Funding to stealth mode startups increased 140% year-over-year in 2020, as many companies chose to stay under the radar during Covid-19.
Deals and funding for companies operating in stealth mode – a phase of temporary secrecy regarding the product, brand, or other aspects of the business – have increased in recent years.
WHAT YOU NEED TO KNOW:
- Healthcare and software companies are the stealthiest: In the past 5 years, stealth mode healthcare companies have raised over $1.3B across 350 deals. During the same time, software companies have raised nearly $1.7B across 511 deals.
- NEA and Lightspeed are among the stealthiest VCs: New Enterprise Associates has invested in 8 stealth mode deals, with 3 in the past 2 years. Lightspeed Venture Partners have done 7 stealth mode deals, with 2 in the past year. Other stealthy VCs include Versant Ventures, The Vertical Group, GGV Capital, Khosla Ventures, and Third Rock Ventures.
- United Stealth of America has the most stealth startups: Deals in the United States represented 88% of all stealth mode deals over the past 5 years. California led the way with 282 deals, with New York (102) in a distant second.
- Market uncertainty during Covid-19 may have influenced companies to stay under the radar. As the population is vaccinated and the pandemic wanes, we may see a number of stealth mode companies emerge.
- However, this trend is likely to continue in industries that rely heavily on intellectual property. Startups in the biopharmaceutical industry – which currently has 70 companies in stealth mode – are particularly susceptible to analogous approaches by incumbents and competitors.
This report was created with data from CB Insights’ emerging technology insights platform, which offers clarity into emerging tech and new business strategies through tools like:
- Earnings Transcripts Search Engine & Analytics to get an information edge on competitors’ and incumbents’ strategies
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