On-Demand Heatmap: What’s Still Hot And What’s Not In The On-Demand Economy

As recently as mid-2015, investors were herding into on-demand, as they bought into the promise of disrupting established players in food delivery, home cleaning, transportation, and many other fields.

VC-backed companies like Lyft, BlaBlaCar, Thumbtack, China’s Ele.me, and Singapore’s GrabTaxi joined the unicorn club in mid-2015, and equity deals to on-demand startups peaked in Q3’15 at 73. The number of VCs investing exploded from less than 25 in 2010 to nearly 200 by April 2015.

How quickly times change. Deals and funding to on-demand crashed in Q4’15, and though deals nosed up in Q1’16, funding collapsed further, and deals are still well off peak levels.

But has the slump been felt by on-demand companies across the board, or are some categories more resilient? We analyzed on-demand deal activity by sub-industry to see which areas are still attracting investors and which ones have slowed down after the rush in 2015. Our analysis includes all equity funding rounds and convertible notes.

Some categories, like ride-hailing, home improvement, and travel have remained strong. Meanwhile, others — such as food & grocery, personal services, and healthcare — have seen deals to on-demand startups decrease in more recent quarters

Click on the heatmap below to enlarge (red squares represent high deal saturation while green squares represent sparser activity):

Here are descriptions for some of the key categories and how activity has trended since 2013:

• Food & grocery startups saw the highest aggregate deal activity in the last 5 years. But deals fell by over 60% in this area from the peak in Q2’15 to Q1’16. Some of the largest funding rounds in food & grocery in Q1’16 included a $135M Series C round raised by DoorDash (backed by investors including Khosla Ventures, Kleiner Perkins Caufield & Byers, Sequoia Capital, and Y Combinator) and a $35M Series C round raised by India-based Swiggy (backed by investors including Accel Partners, Norwest Venture Partners and SAIF Partners).
• Deals to ride-hailing services dropped from more than 10 in Q3’15 to just 5 in Q4’15. But deals bounced back to at least a dozen in Q1’16, with companies like HopSkipDrive, iTaxi, Orahi, Lyft, and Jugnoo raising equity funding rounds in the quarter.
• Logistics, delivery & shipping companies — including those connecting local retailers with customers, as well as startups offering courier pickup services — had the third-highest deal share over the last 3 years. Some of the largest rounds in this sub-category included a $120M Series C round raised by Grofers, a $100M Series C round raised by China’s YunNiao.me and a $80M Series D round raised by California-based Postmates. This area accounted for over 20% of the deals in Q3’15 and had the highest deal share that quarter. But deal activity dropped significantly in the two most recent quarters.
• Deals to on-demand home improvement — including home repairs, garden maintenance, and cleaning services —remained fairly constant over the last four quarters.
• The personal services sub-category includes on-demand beauty, massages, baby sitting, dog walking, and laundry. Deals to this area saw a steep decline, from over 10 in Q3’15 to under 5 in Q4’15. But deal activity to personal services startups was uptick in Q1’16, with companies like Missbeez, Soothe, Zeel Networks and Urban Dhobi raising equity funding rounds.
• On-demand healthcare, wellness and pharmacy startups like PediaQ, Zipdrug, and Doctor On Demand raised nearly 25 equity funding rounds in the last three years, but this was a cold area for investors in Q1’16.

*The heatmap above does not include sub-industries that received less than 5 equity funding deals since Q1’13

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