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Do VCs or retail investors invest more in the summertime?

Examining the summer swoon in investing activity

September 11, 2023

CHART OF THE WEEK 📈

The summer months tend to see a slowdown in private market funding both in Venture Capital and Equity Crowdfunding

  • In Q3 of 2021, we see that VC funding drops by about $62 million after a strong start to the year. In 2022, VC funding continuously drops throughout the year, dropping to its lowest by Q3. And this year, we see that funding in Q3 has also dropped for VC.

  • We see the same trend in the CF market (other than 2021). In 2022, funding drops nearly $80 million from Q2 to Q3. And in Q3 of this year, we also see lower funding from Q2.

  • The summer months are notoriously slow for investment firms, with managers known for taking long vacations rather than making deals happen.

  • But equity crowdfunding also shows a slowdown in the summer months. Do online investors feel the effects of a summer swoon as well? TBD, we’ll check back in the Fall.

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PITCH REVIEW 💸

Brief: Sorce is a technology company committed to rejuvenating human energy and reducing “burnout.” It blends modern science, ancient insights, and collective human power. Its innovative tool lets users harness their nervous system's intelligence, aiming to counter widespread burnout, stress, and productivity issues, which impede economic growth. It’s currently raising $1,235,000 at a valuation of $6M with a minimum investment of $100.

Key People: Co-founder & CEO, Jessica Corbin (11 years in relevant industry experience), Co-founder & COO Kristi Britto, CTO Kai Mildenberger (co-founded SupplyFrame, which was acquired by Siemens in 2021 for $700M)

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Summary

Here's what we like: Sorce addresses a pressing issue in today's fast-paced and stressful world - burnout and mismanaged stress. It operates under a differentiated business model with its innovative B2B and B2C apps. The app tracks heart rate variability, providing valuable insights into an individual's nervous system performance and recommending appropriate recovery or additional load. This approach benefits individuals and empowers corporations to track the health of their employees, leading to increased productivity and reduced burnout.

Sorce has already gained traction with its user base and established partnerships, including large corporations like Mars. The recurring revenue model further strengthens its long-term growth and sustainability prospects. The impressive team behind Sorce appears to be well-connected to the corporate world, with Mars already an active client and other big names in the pipeline, including Accenture and PetSmart.

With a clear mission and a solid foundation, Sorce has the potential to make a significant impact in the wellness industry and deliver value to both individuals and corporations.

Here's what we don't: One of the biggest concerns in the wellness app market is health data privacy. Sorce cites privacy as a concern, and as a reason, the solution does not include a wearable. Focusing on B2B sales, however, may introduce another layer of privacy concerns. Employees may not wish to opt into corporate programs where employers have statistics related to heart health.

Additionally, targeting corporations can lead to much longer sales cycles. Companies may also be less willing to spend discretionary funds in turbulent economic times.

Finally, the wellness app space is incredibly saturated. There is no shortage of HRV trackers on the app store. Sorce will face plenty of indirect and direct competition as the team tries to gain market share.

Would you invest in Sorce?

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ON THE POD 🎙️

In this Inside Startup Investing podcast episode, Chris Lustrino chats with Fran Maier, the co-founder and CEO of BabyQuip. Fran sheds light on how BabyQuip, as a leading baby gear rental service, has become a game-changer for traveling families nationally and internationally. As a new father, Chris resonates with the need for such a service, making the conversation both personal and insightful. Fran discusses the inspiration behind BabyQuip, their challenges, especially during the COVID-19 pandemic, and their commitment to making travel more convenient for parents.

Listen to the full episode here

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