A few weeks ago, we asked founders, investors, cities, and companies to complete a short survey. Our goal is to make insights available to the Urbantech community. The following are some of our recent findings.
More deals and more interest
This year, we’re seeing increasing interest from investors, but we’re also seeing more Urbantech deals. It’s not clear if there is more interest and activity or if we’re just getting better at seeing it. We’re not alone: nearly half of the investors in the Urban.Us Network reported seeing an increase over 12 months ago.
Government and hardware still give investors pause
Mobility (e.g., transport and logistics) remains an investor favorite. More than 80% of all the investors expressed interest in this category. About half of these investors are interested in resources (e.g., energy and water) or built environments (e.g., real estate and construction). Unfortunately, fear of government is still high, with more than 60% of the investors saying they’d hesitate to invest if government were the only customer. This sounds high, but three years ago, this number was closer to 90%.
Investor interest in Urbantech sectors
Recently, two experienced seed-stage hardware investors (K9 and Bolt) weighed in on hardware startups, explaining that they are very, very hard compared to software companies but that they’re easier than they have been in the past. We believe both observations are true, and investors tend to agree that hardware still looks relatively less attractive. Hardware-focused founders revealed one reason why hardware is harder: they listed funding as a top concern (software founders prioritized funding too), but they’re also concerned about non-equity financing such as working capital, lines of credit, etc.
Fear of government is real among investors
After funding, founders listed customers and talent as their major concerns. Distributed teams might be one way to address this issue.
More distributed startup teams?
The Urban.us team is located in SF, Miami, DC, and NYC. We’re very comfortable with distributed teams, but we’re curious to see how Urbantech founders are organizing their startups. For example, one team has customer-facing roles in NYC and tech roles in Poland. Another team is split between NYC, DC, and Portland. More than half of the teams that responded are distributed!
Distributed team member locations
If distributed teams are growing, there could be some interesting implications. For example, we often talk with city stakeholders who are interested in doing more to encourage their local tech ecosystems. The default action is to encourage the formation of companies, but in a distributed world, companies formed and funded in the Bay Area can still lead to growth in tech ecosystems far away. How should cities support tech ecosystems in a world of distributed teams?