partnerships 
 this quarter. The FinTech: Banking &amp; Infrastructure sector accounted for the most partnerships, with notable activities being 
 <a href="https://sp-edge.com/companies/71676">
 Google Cloud
 </a>
 and 
 <a href="https://sp-edge.com/companies/155763">
 Sionic
 </a>
 partnering to launch a comprehensive 
 <a href="https://www.businesswire.com/news/home/20240815806806/en/Sionic-Announces-Fraud-Protection-Service-Using-Google-Cloud-AI-Technology">
 fraud detection and mitigation service
 </a>
 and 
 <a href="https://sp-edge.com/companies/8781">
 Ford
 </a>
 launching a new 
 <a href="https://sp-edge.com/updates/31431">
 usage-based auto insurance
 </a>
 for commercial customers in partnership with 
 <a href="https://sp-edge.com/companies/520401">
 Pie Insurance
 </a>
 .
 
 </li>
 </ul>
 </li>
 </ul>
 
 
 <ul>
 <li>
 <h3>
 M&amp;A
 </h3>
 <ul>
 <li>
 
 Existing offerings were enhanced through bolt-on acquisitions, a key driver of M&amp;As: 
 In Q3 2024, we counted 
 15 M&amp;A transactions
 in the FinTech sector, a slight decline from 22 deals in the previous quarter. The primary motives for these deals were 
 enhancing existing offerings and expanding into new geographies
 . The most valuable deal was 
 <a href="https://sp-edge.com/companies/12478">
 Paylocity&rsquo;s
 </a>
 acquisition of 
 <a href="https://sp-edge.com/updates/33300">
 Airbase
 </a>
 for ~USD 325 million to expand its payroll and human capital software solutions to include business expense management.
 
 </li>
 </ul>
 </li>
 </ul>
 
 
 <ul>
 <li>
 <h3>
 Outlook
 </h3>
 <ul>
 <li>
 
 AI- and GenAI-related product launches and collaborations remain a key priority for FinTechs: 
 The sector is primed for significant integration of these technologies, supported by recent developments, such as 
 <a href="https://sp-edge.com/companies/3670845">
 TranscendAP&rsquo;s
 </a>
 release of the latest version of its AI-powered 
 <a href="https://sp-edge.com/updates/31988">
 accounts payable automation platform
 </a>
 and BrightPlan's introduction of an AI-driven 
 <a href="https://sp-edge.com/updates/32623">
 financial wellness coach
 </a>
 . We think more FinTech firms will adopt these solutions into both internal workflows and customer-facing operations, aiming to enhance efficiency, improve service quality, and better meet customer needs. Immediate applications are likely to include the development of chatbots that leverage proprietary and customer data to enhance customer service. A 
 <a href="https://kpmg.com/kpmg-us/content/dam/kpmg/pdf/2024/future-proofing-banking-enterprise-transformation-imperative.pdf">
 KPMG survey in March 2024
 </a>
 also highlights that nearly 40% of bank leaders expected 6%&ndash;20% of their team&rsquo;s daily tasks to be executed by GenAI by the end of 2024, and 65% of bank executives indicated that GenAI would be a key part of their long-term innovation strategies.
 
 </li>
 <li>
 
 Funding volumes likely to rebound from Q4 2024 onward, despite temporary dip: 
 In Q3 2024, funding volumes declined following two consecutive QoQ increases. This downturn&mdash;expected to be temporary&mdash;was largely owing to a cautious wait-and-see approach among investors, who anticipated rate cuts amid rising geopolitical risks. However, with the Federal Open Market Committee (FOMC) reducing interest rates by 50 basis points in September 2024, the FinTech funding landscape is expected to improve. We also anticipate a shift toward equity financing rather than the debt funding that has dominated in recent quarters, especially across mega deals. According to a 
 <a href="https://www.svb.com/globalassets/trendsandinsights/future-of-fintech-report-2023_final.pdf">
 Silicon Valley Bank report
 </a>
 , VC appetite is likely to favor early-stage startups (due to the potential for higher returns) and those demonstrating strong profitability.&nbsp;
 
 </li>
 <li>
 
 Startups to focus on IPO readiness, with potential listings expected in 2025: 
 After a lackluster year for FinTech IPOs in 2023, characterized by declining valuations, many startups and investors are now looking toward public listings as market conditions begin to improve. The easing of monetary policy is likely to boost valuations, but uncertainty surrounding the upcoming US elections and concerns over a potential soft landing may delay a surge in IPOs until 2025. Companies such as 
 <a href="https://sp-edge.com/updates/27565">
 eToro
 </a>
 , 
 <a href="https://sp-edge.com/updates/27044">
 Klarna
 </a>
 , 
 <a href="https://sp-edge.com/updates/27295">
 Monzo
 </a>
 , 
 <a href="https://sp-edge.com/updates/27220">
 WeBull
 </a>
 , and 
 <a href="https://sp-edge.com/updates/27702">
 Zilch
 </a>
 have announced plans to go public within 12&ndash;24 months. Additionally, an uptick in M&amp;As within the sector is likely driven by investors seeking opportunities in distressed assets (as seen with 
 <a href="https://sp-edge.com/companies/35375">
 Klarna&rsquo;s
 </a>
 acquisition of 
 <a href="https://sp-edge.com/updates/32819">
 Laybuy
 </a>
 this quarter) and companies looking to consolidate market share.
 
 </li>
 </ul>
 </li>
 </ul>
 
 
</div>

FinTech (Q3 2024): Funding dips to 12-month low as investors take a wait-and-see approach; regulators tighten grip on neobanks

<div>
 <ul>
 <li>
 
 Q3 2024 activity remained fairly consistent compared with the previous quarter 
 
 </li>
 <li>
 
 Healthcare continued to be tough for retail giants
 
 </li>
 <li>
 
 Health systems turned to Big Tech to harness the powers of GenAI
 
 </li>
 </ul>
 
 
</div>

<div>
 <ul>
 <li>
 
 Healthcare continued to be tough for retail giants. 
 Following its exit from the virtual care market with the sale of 
 <a href="https://sp-edge.com/companies/619722">
 MeMD
 </a>
 in Q2 2024, 
 <a href="https://sp-edge.com/companies/22572">
 Walmart
 </a>
 shifted its focus toward the specialty pharmacy sector where its core strengths lie. Meanwhile, 
 <a href="https://sp-edge.com/companies/318681">
 Walgreens
 </a>
 was also facing financial pressure in the healthcare space and was reportedly contemplating selling its stake in 
 <a href="https://sp-edge.com/companies/324761">
 VillageMD
 </a>
 , among other restructuring options.
 
 </li>
 </ul>
 
 
 
 <ul>
 <li>
 
 Health systems turned to Big Tech to harness the powers of GenAI.
 During the quarter, health systems entered partnerships with Alphabet, 
 <a href="https://sp-edge.com/companies/201465">
 Microsoft
 </a>
 , and 
 <a href="https://sp-edge.com/companies/203208">
 Amazon
 </a>
 to leverage their GenAI solutions for more efficient and personalized healthcare delivery. These solutions focused on automating complex tasks in R&amp;D and clinical operations and enhancing capabilities around patient engagement.
 
 </li>
 </ul>
 
 
 <ul>
 <li>
 
 <a href="https://sp-edge.com/companies/1658">
 Apple
 </a>
 announced significant advancements in health technology, addressing widespread health issues like sleep apnea and hearing loss
 . During the quarter, the company 
 <a href="https://sp-edge.com/updates/33653">
 introduced
 </a>
 sleep apnea detection features on its latest Apple Watch models: Series 9, Series 10, and Ultra 2. In addition, it 
 <a href="https://sp-edge.com/updates/33543">
 introduced
 </a>
 a hearing health feature for its AirPods Pro 2 to offer the first all-in-one hearing health experience, featuring a clinically validated hearing test and an over-the-counter hearing aid capability for users with mild to moderate hearing loss. Both features were granted FDA approval during the quarter.
 
 </li>
 </ul>
 
 
</div>

EDGE Insights