White Star Capital's Early Growth Fund IV - Investment Themes

White Star Capital

White Star Capital’s Early Growth Fund IV Investment themes & sectors of interest

Foreword Investing in the most promising sectors of today, and tomorrow.

Ahead of the launch of each Early Growth Fund, we challenge the entire team at White Star Capital to form strong convictions around investment themes that address pressing global challenges and opportunities.

Our themes of focus have evolved in response to rapid technological adoption and the changing world around us, but the criteria and methodology that we apply to each investment have remained consistent across all three of our Early Growth Funds to date.

It’s important to note that since the launch of our first fund in 2014, we’ve approached investing with the clear understanding that technology is borderless. Companies from all over the world can address the themes we identify in these reports, and as such we aim to stay ahead of the curve on emerging, impactful trends by building strong, sector and region-specific conviction.

Looking ahead to our fourth fund, we have identified four specific macro themes that we believe are primed to accelerate innovation and sustain long-term growth in related sectors over the next five to ten years. This book combines our research from the following four reports: •

Demographics in Motion – explores the impact of widespread demographic shifts

•

The Fourth Industrial Revolution – describes the digitisation of all industries and

and changing consumer behaviour

enterprises as technological solutions permeate into new sectors Data-driven Transformation – details the need for new digital infrastructures, tools, and systems to handle the transfer and security of zettabytes of new data • The Sustainable Global Economy – dives into the pressing need for climate technology, new circular business models, and green innovation.

•

Included in these reports is more detail on the framework our team applies to finding, investing in, and supporting companies operating in our sectors of interest. This framework reinforces the core principles that give White Star Capital a differentiated edge.

This includes our ability to apply an institutional governance model, deliver superior riskadjusted returns by backing rapidly scaling business models built on recurring revenue models, and support experienced founders with strong financial and sector expertise.

We’re very pleased to share this research, showcasing our framework to identify the subsectors and types of companies we’ll be looking to invest in following the close of Fund IV. If you have any questions about the content of these reports, or would like to discuss our upcoming fund, please do reach out to ourselves or a member of our team.

Eric Martineau-Fortin Founder & Managing Partner

Jean Francois-Marcoux Co-founder & Managing Partner

Contents

Section 1

Demographics in Motion

Section 2

The Fourth Industrial Revolution

Section 3

Data-driven Transformation

128 - 192

Section 4

The Sustainable Global Economy

193 - 271

7 - 57

58 - 127

About White Star Capital White Star Capital is an international multi-stage technology investment manager that backs founders building businesses that are truly differentiated across all markets. Our goal is to partner with local market leaders and to help them become global champions.

With a strong international presence,

We measure our success by the value

we invest in high-growth technology

we add. We mirror our founders’

companies with global ambitions.

tenacity by committing the full weight of our team to accelerate growth.

Unmatched Global View

Active Partners

We are a well-balanced investment

Our investment platform has in

team with strong entrepreneurial

excess of $1bn+ under management

and operational expertise and

and a portfolio of 70+ core companies

financial and M&A experience.

which have raised over $3.5bn+.

Unique Team, Distinct Strategy

Proven Track Record

Evolution of the Early Growth Funds White Star Capital has been investing in high growth software and digital-enabled businesses since 2014. It is now raising its fourth Early Growth Venture Fund, White Star Capital IV LP, a $400m+ investment program to invest in fast-growing

technological companies at the Series A and B stages.

2015

2016

2017

2018

New Fund : WSC raises its first venture fund, WSC I LP, a $70m fund

1 Exit: Dollar Shave Club

2 Exits : Digg and Immunio

1 Exit: Dice

2021

2020

2019

2018

1 Exit: Salesfloor

2 Exits : Activate and Freshly

2 Exits : Echo and Mnubo

New Fund : WSC raises its second venture fund, WSC II LP, a $180m fund

Partial Exit

2021

2022

2023

New Fund : WSC raises its third venture fund, WSC III LP, a $350m fund

2 Exits : Mindsay and Adore Me

2 Exits : Butternut Box and Dialogue

Partial Exit

2024 New Fund : WSC is raising its fourth venture fund, WSC IV LP, a $400m+ fund

4

A global strategy and presence to match Our multicultural Early Growth Fund team operates with a local presence across nine offices in Europe, North America, and Southeast Asia.

NORTH AMERICA

Jean-Francois Marcoux Managing Partner COO

Christophe Bourque General Partner

Eddie Lee General Partner

EUROPE & ASIA

Sanjay Zimmermann Partner

Toronto Montreal

London Guernsey

New York

Berlin

Eric MartineauFortin Managing Partner CEO

Matthieu Lattes General Partner

Nicholas Stocks General Partner

Cristina Ventura General Partner CCO

Tony Corbin General Partner CFO

Patrick Recasens General Partner GC & CSO

Paris

Singapore

Ivanna Biloshytska Vice President

Spencer Henry Vice President

Usamah Khan Vice President, Data & Technology

Neel Patel Associate

Blanche Ajarrista Vice President

Jeremiah Yeo Vice President

Bérénice Moustial Associate

Sara Schein Analyst

Jevyn Ong Analyst

Investment Office locations

In addition, our operational and venture partners bring world class functional expertise to our portfolio companies.

Experience

Expertise SOUTHEAST ASIA EXPANSION, M&A & FINTECH

Joe W ei

ASIA EXPANSION Shun N ag ao

V arg ha M oayed

OPERATIONS, B2B SAAS, GLOBAL EXPANSION COMMUNICATIONS, CONSUMER BRANDS

H en ry D av is

MARKETING, BUSINESS DEVELOPMENT Jakob Schreyer

N icolas Z ylb erstein

W assef Saw af

M&A, SOCIAL MEDIA, CREATOR ECONOMY MENA EXPANSION, SUPPLY CHAIN

VENTURE DEBT Bryan M cLoug hlin

VENTURE DEBT H em al F raser-R aw al

FINTECH, DIGITAL ASSETS Sep A lav i

5

A global investment framework Our team has combined learnings from 70+ investments since 2014 into a framework for finding, investing in, and supporting global market leaders.

POTENTIAL FOR OUTSIZED RETURNS

THEMATIC ALIGNMENT

We support outsized returns by securing strong governance rights to accompany founders throughout the journey

We address society’s largest challenges while leveraging our expertise

Lead or co-lead rounds

Board seat representation

Within thematic focus on which we have built expertise

10-20% ownership

10x return potential

Ability to leverage network of experts

Series A & B

5-7 year exit

High conviction investing

SCALABLE BUSINESS MODEL

STRONG FOUNDER FIT

We deliver risk-adjusted returns by investing in proven and rapidly scalable business models with recurring revenues

We partner with exceptional teams that can scale into globally significant businesses

International market opportunity

Downside protection

Strong track record of execution

Validated by network

Strong unit economics

Recurring revenue

Founder-market fit

Interest alignment

Product-market-fit

World class team

Enabling us to back leading companies across the world With a portfolio of 70+ across three vintages, our Early Growth Funds have achieved 15 exits to date.

North America Exit

IPO + Exit Partial Exit

Exit

Exit

Exit

Exit

Exit

Partial Exit

Europe & Asia

Partia l Exit

IPO

Exit Exit

Exit

6

Demographics in Motion Through the eyes of an international investor

Executive Summary $17.6bn

$20.1bn

$660m

Amount invested globally in consumer fintech in 2022

Amount invested globally in consumer digital health in 2022

Amount invested globally in consumer pet tech in 2022

$750bn+

$1.4tn+

$450bn+

Estimated consumer fintech market size by 2032

Estimated consumer digital health market size by 2032

Estimated consumer pet tech market size by 2032

Looking at Demographics in Motion from a VC’s perspective The internet has had a profound effect on consumer behavior over several decades as we increasingly discovered and purchased online as much as we did offline. Yet, online consumer behavior continues to evolve rapidly because the profile of an average consumer looks markedly different today than it did in the past decades.

The entire population of younger adults, that make up roughly half of our global population, were born native to the internet. Simultaneously, those aged 65+, who represent one-tenth of the population today but are expected to represent onequarter by 2100, are already a massive online consumer base. And with recordsetting generational wealth transfer already underway, the average consumer's approach to finance and wellbeing for themselves and their pets among many other consumption categories are poised to change drastically.

Through this broader lens, we reflect on how evolving age, income, gender, and other socioeconomic attributes across our global population drive changes in online consumer behaviors over time. As technology investors, we aim to partner with the founders who share this worldview and are working tirelessly towards building the next generation of globally successful consumer businesses.

Sector Lead

Nicholas Stocks General Partner

Eddie Lee General Partner

Authors

Jakob Schreyer Venture Partner

Spencer Henry Vice President

Bérénice Moustial Associate

Jevyn Ong Analyst

Sara Schein Analyst

Source: PitchBook, WSC Analysis (2023), Aggregation of all market size sources within “Technologies & Subsectors” slides

8

Contents Section 1

Demographics in Motion: An Overview

10 - 17

Section 2

Demographics in Motion: Ecosystem

18 - 29

Section 3

WSC’s approach to investing in

30 - 33

Demographics in Motion Section 4

Sector Focus

34 - 57

Consumer Fintech

35 - 41

Consumer Digital Health

42 - 50

Consumer Pet Tech

51 - 57

1

Demographics in Motion: An Overview

Demographics in Motion: Overview

The global population is growing… and aging For the first time ever, there are more people aged 65+ than under 5 globally, marking a historic demographic shift from predominantly young to an increasingly aging population Population by age group globally (in billions)1 6.0 Ages 25-64

5.0 4.0 3.0

Under-25s Ages 65+

2.0

Under-15s

1.0

Under-5s

0.0 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

The global population of people aged 65+ is projected to double by 2050, and triple by 2100 to ~2.5bn people. At the same time, the number of people aged 25-64 are expected to grow from ~4bn to ~5bn through 2050 and level off thereafter, while the number of people under the age of 15 will decline. This demographic shift will have significant impacts to economies, healthcare, and social security systems globally.

Life expectancy projections, 20221

Life expectancy projections, 21001

Our aging population is primarily a result of global life expectancy trending upwards while birth rates simultaneously decline, which is expected to continue throughout the twenty-first century. Nearly all countries are expected to experience significant increases in life expectancy through 2100, with most developed countries having populations that live into their 80s and 90s on average. We can attribute a lot of this to advancements in and better access to healthcare and financial resources globally.

Source: 1 United Nations, World Population Prospects (2022) via Our World in Data

11

Demographics in Motion: Overview

Younger generations will earn more, while older generations get tech-savvier Income growth across tech-native Millennials and Gen Z, paired with an increasing tech-savvy older population will lead to consumers spending significantly more time online and transacting digitally Projected annual aggregate income by generation1 $25 $20 $15 $10 $5 $0 2023

2028 Millennials

Generation Z

2033 Generation X

Baby Boomers

Partly due to greater access to higher education vs prior generations, Millennials are poised to have the most spending power in the next decade, closely followed by Gen Z. Millennials and Gen Z are known for being value-driven consumers and will increasingly seek out quality and sophistication when purchasing.

Tech adoption in the US by age group2 Use social media

Own a smartphone 86% 66% 59% 34% 13% 2012

83%

94%

96% 95%

89%

83%

81%

61%

64%

73%

58%

39%

46% 30% 2015

90%

16% 2018

2021

2012

77% 51%

88% 78% 64%

35%

37%

2015

2018

84% 81% 73% 45%

2021

Furthermore, Millennials and Gen Z are highly proficient in navigating digital platforms, holding elevated standards concerning their digital interactions, which impacts the way they socialise, shop, receive healthcare, manage finances, and learn.

While there is still a noticeable difference in tech usage between those under 30 and those 65+, there has been significant growth in the adoption of key technologies by older individuals in the past decade. As tech adoption continues to increase across all age demographics, there will be a growing need for tech-first products and services that cater to the needs of these older consumers as well.

Source: 1 World Data Lab via Brooking; 2 Pew Research Center

12

Demographics in Motion: Overview

Older generations are already wealthy, and so their heirs are about to get a lot wealthier Meanwhile, the largest inter-generational wealth transfer in history is unfolding currently, with the Baby Boomers and the Silent Generation expected to pass down $129tn+ in assets in the US alone Annual wealth projected to be inherited per generation ($ trillions)1 Generation X

Millennials

$2.5

$2.5

$2.0

$2.0

$1.5

$1.5

$1.0

$1.0

$0.5

$0.5

$0.0

$0.0 2021

2025

2029

2033

2037

2041

2045

2021

2025

Generation Z and younger $1.0

$1.0

$0.8

$0.8

$0.6

$0.6

$0.4

$0.4

$0.2

$0.2

$0.0

2029

2033

2037

2041

2045

2041

2045

Baby Boomers

$0.0 2021

2025

2029

2033

2037

2041

2045

2021

2025

2029

2033

2037

Wealth in the US has grown significantly from $38tn (inflation-adjusted) in 1989 to $140tn in 2022, largely as a result of surging home and stock values from decreasing interest rates, paving the way for a projected $73tn wealth transfer from the Silent Generation and Baby Boomers to Gen X, Millennials, and Gen Z by 2045 ($16tn within the next decade), making Millennials 5x as wealthy as they are today. Even yet, some recent reports indicate Boomer and Silent American wealth could be as high as $129tn2, and so the wealth transfer could be larger than ~$73tn. Furthermore, women, who control just 1/3 of US wealth today and tend to be more concerned than men about meeting financial and healthcare goals3, are expected to inherit a large portion of the wealth transfer.

A growing popularity of "giving while living" practices is also leaving impacts. Roughly two-thirds of individuals in the US now prefer to distribute part of their estate while they are still alive, primarily to control the distribution of their assets, reduce estate tax burden, and provide early financial support to their heirs to enable them to achieve their financial goals4. Given all of this, the question then becomes, how is all of this wealth going to be spent in the coming decades?

Source: 1 Cerulli Associates via NYTimes, 2 Bank of America Merrill Lynch via Fortune; 3 McKinsey & Company; 4 Bank of America Merrill Lynch

13

Demographics in Motion: Overview

Most of the modern consumer’s discretionary spend is on healthcare and financial services An increasingly tech-savvy population is currently spending most of their disposable income on healthcare and financial products, aside from consumer necessities such as housing, food, and transportation Spend by category by generation in the US1 Generation Z

37%

Millennials

36% 32%

Boomers

34%

Silent

37%

Food

Transportation

19%

13%

Generation X

Housing

13%

4%

16%

12%

17%

12%

8%

15%

12%

15%

15%

13%

17%

12%

12%

Healthcare & Personal Care

7%

11%

14%

15%

17%

12%

12%

Insurance, Pensions, & Cash Contributions

10% Others

Consumers dedicate a significant portion of spending to healthcare, personal care, insurance and pensions, and cash contributions. These categories are key to wellbeing and financial security, transcending all age groups.

Spend by category by generation in the US (excl. housing, food, transportation)1 Generation Z

15%

36%

49%

Millennials

20%

44%

36%

Generation X

20%

44%

36%

Boomers Silent

30%

38% 44%

Healthcare & Personal Care

31% 30%

Insurance, Pensions, & Cash Contributions

25% Others

Looking beyond the essential categories of housing, food, and transportation, personal insurance, pensions and cash contributions represent the highest category of spend across most age groups, aside from the Silent Generation who only spends more on healthcare and personal care. For all age groups aside from Silents, healthcare and personal care spend ranks second. This demonstrates the critical role that both health and financial products play in the daily lives of consumers.

For healthcare specifically, women in the US make ~80% of decisions for their families2, with similar trends seen across Europe. As such, digital health businesses could gain an edge by effectively marketing gender-neutral products to women.

Source: WSC Analysis, 1 U.S. Bureau of Labor Statistics via Visual Capitalist, 2 National Library of Medicine

14

Demographics in Motion: Overview

People are getting married and having children later… and they’re filling the void with pets As people marry and have children later in life, they look to pets for companionship, who are already viewed as equivalent to humans in the household, and in turn command similar spending habits Average age of women at marriage1 32 years 29 years 26 years 23 years 20 years 1990

1993

1996

1999

United States

2002

United Kingdom

2005

2008 Germany

2011

2014

2017

Korea

As women increasingly gained better access to and prioritised their education and career in the past several decades, the average age at marriage increased globally. The age of women at birth of their first child generally increased in lockstep as a result2, to the point where today, 67% of those aged 18-26 chose getting a dog vs having a child 3. % of households in the US with a pet vs own child under 18 years old4 80% 70% 60% 50% 40% 30% 1990

1993

1996

1999

Households with pets

2002

2005

2008

2011

2014

2017

2020

Households with own children under 18 years old

And we’ve seen this play out over the past few decades, in which the percentage of US households owning pets increased, while those with children under 18 decreased.

Today, 97% of US pet owners consider their pets part of the family. 51% consider them not only part of their family, but as much a part of it as a human member.

Breaking it down by gender, marriage, and parental status, 57% of women (vs 43% of men), 63% of those never married (vs 43% of those married and 54% of those divorced or widowed), and 55% of non-parents (vs 42% of parents) consider their pets on equal footing as their human family members5. To put this into practical terms, single women, for example, spend ~1.47% of their income on pets (vs men at ~0.75%)6. On a generational basis, Gen Z takes this mentality a step further, with 41% willing to spend $100 on their pet instead of their partner and 36% getting more joy seeing their pet happy than their partner, more than any other generation on both accounts6.

Source: 1 UN World Marriage Data (2019) and OECD (2017) via Our World in Data; 2 United Nations Economic Commission for Europe; 3 USA TODAY Blueprint and OnePoll; 4 Statista; 5 Pew Research Center; 6 US Bureau of Labor Statistics’ (BLS) 2021 Consumer Expenditure Survey via MarketWatch and Pet Food Processing; 7 SWNS via New York Post

15

Demographics in Motion: Overview

Across the board, consumers want AI to enhance their healthcare and financial decision-making Consumers are not only open to the idea, but want AI embedded in decision-making processes with service providers, especially when it comes to their health and financial well-being Consumer preferences for AI by category1

Marketing Services

5%

25%

40%

29%

Doctor

7%

25%

37%

32%

Financial Advisor

4%

18%

46%

32%

Accountant

5%

18%

43%

34%

Ride Share

6%

14%

News/Journalism

7%

13%

Flights

5%

13%

Legal Services 3%

13%

Haircut

10%

5%

39%

All AI

41%

35%

45%

37%

45%

38%

46%

21% AI Checked by human

64% Human supported by AI

Human only

According to a survey by Orbitmedia, people generally want AI involved in the decision-making processes with service providers. This is especially the case for health and financial advice, where a vast majority want AI involved across doctor, financial advisor, and accountant categories, with only a third preferring AI to be excluded.

For healthcare, one-third of consumers want AI in the driver’s seat for their medical decisions, with 25% preferring doctors who use AI to make decisions but check everything and 7% preferring all medical decisions driven by AI. For financial services, two-thirds of people want AI involved in retirement planning/accounting decisions.

Although consumers are not yet comfortable with humans fully out of the loop, in the coming decades, we expect to see an increasing number of personalised, white glove consumer fintech, digital health, and pet tech products powered by AI. The fact that most already prefer AI involved than not is a first step towards this future, presenting a massive opportunity for next-gen consumer fintech, digital health, and pet startups.

Source: 1 Orbitmedia

16

Demographics in Motion: Overview

Our 10-year outlook We believe the following trends will lead to increasing opportunities in consumer fintech, digital health, and pet tech over the next decade

An aging, tech native population will shape society

Hyper-personalised products as the new norm

As described in detail on prior pages, the global world population is not only growing, but aging as result of global life expectancy trending upwards while birth rates simultaneously decline. Our aging population is more tech savvy than ever before and by 2030, the entire world could be considered tech native.

Consumer desires will increasingly shift towards products and solutions rooted in technological innovation, and aside from the consumer necessities of housing, food, and transportation, financial services as well as healthcare and wellness with be the largest spend categories (inclusive of pets who are becoming more and more humanised).

In the coming years, hyper-personalised products and services will be the new norm. Consumers are increasingly becoming the conductors of their own well-being, not only leveraging, but preferring platforms that offer data-driven insights to optimise all aspects of their lives. This shift won't be confined to niche markets. We see this as particularly primed to transform the consumer fintech, digital health, and pet tech industries. As consumers continue to prioritise convenience and control in their purchasing decisions, we expect to see a gravitation towards platforms that seamlessly integrate health and financial data, offering comprehensive plans and recommendations based on a consumers’ specific financial goals and health metrics.

Companies that recognise these trends and effectively empower individuals to become the maestros of their own well-being through hyperpersonalisation will be well positioned for success in the coming decades.

~2.5bn

~5.0bn

155%

Individuals aged 65+ globally by 2100 (up from ~800m in 2022)1

Individuals aged 25-64 by 2100 (up from ~4.0bn in 2022)1

Avg growth in smartphone adoption across ages since 20122

The term “underbanked” will become obsolete

Hybrid care as a requirement to win

While we can’t confidently say that the entire world will be “banked” by 2030, we expect to see significant progress, and more specifically see a world where the term “underbanked” becomes a relic of the past. As it’s generally defined today, an individual who is “underbanked” has an account at a bank or credit union but relies on alternative financial services for certain banking needs, such as purchasing money orders, taking out a pay day loan, or sending/receiving money via a non-bank such as Venmo)3. As fintechs offer new and more convenient/sophisticated ways to manage finances, and they become more engrained in the modern consumer’s everyday life, the negative connotation associated with “underbanked” is flipped on its head, especially amongst Millennials and Gen Z.

Companies that refuse to transcend the binary modality of virtual-only or in-person-only care for both humans and pets will fall behind the pack in the next decade. Conversely, the companies that understand the importance of harmonising virtual consultations, remote monitoring, and strategically timed in-person touchpoints in office or at home, underpinned by data-driven insights for personalised care plans, will be primed to win. The future of digital care is about empowering patients and pet owners with the tools to receive their own best version of care, not to replace doctors and vets in the process, and the companies forging forward with a hybrid experience, where convenience meets clinical expertise, will define the future of their categories, regardless of the field of care.

Source: 1 United Nations, World Population Prospects (2022) via Our World in Data; 2 Pew Research; 3 Morning Consult

17

2

Demographics in Motion: Ecosystem

Demographics in Motion: Ecosystem

Ecosystem Highlights $115bn

$17bn

Raised by consumer fintech, digital health, and pet tech startups since 2021

Raised by consumer fintech, digital health, and pet tech startups YTD1

$60bn

2021

$38bn 2022

$17bn 2023YTD

1

$6bn

$5bn

$6bn

Q1-23

Q2-23

Q3-23

$6.4bn

12.3x

VC capital invested in Seed stage consumer fintech, digital health, and pet tech companies since 2021

VC capital invested across Seed, Series A and Series B stages in consumer fintech, digital health and pet tech in 2022 vs 2015

$3bn

2021

$3bn

2022

$13bn

$1bn 2023YTD

$1bn 1

2015

2022

694

163

VC funds raised investing in consumer fintech, digital health, and pet tech since 2015

VC-backed consumer fintech, digital health, and pet tech unicorns since 2015

410

131

Consumer fintech, digital health, and pet tech mega rounds2 since 2021

Consumer fintech, digital health, and pet tech exits YTD1

Source: Pitchbook (2023); 1 January 1st through September 30th , 2023; 2 Disclosed rounds >$100m

19

Demographics in Motion: Ecosystem

Deal volume and activity have increased significantly in the last decade Deal volume increased significantly, growing at least 4x across all regions from 2015 to 2022 Consumer fintech, digital health, and pet tech deal count across Seed, Series A and Series B stages by Region1 1,462 68 371 847 671 42 177

526 408 295 12 75

24 107

208

277

2015

2016

33 134

452

359 2017

2018 North America

60 209

1,306 72 343

940 57 228

646 1,023

578

655

2019

2020

Europe

Southeast Asia

2021

891

2022

2023YTD 2

While capital invested in the space also increased significantly since 2015 Total capital invested in consumer fintech, digital health, and pet tech across Seed, Series A and Series B by Region ($m)1 $16,286

$12,682

$8,033 $6,463

$5,795

$4,053 $1,028

2015

$1,753

2016

$2,572

2017

2018 North America

2019

2020

2021

Europe

Southeast Asia

2022

2023YTD 2

Source: Pitchbook (2023); 1 Filtered for B2C fintech, Insurtech, digital health, health tech, health insurance, wellness, and pet tech industries, excluding clear B2B and other non-consumer fintech, digital health, and pet verticals; 2 As of September 2023

20

Demographics in Motion: Ecosystem

We’ve seen more and larger funds focused on consumer fintech, digital health, and pet tech Number of funds raised investing in consumer fintech, digital health, and pet tech increased since 2015, despite a dip in 2022 due to market conditions 1

Number of funds raised globally by VCs investing in consumer fintech, digital health, and pet tech 116 98

121

104

75

71 51 33

25

2015

2016

2017

2018

2019

2020

2021

2022

2023YTD

2

Alongside increases in number of funds, the median fund size for VCs investing in consumer fintech, digital health, and pet tech also increased Median fund size raised by VCs investing in consumer fintech, digital health, and pet tech globally ($m)

91.0

47.8

50.6

51.0

2017

2018

96.0 87.6

100.0

83.5

30.0

2015

2016

2019

2020

2021

2022

Source: Pitchbook (2023); 1 Includes North America, Europe, and Southeast Asia; 2 As of September 2023

2023YTD 2

21

Demographics in Motion: Ecosystem

VC funds investing in consumer fintech, digital health, and pet tech by category Fintech Specialists: Fintech general thesis across consumer and/or enterprise business model companies Digital Health Specialists: digital health general thesis across consumer and/or enterprise business model companies Consumer and Broader Tech Generalists: broad focus across the entire technology sector, including consumer tech products and services Select Fintech Specialists

Select Digital Health Specialists

Select Consumer and Broader Tech Generalists

Source: PitchBook (2023); WSC Analysis (2023)

22

Demographics in Motion: Ecosystem

Select VC specialists investing in consumer fintech and digital health globally Investor

AUM

Stage

Deal Count

2007

$3.6bn

Seed / Series A+

362

2016

$2.5bn

Seed / Series A+

127

2010

$1.3bn

Seed / Series A+

166

2010

$1.2bn

Seed / Series A+

293

2013

$1.0bn

Seed / Series A+

91

2018

$1.0bn

Series A+

69

2019

$800m

Series A+

40

2011

$500m

Series A+

31

Founded

HQ

Top Deals

Fintech Specialists

Digital Health Specialists

Source: PitchBook (2023), WSC Analysis (2023)

23

Demographics in Motion: Ecosystem

Select VC generalists investing in consumer fintech, digital health, and pet tech globally Investor

Founded

HQ

AUM

Stage

Deal Count

Top Deals

Consumer and Broader Tech Generalists

1980

$77.0bn

Series A+

1,077

2000

$25.0bn

Seed / Series A+

1,385

2000

$4.9bn

Seed / Series A+

468

1996

$4.0bn

Seed / Series A+

1,237

1996

$2.8bn

Seed / Series A+

160

2007

$2.2bn

Seed / Series A+

350

2010

$1.0bn

Seed / Series A+

166

Source: PitchBook (2023), WSC Analysis (2023)

24

Demographics in Motion: Ecosystem

Valuations in consumer fintech, digital health, and pet tech are starting to recover Since 2021, consumer fintech, digital health, and pet tech startup valuations generally moved in line with the broader tech industry % Change in Median Post-Money Valuation by Series Globally 2021 – 2023YTD1 Co nsumer fintech, digital health, and pet tech 2

Other Tech

33.3% 11.9%

4.8%

0.1%

(24.3%)

(23.1%)

(34.5%)

(36.4%) (58.4%) (57.2%)

Median PostMoney Valuation 2023YTD1

Seed $11.7m $12.0m

Series A $45.8m $42.6m

Series B $102.4m $102.2m

Series C $300.0m $220.0m

Series D $416.5m $355.0m

Consumer fintech, digital health, and pet tech all saw increases in valuations from 2022 to 2023YTD1 Median Post-Money Valuation by subsector2 Sub-sector

2022

2023YTD1

% Change

Consumer Fintech

$25.0m

$25.3m

1.1%

Consumer Digital Health

$15.0m

$16.6m

10.7%

Consumer Pet Tech

$6.9m

$15.3m

120.6%

Source: Pitchbook (2023); 1 As of September 2023; 2 Filtered for B2C fintech, Insurtech, digital health, health tech, health insurance, wellness, and pet tech industries, excluding B2B and other non-consumer fintech, digital health, and pet verticals

25

Demographics in Motion: Ecosystem

Consumer digital health led the way in terms of total funding and exit count Funding was split relatively even between consumer digital health and consumer fintech as of 2023YTD1 2023YTD1 funding by subsector2

Consumer FinTech $7.9bn

Consumer Digital Health $8.8bn

Consumer Pet Consumer PetTech Tech $0.3bn

Consumer digital health led the count of exits from 2020 to 2023YTD1 Count of consumer fintech, digital health and pet tech exits across M&A and IPO exits since 2020 by subsector2 263 217 187

107 84 131

78

149 103

130

540 2020

2021 Co nsumer Digital Health

2022 Co nsumer FinTech

2023YTD Co nsumer Pet Tech

Source: Pitchbook (2023); 1 As of September 2023; 2 Filtered for B2C fintech, Insurtech, digital health, health tech, health insurance, wellness, and pet tech industries, excluding B2B and other non-consumer fintech, digital health, and pet verticals

26

Demographics in Motion: Ecosystem

Exit environment has been strong, which is key to long-term viability of the ecosystem Exit environment has been robust, with 860 companies exiting via IPOs and acquisitions since 2020, and 44% of exits coming from 2022 to 2023YTD1 alone despite macro challenges in recent years

93%

798

Of consumer fintech, digital health, and pet tech exits since 2020 were via M&A

Consumer fintech, digital health, and pet tech exits via IPO and M&A since 2020

44%

$161bn

Of consumer fintech, digital health, and pet tech exits since 2020 were in 2022 and 2023YTD1

Disclosed consumer fintech, digital health, and pet tech exit value since 2020 via IPOs and M&A

Select large consumer fintech, digital health and pet tech exits since 2020

SPAC

2021

IPO

2023

[NASDAQ: SOFI]

[NASDAQ: BETR]

$2.4bn raised at $8.0bn

$5bn raised at $7.7bn

M&A

2021

Acquired by One Medical for $1.4bn

M&A

2021

Acquired by JP Morgan for $985m

Source: Pitchbook (2023); 1 As of September 2023

M&A

2023

M&A

2023

Acquired by Amazon for $3.5bn

Acquired by Blackstone for $2.3bn

IPO

SPAC

2021

2022

[LON: BIG]

[NAS: PET]

$278m raised at $796m

$350m raised at $379m

27

Demographics in Motion: Ecosystem

Corporate M&A is driving overall exit count Corporates are the most active acquirers of consumer fintech, digital health, and pet tech companies Count of top acquirers by investor type since 2020 361

150 113

93 44

Corporates PE/Buyout

VC-Backed PE-Backed Company Company

41

37

33

Venture Capital

Asset Manager

Growth / Expansion

23 SPAC

Others

The most active acquirers are strategic corporates operating in healthcare and pet care spaces, followed by financial institutions Select active acquirers track record in consumer fintech, digital health and pet tech Mars

18

JAB Holding Company

16

VillageM D

13

CareMax

10

CVS Health

10

Carbon Health

8

UnitedHealth Group

6

Goldman Sachs

6

JP Morgan Chase

6

Paypal

4

SunLife Amazon

3 2 Indicates WSC Portfolio Company Acquirer (Dialogue Technologies)

Source: Pitchbook (2023); 1 As of September 2023

28

Demographics in Motion: Ecosystem

Select Unicorns

Developer of foreign exchange and moneytransferring applications designed for customers and businesses

Developer of mobile banking and finance platform designed to offer banking services on the go

$33.0bn valuation

$25.0bn valuation

$15.8bn valuation Provider of value-based primary care, multispecialty care, and urgent care via traditional clinics, in-home, and online appointments

$6.2bn valuation Provider of digital healthcare alternatives intended to facilitate the treatment of musculoskeletal pain

Provider of pet insurance and pet wellness services intended to make the world a better place for pets and their parents

Developer of a financial platform designed to create disruptive and meaningful products in retail credit Source: Pitchbook (2023); 1 As of September 2023

$2.4bn valuation

$1.6bn valuation

29

3 WSC’s approach to investing in Demographics in Motion

Demographics in Motion: Our Approach

We’ve created a WSC VC Investability Index to assess sectors and subsectors of interest The purpose of this report will be to help shed light on this burgeoning ecosystem, looking at every single industry and identifying opportunities for investment as a generalist venture capital fund Scoring: Yes = 1 / No = 0 Business Model Is this a recurring or recurring-like business model?

Technology Readiness Is the existing technology ready to scale?

Margins Are margins scalable for long term growth?

Company Stage Are there revenue-generating businesses raising at Series A? Market Size Does the potential market size at scale correspond to our criteria ($5bn+)?

Exit Environment Have we seen large exits in this sector ($1bn+) and have IPOs performed well?

Capital Efficiency Can these businesses achieve scale without overly diluting early shareholders?

Market Readiness Are we seeing pull from the market and supportive regulatory regimes?

Barriers to Entry Are there barriers to entry?

Internationalisation Is this an internationally scalable model?

Legend Out of Scope

Work to be done

Within WSC Scope

Score 0-3

Score 4-6

Score 7-9

31

Demographics in Motion: Our Approach

And broke down Demographics in Motion into 3 sectors and 17 subsectors Consumer Fintech • Digital Banking • Lending • Payments & Money Transfer • Wealth Management • Insurance

Consumer Digital Health • Search & Navigation • Health Insurance • Preventative Care • Hybrid Care • Virtual-Only Care • Medication • Rehabilitation

Consumer Pet Tech • Pet Care • Pet Insurance • Pet Food & Supplements • Pet Services • Other Pet Products

32

Demographics in Motion: Our Approach

Our thematic approach to investing led us to focus on specific subsectors WSC focuses on key trends underpinning rapid structural change in consumer fintech and consumer digital health Unlocking Access

Personalised Experiences

Enhanced Convenience

Increased Efficacy

Inclusive digital solutions empower widespread entry to finance and healthcare, fostering societal evolution and inclusivity

Adaptive, user-friendly, and on-to-go solutions adapt to evolving consumer preferences, influencing consumer patterns and behaviors

Unique experiences catered to specific preferences and needs of consumers, enhancing customer satisfaction and building brand loyalty

Improved outcomes through advanced tech and high-quality first services, driving consumer confidence for continued usage

We have identified the following subsectors as investible for White Star Capital based on the above key trends and applied more specific scoring criteria in the next section of this report Unlocking Access

Personalised Experiences

Enhanced Convenience

Increased Efficacy

✓

Consumer Fintech

Digital Banking

✓

✓

Lending

✓

✓ ✓ ✓ ✓

Payments & Money Transfer

✓ ✓

Wealth Management Insurance

✓ ✓

Consumer Digital Health

✓ ✓ ✓ ✓ ✓ ✓ ✓

✓ ✓

✓ ✓

✓

Pet Insurance

✓ ✓

Pet Food & Supplements

✓

✓ ✓ ✓

✓ ✓ ✓

Search & Navigation

✓

Health Insurance Preventative Care Hybrid Care Virtual-Only Care

✓ ✓

Medication Rehabilitation

✓ ✓ ✓

✓ ✓ ✓

Consumer Pet Tech

Pet Care

Pet Services Other Pet Products

✓

33

4 Sector Focus

Consumer Fintech

Sector Focus: Consumer Fintech

Consumer Fintech Consumer fintech enables seamless financial transactions, essential for digital populations, fostering economic stability and inclusion

~1.0bn

$1.5tn

Adults remain unbanked across North America, Europe, and APAC as of 20221

Expected annual fintech revenue by 20302

60%

90%

Of consumers are very or somewhat interested in a using a digital bank in the next year3

Of banking interactions globally expected to be through digital banking channels by 20254

Investing in conventional stocks/bonds for investments and state's traditional pension tax incentives saving schemes for retirement are no longer resonating with younger generations. Gen Z and Millennials seek personalised, tech-first experiences for greater accessibility, transparency, and flexibility. While the likes of neobanks, commission-free trading, and robo-advisors have already come to be, it must be taken a step further to adequately meet modern consumers’ needs.

Millennials will have to care for aging parents and children at the same time, more and more young boomers are entering retirement in debt, and the wealthiest 10% will be the ones giving and receiving most of the wealth transfer.5 The next wave of fintechs will need to have a strong understanding of these nuances to succeed.

Technology

WSC Score

Notes

Digital Banking

8

Large market demand

Insurance

8

Demand for personalisation

Payments & Money Transfer

8

Typically, higher profit margin

Wealth Management

7

Demand for automation

Lending

7

Large market demand

Source: 1 World Bank Financial Inclusion Project via Fintech Nexus; 2 Boston Consulting Group & QED; 3 Bankrate; 4 McKinsey & Company via market.us; 5 The Federal Reserve via NYTimes

36

Sector Focus: Consumer Fintech

Market Drivers “Unbanked” and “underbanked” adults1,2 34%

21%

26%

5%

18%

8%

12% 46%

18%

27%

8%

25%

27% 52%

24% 24%

Gen Z Millenials Gen X

Preferred banking channel by generation3 11% 17%

13% 16%

13%

14%

59%

57%

55% 68%

41%

Boomers

40%

20%

North Europe America

APAC

Gen Z

Gen Y

Mobile app

PC

12%

6%

19%

37%

29% 38% 40%

19%

Gen X In-person

Boomers Some other way

“Underbanked” are tomorrow’s consumers

Digital has trumped in-person banking

50%+ of adults across North America, Europe, and APAC are either unbanked (do not have a bank or credit union checking/savings account) or underbanked (do have an account but rely on alternative financial services, from purchasing money orders to sending/receiving money via Venmo). The consumers of tomorrow increasingly want convenience, personalisation, and higher fidelity fintech experiences. Next-gen digital banking platforms should target onboarding younger generations, as almost all Gen Z adults in the US are not fully banked.

Adults in the US prefer to use digital channels over in-person channels for their banking needs. A recent study by Ipsos shows that over 70% of Gen Z and Y and ~70% of Gen X prefer to use digital channels for banking their services.3 Although Boomers equally prefer to access banking via PCs and inperson, the majority still prefers to bank digitally. As such, we expect the pendulum to swing increasingly digital over time as our tech-savvy population ages, presenting an opportunity for fintech startups to capture this growing aging audience.

Global Consumer Payment Value 20112022 ($tn)4

Preference for financial advice/info5 81%

$50

75%

$40 $30 $20

25%

19%

$10 $0 2011 Card

2013

2015 Electronic

2017

2019 Cash

2021 Other Paper

Gen Z Social Media

Milennials Non Social Media

Moving towards a cashless future

Desire for digital and personalised insurance

Euromonitor forecasts a $18tn surge in total card payment value over the next five years, equally split between credit and debit cards.

This significant shift reflects a dramatic decline in cash usage, which reached a record low of 22% of volume in 2022 as consumers increasingly embrace electronic alternatives.

The migration towards card-based and direct electronic payment channels has been fueled by both policy efforts to increase transparency and security as well as increased access to and acceptance of electronic card payments.

81% of Gen Z and 75% of Millennials are turning to social media platforms (YouTube, TikTok, Twitter, and Instagram) for financial advice, information, and even purchasing of insurance coverage, according to a LIMRA study.5 Furthermore, younger generations desire access to more personalised insurance products. A Capco survey showed that 47% of Gen Z and Millennial policyholders are willing to share data from smart home devices with an insurance company to unlock hyperpersonalisation and “value-for-money.”6

Source: 1 Morning Consult; 2 World Bank Financial Inclusion Project via Fintech Nexus; 3 Ipsos via Marketing Charts; 4 Euromonitor International; 5 LIMRA; 6 Capco via Businesswire

37

Sector Focus: Consumer Fintech

Technologies & Subsectors Score: 8

Digital Banking

Tailored banking products and platforms with cheaper and more personalised experiences while also eliminating the need for physical branches resonate well with younger populations, especially as it relates to digital account management, wallets, and spend analytics.

Tailwinds + + +

$21.5bn market size in 2022, expected reach $132bn by 2032, (CAGR of 19.9%)1 Opportunity to capture Boomers, who currently bank heavily offline vs other age groups The average U.S. adult uses the same primary checking account for 14.3 years (retention tactic)2

Challenges + + +

A highly regulated space, requiring companies to navigate complex/shifting compliance protocols Historically difficult to scale unit economics for neobanks (e.g. Revolut’s thin margins despite scale)3 Data privacy concerns remain at the forefront of the discussion around new banking technologies

Score: 8

Insurance

With global insurance premiums surpassing $7tn, InsurTechs will continue to find pockets to grow. Incumbents will likely maintain strong footholds on traditional products but will struggle to adequately cover the evolving needs of the modern, younger consumer, creating opportunities for InsurTechs to capture share.

Tailwinds + + +

$6.5bn market size in 2022, expected reach $82bn by 2032, (CAGR of 28.9%)4 Opportunity to capture older demographics as they increasingly move to digital for financial services Heightened risk awareness from weather events and geopolitics drive needs for new insurance solutions

Challenges + + +

High CAC and loss ratio risk undermine scalability Complex approval processes for new insurance products can delay market entry/product launches Regulatory challenges have hindered pure-play Insurtechs that don't rely on existing re-insurer networks from emerging and gaining steam

Score: 8

Payments & Money Transfer

The growing majority are already comfortable with conducting financial transactions online.

Revolutionising payment solutions provides consumers with secure, fast, and efficient ways to spend, manage finances, and earn rewards.

Tailwinds + + +

$84.5bn market size in 2022, projected to reach $505bn by 2032 (CAGR of 19.7%)5 Open banking initiatives are unlocking innovative payment and broader banking solutions Globalisation driving demand for faster, cheaper, and more efficient international money transfers

Challenges +

+

Oversaturated market, with the likes of a few platforms dominating the peer-to-peer payment space (PayPal, Venmo, Cash App, Zelle) Data privacy concerns, although regulations around PSD2 in Europe and KYC/AML could provide some solutions

Source: 1 Polaris Market Research via PR Newswire; 2 Bankrate; 3 Revolut; 4 The Brainy Insights via InsurTech Digitial; 5 The Brainy Insights via Yahoo Finance

38

Sector Focus: Consumer Fintech

Technologies & Subsectors Score: 7

Lending

Platforms providing consumers with the necessary tools to access loans and other forms of credit for shopping have contributed to a massive surge in digital payment volume over the years, but also led to the trends of impulse buying and fueling debt burdens in certain instances.

Tailwinds + + +

$11.8bn market size in 2022, projected to reach $24.3bn by 2032 (CAGR of 7.8%)1 Higher interests are enabling consumer lending businesses to generate favorable unit economics Government policies promoting sustainability driven consumer lending, such as green loans

Challenges +

Recent controversy around predatory consumer lending practices, especially BNPL (34% of BNPL users have fallen behind on one or more payments with 72% of those respondents saying they believe their credit score declined as a result)2

Score: 7

Wealth Management

Accessible and affordable investment platforms, personalised for individual goals and risk appetites that empower consumers to make more informed financial decisions and grow their wealth over time.

Tailwinds + + +

$3.6bn market size in 2021, projected to reach $10.2bn by 2030 (CAGR of 14%)3 96% of Gen Z and 79% of both Millennials and Gen X would trust financial advice generated by an algorithm over a human (vs just 38% of boomers)4 57% of Americans don’t have a financial advisor5

Challenges +

Robo-advisors of the past few years have not proven to be sophisticated enough to hedge against unexpected macro market events

Source: 1 Allied Market Research via PR Newswire; 2 Qualtrics/Credit Karma Survey; 3 Straits Research via GlobeNewswire; 4 Accenture via Businesswire; 5 Northwestern Mutual via Yahoo Finance, Capco

39

Sector Focus: Consumer Fintech

Market Map: Seed – Series B Digital Banking

Insurance

Payments & Money Transfer

Lending

Wealth Management

Source: Pitchbook (2023), WSC Analysis (2023) Note: Companies shown are Seed, Series A, or Series B stage

40

Sector Focus: Consumer Fintech

Select Growth Stage Category Leaders

Developer of an online payment platform designed to facilitate cashless payments through installments

Developer of a social trading and investing platform

Operator of a digital-only banking platform intended to offer online banking services

$4.7bn raised to date

$1.7bn raised to date

$1.0bn raised to date

$600m raised to date Operator of a neobank intended to offer affordable and responsible credit to mainstream consumers

$127m raised to date Digital insurance broker and concierge service selling life and non-life insurance products throughout Europe

Provider of lease guarantee and security deposit replacement services for renters without sufficient credit, income or credit history Source: Pitchbook (2023), WSC Analysis (2023) Note: Companies shown are Series C stage and later

$120m raised to date

41

Consumer Digital Health

Sector Focus: Consumer Digital Health

Consumer Digital Health Digital health solutions enable accessibility for increasingly digital populations, promoting health equity and overall well-being

9.2%

66%

Average health expenditure to total GDP ratio in OECD countries in 20221

Of Gen Z (vs 40% of other generations), use digital tools to monitor their health2

54%

18.6%

Increase in life expectancy since 1960, from 47.7 years to 73.4 years globally3

Expected CAGR for consumer digital health market from 2023 to 20304

Now that digital health has reached mainstream status and the COVID-19 tailwinds of the last few years have faded, the sector must now rely on new products that create more accessible, affordable, and trustworthy offerings for consumers to see sustained growth. Digital health founders and tech providers will need to work closer than ever before with medical professionals, patient advocates, and regulatory agencies to ensure new solutions genuinely address the needs of the modern consumer, prioritising hyper-personalisation and quality of care regardless of the care channel.

Technology

WSC Score

Notes

Hybrid Care

8

High fidelity outcomes

Health Insurance

8

Demand for personalisation

Medication

7

High convenience factor

Preventative Care

7

Large market demand

Search & Navigation

6

Rehabilitation

6

Virtual-Only Care

6

Source: 1 OECD; 2 Oliver Wyman Forum; 3 Worldometer; 4 Grand View Research via Yahoo Finance

43

Sector Focus: Consumer Digital Health

Market Drivers Government health expenditure as a % of GDP1

Healthcare benefits costs growth (%)2

20%

12% 10%

15%

8%

10%

6% 4%

5%

2%

0% 1960

1970

1980

1990

Canada France

2000

2010

US UK

2020

0% Global

Germany Japan

North America Asia Pacific 2021A

2022A

Europe

2023F

Increased spend 36% allocated to healthcare 25%

Raising healthcare costs

The US spends 15%+ on health expenditures as a share of GDP, triple the amount in 2000, and most European countries, Canada, and Japan have seen similar increases in the past decades too. A significant portion of this spend goes towards older demographics, and this trend is expected to continue moving in an upwards direction as the population ages (~20% of GDP in the US by 2027)2, which will fuel innovation within digital health for older adults and digital health at large.

A combination of inflation and rising healthcare consumption in recent years has led to continued increases in global healthcare benefit costs. Costs were expected to rise by an ~10% globally in 2023, after sharp rises in 2021 and 2022 already. Fast growing medical costs are largely to blame, which comes as a result of the high costs to develop new healthcare technologies and provider focus on profit margin optimisation.

Healthcare activity engagement channel by generation4

Telemedicine vs in-person preference5

41% 22% 8% 29%

38% 16% 7% 39%

29% 10% 5% 56%

24% 8% 5%

23% 8% 3%

63%

66%

Boomers & Gen X Bridge Millenials Seniors Millennials Digital & in-person Digital only In-person only

Gen Z No activity

Prescription Refill

61%

Minor Illness

39%

51%

49%

Mental Health

38%

62%

Chronic Condition

35%

65%

Annual Wellness

27%

73%

Emergency

23%

77%

Physical Therapy

20%

80%

Telemedicine

In-Person Care

Growing preference for omnichannel care

Telemedicine preference depends on care

Gen Z is the most “digital” health generation yet, with 66% of Gen Z using a mix of digital and in-person care (vs 63% for Millennials, 56% for Bridge Millennials, 39% for Gen X, and 29% for Boomers). While Gen X and Boomers rank lowest on this basis, of those who do engage in healthcare activity, “digital and in-person” ranks highest, presenting an opportunity for digital health startups focused on older adults to capture the 41% and 38% of Boomers and Gen X, respectively, who don’t engage in healthcare activity at all.

Although telemedicine is the preferred channel for certain types of care like prescription (61%) and minor illness (51%), this is not the case across all types of care.

Both convenience and quality of care are factors at play here. While individuals typically value convenience over quality with prescriptions, especially for those with multiple prescriptions (71% of those with 4+ prescriptions who are typically older adults), emergency care and physical therapy for example are typically difficult to adequately address via telehealth only.

Source: 1 Our World In Data; 2 Centers for Medicare and Medcaid Services; 3 Willis Towers Watson (2023 Global Medical Trends Survey); 4 PYMNTS, The ConnectedEconomy Omnichannel Healthcare with CareCredit; 5 RockHealth with Stanford Medicine

44

Sector Focus: Consumer Digital Health

Technologies & Subsectors Score: 8

Hybrid Care

Bridging the gap between the convenience of virtual and the personalised touch of in-person care, hybrid models offer a flexible path to optimise health. Seamlessly blending telehealth consultations with targeted in-person visits (in office or at home) empower patients to navigate their healthcare journey with personalized plans, increased access, and enhanced outcomes.

Tailwinds + +

+

500m+ hybrid healthcare primary care visits anticipated by 2030 (20% via telehealth)3 Hybrid care allows patients to choose the mode of care that best suits their needs/preferences, often leading to increased engagement and retention Enables personalisation, convenience, and fidelity

Challenges +

Typically, higher costs of capital required to build out in-person clinics and or provide in-person care, reducing profit margins

Score: 8

Health Insurance

Purchasing health coverage has long been a frustrating experience for consumers, with many still uninsured globally. Digital health Insurtech platforms empower individuals with tools to compare plans, understand benefits, and manage claims, simplifying the journey to health coverage.

Tailwinds + + +

$6.5bn market size in 2022, expected to reach $82bn by 2032, (CAGR of 28.9%)4 10-15% under 65 in the US have no health insurance and those 65+ are mostly government insured5,6 38% of Gen Z prefers to buy life insurance online vs 27% for Millennials7

Challenges +

+

Rising healthcare costs ultimately make it difficult for insurers to keep premiums affordable and maintain profitability as businesses Complex approval processes for new insurance products can hinder innovation and delay market entry/product launches

Score: 7

Medication

Medication and pharmacy care platforms play a crucial role in countless remote treatment plans today, offering consumers higher convenience and accessibility by embracing a virtual medication management experience.

Tailwinds + + +

$5.2bn pharmacy automation market size in 2021, expected to reach $10.4bn by 2030, (CAGR of 8%)1 Development of new drugs, such as in weight loss, are fueling demand to these platforms ~50% of those aged 65+ in the UK take 5 or more medicines2

Challenges +

Historically have seen instances of unlawful and unethical business practices around the prescription of certain drugs, such as with Adderall and other similar drugs

Source: 1 Fortune Business Insights; 2 American Pet Products Association; 3 SCP Health; 4 The Brainy Insights; 5 US Census Bureau via Statista; 6 GALLUP; 7 LIMRA

45

Sector Focus: Consumer Digital Health

Technologies & Subsectors Score: 7

Preventative Care

Traditionally, prioritising preventative care has been a cumbersome process of scheduling appointments, remembering tests, and understanding results. Smart preventative care platforms illuminate the path, guiding individuals through personalized plans, automated reminders, and clear data visualisations, making proactive health a seamless part of their lives.

Tailwinds + + +

$243bn market size in 2022, expected to reach $593bn by 2030, (CAGR of 11.8%)2 Younger generations are generally more healthconscious and likely to seek out preventative health Wearables and aging in place devices are gaining steam with older adults to live longer/healthier lives

Challenges +

+

Generally, more uneven access and insurance limitations to higher ticketed preventative care, hindering certain demographics Preventative solutions aren’t always the most convenient for consumers to access/keep up with and so businesses can experience higher churn

Score: 6

Search & Navigation

Finding and accessing information/resources for health and wellness has historical been a difficult and confusing process for consumers. Search and navigation tools, like Zocdoc, help solve these pain points for consumers by providing them with actionable options/next steps for care delivery.

Tailwinds + +

72% of internet users actively search for health information online3 Many search and navigation platforms today are web browser first experiences, which caters well to the 70+ age group that prefers to use laptops and desktops over smartphones and tablets

Challenges +

+

Potentially limited market size without room for several large players in certain categories, such as with medical scheduling platforms ($435m global medical scheduling software market size in 2022)4 General lack of true differentiation amongst different platforms today

Score: 6

Rehabilitation

The traditional image of rehabilitation, consisting of plain corridors, clunky equipment, and slow progression to recovery is fading into the past, and a digital revolution is sweeping through the world of rehabilitation and recovery, transforming how we heal muscles/minds and treat pain.

Tailwinds + +

$145bn market size in 2021, expected to reach $246bn by 2030, (CAGR of 6.1%)1 Technological advancements, such as in VR, AR, and wearable sensors are creating more immersive and personalised experiences

Challenges +

The long-term efficacy and cost-effectiveness of tech platform-based rehabilitation compared to traditional methods still needs further study and proving out

Source: 1 Polaris Market Research via PR Newswire; 2 NHS Digital via Statista; 3 Grand View Research; 4 Pew Research; 5 ResearchAndMarkets

46

Sector Focus: Consumer Digital Health

Technologies & Subsectors Score: 6

Virtual-Only Care

Expedited from the COVID-19 pandemic, virtual-only care models, which deliver consultations, monitoring, and care delivery remotely (e.g. mental health platforms) offer increased access and convenience for many consumers, particularly those facing geographical or physical limitations.

Tailwinds + +

$9.8bn market size in 2022, expected to reach $113bn by 2032, (CAGR of 28.5%)2 Typically, more cost effective for businesses, and in for turn consumers, resonating well with younger generations who are less wealthy

Challenges +

+

Source: 1 Grand View Research; 2 MarketResearch via Globenewswire

Only works well for certain care types, whereas certain diagnoses and treatments still require inperson examinations and procedures The absence of physical examinations can increase the risk of misdiagnosis in some cases

47

Sector Focus: Consumer Digital Health

Market Map: Seed – Series B Hybrid Care

Health Insurance

Medication

Preventative Care

Source: Pitchbook (2023), WSC Analysis (2023) Note: Companies shown are Seed, Series A, or Series B stage

48

Sector Focus: Consumer Digital Health

Market Map: Seed – Series B Search & Navigation

Rehabilitation

Virtual-Only Care

Source: Pitchbook (2023), WSC Analysis (2023) Note: Companies shown are Seed, Series A, or Series B stage

49

Sector Focus: Consumer Digital Health

Select Growth Stage Category Leaders

Provider of an online digital insurance service intended to give everyone access to a healthy and productive life

$557m raised to date

$504m raised to date Developer of an online digital health platform intended to help customers find suitable physicians and also schedule appointments

$395m raised to date Medical health testing platform connecting customers and laboratories for health testing, telehealth services, and pharmacy capabilities

$325 raised to date Developer of an artificial intelligence-powered digital therapeutic system designed to aid with musculoskeletal healthcare needs

/ $285m raised to date

Developer of a digital healthcare platform designed to simplify access to healthcare by connecting patients with doctors

Provider of dental care services intended to produce more accurate diagnoses, craft finer restorations and deliver beautiful aesthetics Source: Pitchbook (2023), WSC Analysis (2023) Note: Companies shown are Series C stage and later

$190m raised to date

50

Consumer Pet Tech

Sector Focus: Consumer Pet Tech

Consumer Pet Tech Pet tech solutions equip pet owners with the necessary tools to ensure their furry family members thrive with optimal health and happiness

1bn+

90%

Pets worldwide, with 471m pet dogs and 370m pet cats alone1,2

Of pet owners have purchased a pet product online in the last 12 months3

$137bn

97%

Spent on pets in the US alone in 2022 (vs $91bn in 2018)4

Of US pet owners consider their pets to be part of their family4

The pet industry has proven to be more resilient than most to economic cycles, behind just consumer health, food and beverage, and toys/games5. This was validated in recent years by booming pet ownership, accelerated in part from more time spent at home and desires for companionship during the pandemic, paired with an increasing trend of pet humanisation fostering a ripe market for novel pet solutions and concepts globally.

The pet landscape has reached a point where for the first time ownership between older and younger generations is split evenly, and so tech-native Millennial and Gen Z owners will begin to have a growing influence over the trajectory of the industry2. Yet, a growing tech-savvy older population holding more wealth and with more time on their hands in retirement to focus on their pets’ wellbeing will retain a significant foothold.

Technology

WSC Score

Notes

Pet Care

9

High fidelity outcomes

Pet Insurance

8

Demand for personalisation

Pet Food & Supplements

8

Large market demand

Pet Services

7

Demand for convenience

Other Pet Products

6

Source: 1 GFK via Health for Animals, Global Animal Health Association; 2 The Zebra; 3 American Pet Products Association (APPA) via Pet Food Processing; 4 APPA via Forbes; 4 Pew Research; ; 5 McKinsey & Company

52

Sector Focus: Consumer Pet Tech

Market Drivers Pet ownership/spend growth by age1 Ownership

Spent more

32%

33%

27% 24%

25% 24% 16%

14%

2020

Online pet product spend by age2 US

26%

43%

Germany

28%

31% 31%

Switzerland

24%

26%

23%

21%

7%

Italy

23%

29%

20%

21%

7%

Netherlands

26%

52%

50% 49% 29% 17%

2022

2020

2022

55-64

24%

23%

27%

22%

31% 45-54

19%

35-44

8%

17% 6%

21%

17% 5%

25-34

18-24

Spend grows despite ownership shifts by age

45+ segment leads in online pet spend

As mentioned already, for the first time, pet ownership in the US is split evenly amongst older and younger individuals, as younger generations increasingly adopted pets while older generations fluctuated in ownership.

Although only Boomers experienced a decrease in pet ownership, they accounted for the largest increase in pet spending from 2020-2022. This is likely attributed to Boomers holding more wealth than other generations and being less burdened with certain costs, such as child expenses, compared to Millennials and Gen X, presenting an opportunity for pet startups to market to older demographics.

In several countries across North America and Europe, online buyers aged 45+ spend the most on their pets. In countries like the US and Germany specifically, adults approaching retirement age (55-64) spend more online on their pets than any age group. This presents an opportunity for pet startups to market to a growing audience of older adults, who will have more time to focus on their pet’s welling being, are generally wealthier, and as such have higher willingness to spend ($949 and $842 average annual pet spend by Gen X and Boomers, respectively (vs $679 and $369 for Millennials and Gen Z, respectively)3.

% preferring specialty pet stores4

Pet insurance penetration by age5

36%

69%

62%

15%

60%

11%

44%

Gen Z

Millennials

Gen X

Boomers

Gen Z

Gen Y

9%

Gen X

7%

Boomers

Specialty as a choice across generations

Pet insurance penetrates young owners first

When it comes to pet owner purchasing habits, specialty retail is the preference, with 56% preferring to shop for pet products at a pet specialty store, and 25% having a strong preference. This mentality holds true across almost all age groups, except for Boomers at 44% preference (vs 60%+ for all other generations). While Gen Z leads the pack, the gap across two generations between Gen X and Gen Z is much narrower compared to the gap between just Gen X and Boomers, indicating pet owners of the future will increasingly favor specialty products.

While older generations are typically more insured than younger generations across the board, such as with valuable protection and umbrella insurance, the narrative is the opposite with pet insurance. This is partly due to younger generations having less disposable income to cover expensive veterinary costs, and therefore prefer to transfer risk to an insurance policy than risk having to cover continuous and/or large expenses out of pocket but is also likely due to lower older adult tech penetration, presenting opportunities for pet Insurtechs to target both younger and older demographics.

Source: 1 American Pet Products Association; 2 Statista Consumer Insights; 3 Bureau of Labor Statistics' 2021 Consumer Expenditure Survey; 4 Market Research.com Packaged; 5 J.D. Power Loyalty Indicator & Shopping Trends

53

Sector Focus: Consumer Pet Tech

Technologies & Subsectors Score: 9

Pet Care

With more than half of the global population estimated to have a pet at home today and an everincreasing trend of the “humanisation of pets,” many of the same digital health products and services people desire today are ultimately being desired for their pets as well.1 Tailwinds $118bn global market size in 2022, expected to reach $208bn by 2032, (CAGR of 5.9%)2 Stickier than other pet categories (<20% of dog owners would cut pet care if budget was tight, as low as 3% and 4% for medication and emergency surgery, respectively, with similar trends for cats)3

+ +

Challenges + +

Pet care models with brick-and-mortar presences can be capital intensive Virtual-only pet care models can have limitations in terms of quality of care, similar to in traditional digital health for humans

Score: 8

Pet Insurance

Rising veterinary costs have made it difficult for pet owners to secure proper veterinary care in the recent past, and so many pets have gone unprotected. This has led to a wave of pet insurance platforms offering more transparency and accessibility to help enable worry-free pet parenthood.

Tailwinds + + +

$9.4bn global market size in 2022, expected to reach $32.7bn by 2030, (CAGR of 17%)4 Younger generations are more willing to share data with Insurtechs for access to lower premiums plans 91% of owners had financial stress from pet care costs in the past year, as vet costs rose 11% vs 20225

Challenges +

+

Rising veterinary costs ultimately make it difficult for insurers to keep premiums affordable and maintain profitability as businesses Can be costly depending on type of pet, breeds and region, turning some individuals away from adopting plans in general

Score: 8

Pet Food & Supplements

As younger generations continue to seek out alternative pet foods such as fresh, frozen, or raw more than older generations, partly due to their own preferences and a higher acuteness for their pets' digestive sensitivities, novel pet food and supplement have gained increasing steam6.

Tailwinds + +

$104bn market size in 2022, expected to reach $161bn by 2032, (CAGR of 4.5%)7 38% and 35% of Gen X and Millennial/Gen Z dog owners, respectively, give their dogs nutritional supplements (vs 28% of Boomers) with similar trends seen in cat owners6

Challenges +

+

Several well capitalised players in the market already (e.g. Butternut Box and The Farmer’s Dog), so newcomers may have difficulty competing While speciality dog food is stickier than accessories and services (24% would cut if budget was tight vs 50% and 39%), it’s not as sticky as pet care (<20%)3

Source: 1 GFK via Health for Animals, Global Animal Health Association; 2 Precedence Research; 3 Forbes Advisor; 4 Grand View Research; 5 USA TODAY Blueprint and OnePoll; 6 Purchased Facts; 7 Brainy Insights via Feed and Additive

54

Sector Focus: Consumer Pet Tech

Technologies & Subsectors Score: 7

Pet Services

Calls to return to office following the pandemic have led to a higher need for pet services across the board, such as dog walking, daycare, and overnight boarding to name a few.

Tailwinds + + +

$24.9bn global market size in 2022, expected to reach $50.1bn by 2030, (CAGR of 9.2%)1 Younger generations are more likely to use certain online pet services like dog walking2 Opportunity for premium/luxury services to capture older pet owners with higher willingness to spend

Challenges +

+

Although not as high as accessories, if individuals had to cut dog-related expenses due to tight budgets, dog services still ranks higher than most at 39% of respondents, indicating high churn risk3 Several well capitalised players in certain categories already (e.g. Rover and WAG!)

Score: 6

Other Pet Products

As pets become increasingly humanised, pet owners look to purchase products that help them better monitor their pet’s wellbeing and make them feel more human-like, such as through accessories, leading to a suite of pet products being developed that cater to these desires.

Tailwinds + +

$2.4bn global market size in 2022, expected to reach $6.9bn by 2030, (CAGR of 14.3%)1 Some countries like UK and Japan require mandatory microchipping for pets4,5, presenting an opportunity for pet device startups to sell products to owners already accustomed to pet devices

Challenges +

+

If individuals had to cut dog-related expenses due to tight budgets, accessories (i.e. dog treat, toys, outfits, etc.) rank higher than any other category at 50% of respondents, indicating high churn risk3 Potentially limited market size today for certain categories like wearables

Source: 1 Grand View Research; 3 PETS International and Yummypets via GlobalPETS; 3 Forbes Advisor; 4 Forbes; 5 The Japan Times

55

Sector Focus: Consumer Pet Tech

Market Map: Seed – Series B Pet Care

Pet Insurance

*

*

*

Pet Food & Supplements

Pet Services

Other Pet Products

Source: Pitchbook (2023), WSC Analysis (2023) Note: Companies shown are Pre-Seed, Seed, Series A, or Series B stage; * Indicates bootstrapped or no equity raised to date

56

Sector Focus: Consumer Pet Tech

Select Growth Stage Category Leaders

Provider of pet insurance and pet wellness services intended to make the world a better place for pets and their parents

$480m raised to date

$469m raised to date Operator of a fresh dog food company intended to improve the health conditions of dogs

$168m raised to date Producer of pet food intended to focus on pet nutrition

$71m raised to date Operator of a media platform intended to provide pet information

$31m raised to date Developer of pet application, smart collar, and virtual dog fence designed to help pet parents to know their dogs are safe

$9m raised to date Developer of a real-time and around-theclock pet consultation platform Source: Pitchbook (2023), WSC Analysis (2023) Note: Companies shown are Series C stage and later

57

The Fourth Industrial Revolution Through the eyes of an international investor

Executive Summary $3.7tn

$120tn

Value created by the Fourth Industrial Revolution in 2025, equal to 3% of global GDP

Size of B2B commerce market1, which is 5x that of B2C, with only a third of its online penetration2

74%

25%

Of the workforce will be under 45 by 2030, with a preference for digital experiences in the workplace and home

Median cost benefit for organisations that implement digital transformation

Looking at the Fourth Industrial Revolution from a VC’s perspective The Fourth Industrial Revolution is not just about digitalisation, but also the communication between networks and digital solutions, coupled with intelligent systems that automate and optimise tasks.

The B2B market is large and complex, ripe for disruption that will drive significant cost savings and productivity gains. The pandemic had already accelerated the pace of digitalisation via remote work practices, and now a younger generation with strong preferences for digital solutions in the workplace is driving it further.

The current macro climate, characterised by the increased cost of capital, high inflation levels, and supply chain disruptions, coupled with lower consumer sentiment, is pushing investors and companies alike to focus on profitability, rather than growth at all costs. Technology has always been a fundamental driver of productivity throughout history, and it will continue to play that role, particularly at this critical time.

We are at a pivotal moment where technological innovation is primed to disrupt, setting the stage for all businesses and enterprises to thrive and evolve. Sectors heavily reliant on analog methods will benefit the most and we expect to see promising new technologies emerge to serve these businesses as they evolve.

Sector Leads

Christophe Bourque Vargha Moayed General Partner Venture Partner

Authors

Henry Davis Venture Partner

Ivanna Biloshytska Jeremiah Yeo Vice President Vice President

Neel Patel Associate

Bérénice Moustial Associate

Source: McKinsey, Activant Research, McKinsey, Forrester Note: 1) Includes B2B transactions across all sectors globally, 2) B2B has 5.5% online penetration vs 17.9% for B2C

59

Contents Section 1

The Fourth Industrial Revolution: An Overview

61 - 67

Section 2

The Fourth Industrial Revolution: Ecosystem

68 - 79

Section 3

Our approach to investing in the Fourth Industrial Revolution

80 - 84

Section 4

Sector Focus

85 - 127

Industrial Technology

86 - 92

Healthcare Technology Systems

93 - 99

Logistics and Warehousing

100 - 106

Future of Work

107 - 113

Financial Applications

114 - 120

Real Estate Technology

121 - 127

1

The Fourth Industrial Revolution: An Overview

The Fourth Industrial Revolution: Overview

Fourth Industrial Revolution – Timeline The Fourth Industrial Revolution is the culmination of human progress across 300 years of innovation at an accelerating pace 1698 – Invention of the first steam engine to raise water from mines by suction produced by condensing steam by Thomas Savory.

1760 – Start of the First Industrial Revolution, with the automation of manual labour, transforming the Western economy into a manufacturing-based economy.

1834 – Invention of the first battery-powered electric motor by Thomas Davenport of Vermont, initially created to power a small-scale printing press.

1870 – Start of the Second Industrial Revolution, characterised by rapid scientific advancement, improved transportation solutions and mass production, including the creation of the internal combustion engine, electricity, and telegraph networks.

1876 – Alexander Graham Bell invented the first telephone after receiving a patent for transmitting vocal or other sounds telegraphically by causing electrical undulations.

1975 – Beginning of the Third Industrial Revolution, marked by the shift from mechanical to electronic technologies, with the rise of computers and integrated circuit chips to store and process vast amounts of data and information.

1977 – Introduction of the first personal computer by John Blankenbaker, the Kenbak-1 with 256 bytes of memory and featuring small and medium scale integrated circuits on a single circuit board.

1992 – Creation of the World Wide Web and launch of IBM's first smartphone, the Simon Personal Communicator.

2010s – Fourth Industrial Revolution , defined by the rapid integration of physical assets and advanced digital technologies such as IoT, generative artificial intelligence, cloud computing, large-scale data analytics, and nanotechnology, creating smart interconnected networks and transforming traditional business models and operations.

The Fourth Industrial Revolution, combined with B2B Vertical SaaS solutions, leverages the accelerating and compounding effect of digitalisation alongside proprietary data and customisation to boost operational efficiency. Digital platforms have reduced transaction and friction costs for individuals and organisations, and driven scalability, giving rise to lean and fast-adapting businesses.

Traditional B2B sectors stand to gain significantly. In 2025, the value created by the Fourth Industrial Revolution is expected to reach $3.7tn for manufacturers and industrial suppliers alone. Furthermore, an estimated 70% of new value created in the economy over the next decade will come from digitally-enabled platforms. The automation of complex tasks will allow a new era of disruptive innovation.

62

The Fourth Industrial Revolution: Overview

Technology and automation drive structural transformation, reshaping entire industries Technological automation has unlocked unprecedented scalability and growth potential for businesses The progressive integration of technology and automation has transformed industries at an unprecedented rate, boosting productivity, with the OECD Labour Productivity Index rising by 272% and 149% since 1960 respectively for OECD countries and the US. Each industrial revolution has accelerated with every technological leap, improving product quality, services, consistency, and output precision. Technological progress and widespread automation is also reflected economically, as the GDP per person has increased by 57% from 2000 to 2022, assuming constant 2017 purchasing power parity (PPP).

OECD Labour Productivity Index Generative AI: GPT-1

120% 100%

WiFi invention

80%

3D printer invention

60%

107% 105%

Bitcoin

5G first deployments

2010

2020

Text messaging First personal computer Creation of world Email Altair 8800 wide web ATM (Microcomputer revolution)

40% 20% 0% 1960

1970

1980

Source: OECD, WSC Analysis (2023)

1990 USA

2000 OECD

These advancements have also led to significant time and cost savings, liberating employees from mundane, manual tasks and allowing them to focus on valueadd activities. Simultaneously, globalisation, facilitated by these technologies, has allowed companies to cater to increasing international demand, scaling their operations and market reach globally, thus allowing them to expand exponentially. From 1979 to 2020, net productivity, the measure of output generated by technology after subtracting input costs, rose by 62%. The incremental gains also extend to streamlining operations and reducing costs, ultimately leading to increased profitability.

Supporting trends, such as the rise of artificial intelligence and data analytics, continue to enhance technology and automation capabilities, further revolutionising business models and processes. This transformation has become a cornerstone of the contemporary tech-driven industry, reshaping the way companies operate and compete in an increasingly digital world.

Source: Economy Policy Institute, World Bank, OECD

63

The Fourth Industrial Revolution: Overview

The Fourth Industrial Revolution: a new avenue of growth Why now?

Geopolitical tensions and higher-than-expected oil prices have strained global supply chains and driven inflation. In response, companies are increasingly focusing on cost management due to their limited ability to pass inflation onto consumers, who are constrained by diminished purchasing power and increasing household debt. Additionally, rising commodity prices, and a tight labour market are compressing margins. This situation is prompting companies to seek innovative ways to boost productivity and efficiency to maintain profitability.

Inflation in supply chain forcing companies to be more efficient S&P 500 Materials Price Index since 2018 600 505

500 400 300 200 Nov-18

Nov-19

Nov-20

Nov-21

Nov-22

Nov-23

Source: S&P

Most developed countries face a shrinking labour force, driven by declining participation rates, falling birth rates and an increasingly ageing population.

The World Economic Forum anticipates a 23% labour market churn in the next five years. Although advancements in productivity, AI, and automation are partly responsible for this shrinkage, they also represent a solution to the problem.

These technologies, integral to the Fourth Industrial Revolution, promise to enhance productivity through cost savings, production flexibility, and the customisation of goods and services. However, significant changes are required to realise these benefits.

Shrinking labour force Decline in the % workforce out of world population aged 25-54 years old 70% 65%

65%

60% 1990

2000

2010

2020

Source: World Bank Source: The Fourth Industrial Revolution, Klaus Schwab, McKinsey, and Forbes

64

The Fourth Industrial Revolution: Overview

The Fourth Industrial Revolution: a new avenue of growth Why now?

B2B operations and transactions typically involve many stakeholders and involve high degrees of complexity and the need for customisation. The lack of standardisation across industries and reliance on legacy systems complicate processes. Developments in API-driven architecture facilitate communications across the value chain, enabling decisions and analysing data in real-time.

API architecture enables digitisation of complex legacy on premise software and IT infrastructure systems B2B lags B2C in digitalisation as showcased by the Digital Quotient score1 Digital leaders

Average B2B2 score = 28

Average B2C2 score = 35

Digital laggards

Source: McKinsey

Millennials, or 'Gen Y', are expected to form 40% of the workforce by 2025, closely followed by Gen Z. Both generations are not just highly proficient in navigating digital platforms, but also hold elevated standards concerning their digital interactions, seeking design and user interfaces of similar standards as in their personal lives. This will drive demand for digital solutions in the workplace.

Digital native workforce taking over Projected US labour force size by age in 2030 12% 7% 9% 2% -3%

11%

11%

11%

11%

11%

10%

9%

7%

3% 16-19

20-24

25-29

30-34

35-39

Generation Z

40-44

45-49

Millenials

50-54

55-59

Generation X

60-64

4% 65-69

2% 70-74

1% 75-79

1% 80+

Boomers

Source: US Department of Labour Source: The Fourth Industrial Revolution, Klaus Schwab, McKinsey, and Forbes, Notes: 1) Average across 4 equally weighted dimensions: culture, strategy, capabilities, and organisation.

2) Sample includes 47 B2B and 128 B2C companies

65

The Fourth Industrial Revolution: Overview

The Fourth Industrial Revolution: a new avenue of growth Why now?

Generative Artificial Intelligence (GenAI) is emerging as the key driver of the next productivity wave. GenAI describes algorithms that can be used to create new content, including audio, code, images, text, simulations, and videos. The broad applicability makes it a powerful tool – almost anyone can use them, with little to no formal technical training – allowing for a preternatural ability to have a conversation with a user.

Previous waves of automation technology mainly affected physical work activities. The current version of generative AI is in its early stages of development and adoption.

However, its performance is rapidly advancing due to continuous training from human inputs. It is anticipated to significantly impact knowledge work, especially critical thinking and decision-making activities. McKinsey projected that by 2040, generative AI will match the proficiency of the top 25% of people in executing various office tasks.

Generative AI has been evolving at an unprecedented pace Timeline of major large language model (LLM) developments following ChatGPT’s launch in 2022 November 2022 OpenAI’s ChatGPT, powered by GPT 3.5, becomes the first widely used textgenerating product, gaining a record 100 million users in 2 months.

December 2022 Large language models such as Google’s Med-PaLM are trained for specific use cases and domains, such as clinical knowledge.

February 2023 Amazon’s multimodal-CoT model incorporates “chain-of-thought prompting”, in which the model explains its reasoning, and outperforms GPT-3.5 on several benchmarks.

March 2023 OpenAI releases GPT-4, which offers significant improvements in accuracy and hallucination mitigation, claiming a 40% improvement relative to GPT-3.5.

Microsoft announces the integration of GPT-4 into its Office 365 suite, potentially enabling broad productivity increases.

Bloomberg announces a large language model trained with 50 billion parameters of financial data.

November 2023 Amazon introduces Q, a business chatbot powered by generative artificial intelligence.

Source: McKinsey, WSC Analysis (2023)

66

The Fourth Industrial Revolution: Overview

Our 10-year outlook for the Fourth Industrial Revolution We believe the following trends will result in a growing number of opportunities within the Fourth Industrial Revolution

Shifting business demand

Efficiency and trend navigation

As customers demand higher quality and faster delivery of products and services, firms are increasingly leaning towards automation, leveraging connected machines, artificial intelligence, and streamlined processes. This technological shift may result in potentially displacing 20% to 40% of current job roles globally over the next 10 years, disproportionally impacting low-tech penetration markets. Against this backdrop, B2B firms acknowledge the importance of tailoring their offerings to specific geographical markets and adopting customerfocused strategies to stay ahead and fulfill the growing expectations of their clientele.

We are currently witnessing increasingly quicker product and innovation cycles. This shift involves swift development, launch, and reconfiguration of products, leading to reduced investment costs but intensified competition.

375m

55-66%

8-9%

Workers might change job and learn new skills by 2030

Of the global middle class will be located in AsiaPacific

Of 2030 labour demand to be in jobs currently nonexistent

Supply chain restructuring In the B2B sector, various stakeholders are integrated into the supply chain. The evolving geopolitical landscape and inflation are steering a strategic reduction of reliance on single-source global supply chains, notably between China and Western countries. This development prompts companies to increasingly embrace localised and regional supply chains, with North American firms nearshoring to Mexico from Chin. This will attract enhanced investments in certain areas, encouraging broader adoption of digital technologies.

Businesses that adapt to these shifting regional dynamics will gain new market opportunities and solidify their competitive stance.

Source: European Commission, McKinsey, Surinder Batra

Simultaneously, there is an increasing reliance on third-party Software as a Service (SaaS) tools.

This shift places greater pressure on businesses to tailor solutions to custom needs, operate at lower cost and to anticipate shifts in demand.

The combination of accelerated innovation cycles and the strategic adoption of adaptive tools defines a landscape rich with opportunities.

Human-centric technology advancements In the coming decade, we foresee a significant trend in the post-Fourth Industrial Revolution era – an increase in collaboration between humans and machines.

The transition highlights smoother incorporation of human skills into advanced technological systems, placing emphasis on values like humanism, personalisation, and creativity. This deliberate focus is geared towards innovations customised to meet user needs The European Commission’s “Industry 5.0” initiative highlights the importance of resilience, human-centered approaches, and adaptability as guiding principles. These principles are crucial for startups to thrive in our ever-changing technological landscape.

67

2

The Fourth Industrial Revolution: Ecosystem

The Fourth Industrial Revolution: Ecosystem

Ecosystem Highlights $627bn

$114bn

Raised by Fourth Industrial Revolution startups in the last 3 years

Raised year-to-date by sector startups in 2023 year-to-date (Jan-Nov)

2,071

39%

Mega rounds in total1

VC funding over the last 3 years relative to all transactions in the sector

$13.2bn

407

In seed funding in the last 3 years

VC-backed Fourth Industrial Revolution unicorns2

551

8.0x

Fourth Industrial Revolution exits in 2022

Increase in total capital invested from 2014 to 2022

Source: Pitchbook (2023) Notes: 1) Rounds >$100m, 2) As of November 2023, includes companies backed by venture capital firms

69

The Fourth Industrial Revolution: Ecosystem

Deal activity has increased significantly over the last decade Deal volume increased significantly across all regions, but Europe (4.5x) and Southeast Asia (8.0x) saw more significant increases in deal volume compared to North America (2.8x) from 2014 to 2022 Fourth Industrial Revolution Deal Count across Seed, Series A and Series B stages

by Region 4,538 221 3,159

1,821

1,655 1,225 29 263 933 2014

86 489

61 359 1,235

1,246

2015

2016

2,624

193

2,231

143

885

122 586

736

3,326

1,314

191

1,745

231 1,196

991

2,065 3,003

1,523

4,041

2,081

2,144

2017 2018 2019 2020 2021 North America Europe Southeast Asia

2,614

2022

2023YTD

1

Total capital invested was 8.0x higher in 2022 compared to 2014 Total Capital Invested in the Fourth Industrial Revolution across Seed, Series A and Series B by Region ($m)

47,668 42,049

22,209

25,751 17,993

16,413 5,238

6,900

7,669

2014

2015

2016

11,483

2017

2018

North America

Source: Pitchbook (2023) Notes: 1) As of September 2023

2019 Europe

2020

2021

2022

1

2023YTD

Southeast Asia

70

The Fourth Industrial Revolution: Ecosystem

Increasing sector confidence, as the size of funds investing in Enterprise SaaS fund size trends up There was an upward trend in terms of number of funds raised investing in Enterprise SaaS from 2010 to 2018. However, the number of funds raised has now stabilised Number of funds raised globally1 by VCs investing in Enterprise SaaS 321 277

274

288 259

255

277

210

137 87

155 113

105

33

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022 2023YTD

2

While the number of funds raised has stabilised since 2018, the median fund size of VCs investing in Enterprise SaaS has trended upwards – signaling that confidence amongst funds investing in Enterprise SaaS is increasing Median fund size raised by VCs investing in Enterprise SaaS globally ($m) 96.3 80.5

78.5 67.1

65.5 53.7

2010

2011

2012

2013

60.0 53.1

2014

2015

2016

77.0

72.2 54.0

55.8

2017

2018

2019

Source: Pitchbook (2023) Notes: 1) Includes North America, Europe, and Southeast Asia 2) As of September 2023

59.1

59.6

2020

2021

2022 2023YTD

2

71

The Fourth Industrial Revolution: Ecosystem

VC funds investing in the Fourth Industrial Revolution can be segmented into five categories Classification of VC firms Industrial Technology and Logistics: Focused on either manufacturing or logistics, or both Financial Applications: Focused solely on financial applications as a single vertical (i.e. Fintech funds) Real Estate Technology: Focused solely on real estate or a relevant subsector of real estate as a single vertical Healthcare Technology Systems: Focused solely on healthcare as a single vertical Generalist: Focused on a wide range of sectors, but make investments in companies within the Fourth Industrial Revolution space

Industrial Technology and Logistics

Healthcare

Source: WSC Analysis (2023)

Financial Applications

Real Estate Technology

Generalist

72

The Fourth Industrial Revolution: Ecosystem

The largest specialist funds are mostly headquartered in North America Top specialist VC funds in order of assets under management Investor

AUM

Stage

Deal Count

2015

$4.0bn

Series A+

158

2022

$1.0bn

Seed / Series A+

8

2012

$182m

Series A to C

29

2013

$1.5bn

Series A+

149

2010

$320m

Seed / Series A

258

2013

$110m

Seed / Series A

31

2012

$11.9bn

Series A+

280

2007

$3.6bn

Series A+

362

2016

$2.5bn

Series A / Series B

127

Founded

HQ

Top Deals

Industrial Technology

Logistics and Warehousing

Financial Applications

Source: WSC Analysis (2023)

73

The Fourth Industrial Revolution: Ecosystem

The largest specialist funds are mostly headquartered in North America Top specialist VC funds in order of assets under management Investor

AUM

Stage

Deal Count

2015

$3.2bn

Seed / Series A+

197

2011

$1.0bn

Series A+

74

2013

$600m

Series A / Series B

57

2014

$5.3bn

Series A+

166

1969

$4.5bn

Series B+

522

1980

$2.7bn

Seed / Series A

778

Founded

HQ

Top Deals

Real Estate Technology

Healthcare 1

Source: WSC Analysis (2023) Notes: 1) OAK HC/FT is also a financial technologies VC firm

74

The Fourth Industrial Revolution: Ecosystem

The sector has experienced significant valuation declines in recent years Since 2021, Fourth Industrial Revolution company valuations have corrected more relative to other tech companies across all stages after seed rounds % Change in Median Post-Money Valuation by Series Globally 2021 – 2023YTD1 Fourth Industrial Revolution

Other Tech

33% 23% 6%

(5%) (18%) (35%)

Median PostMoney Valuation 2023YTD1

Seed $12.2m $12.0m

Series A $40.2m $45.0m

Series B $84.3m $116.6m

(39%)

(35%)

Series C $222.0m $216.0m

(57%) (60%) Series D $400.0m $362.5m

Most sub-sectors saw declines in valuations from 2022 to 2023YTD1 Median Post-Money Valuation per Sub-Sector Sub-sector

2022

2023YTD1

% Change

Industrial Technology

$20.6m

$19.2m

(6.6%)

Logistics and Warehousing

$23.0m

$18.7m

(18.7%)

Future of Work

$20.0m

$13.4m

(32.8%)

Financial Applications

$29.5m

$25.0m

(15.1%)

Real Estate Technology

$18.0m

$15.1m

(16.1%)

Healthcare Technology Systems

$18.9m

$20.0m

6.1%

Source: Pitchbook (2023) Notes: 1) As of September 2023

75

The Fourth Industrial Revolution: Ecosystem

Healthcare led the way in terms of exit count, and ranked amongst the top in terms of funding Industrial Technology, Financial Applications & Healthcare Technology Systems startups attracted the most funding as of 2023YTD1 2023YTD1 Funding per Subsector

$12.1bn $24.0bn

Healthcare Technology Systems

Logistics and Warehousing

$4.2bn

$24.7bn

$24.5bn

$12.0bn

Industrial Technology

Financial Applications

Real Estate Technology

Future of Work

Healthcare led the count of exits from 2020 to 2023YTD1 Count of Fourth Industrial Revolution exits across M&A and IPO exits since 2020 by sub-sector

296 Industrial Technology

621

289

Healthcare Technology Systems Future of Work Source: Pitchbook (2023) Notes: 1) As of September 2023

286

249

Real Estate Technology

Logistics and Warehousing

241 Financial Applications

76

The Fourth Industrial Revolution: Ecosystem

The exit environment is picking up, which is key to the long-term viability of the ecosystem Exit activity in the Fourth Industrial Revolution space saw a 39% increase from 2020 to 2022

89%

1,906

Of exits from 2020 to 2023YTD1 were M&A transactions

Companies in the Fourth Industrial Revolution space have exited via IPO and acquisitions between 2020 to 2023YTD1

49%

$451bn

Of Fourth Industrial Revolution exits since 2020 came from 2022 to 2023YTD1 alone, signaling a robust exit environment

In total Exit Value from 2020 to 2023YTD1 disclosed through IPOs and acquisitions

Large Fourth Industrial Revolution Exits across key verticals since 2020

IPO

2021

$29.0bn valuation

IPO

2021

$2.2bn valuation

Source: Pitchbook (2023) Notes: 1) As of September 2023

IPO

2021

$8.5bn valuation

SPAC

2021

$1.6bn valuation

IPO

2021

$7.0bn valuation

M&A

2020

Acquired by Teladoc Health (NYS: TDOC) for $1.1bn

77

The Fourth Industrial Revolution: Ecosystem

Exits Corporates and VC-backed companies were the most active acquirers of fourth industrial revolution companies Top 100 acquirers (acquisition count) by acquirer type from 2020 to 2023YTD1 62%

23%

6%

Co rporation

VC-Backed Co mpany

PE-Ba cked Co mpany

3%

2%

SPAC

Holding Co mpany

4% Others

Top Fourth Industrial Revolution acquirers were mostly made up of Healthtech and Real Estate technology companies Most active acquirers of Fourth Industrial Revolution companies by count from 2020 to 2023YTD1 14 8 7 7 6 5 5 5 4 4 Source: PitchBook (2023) and publicly disclosed information Notes: 1) As of November 2023 2) As of September 2023

78

The Fourth Industrial Revolution: Ecosystem

Select Unicorns

Developer of HR management and recruitment platform designed to serve small and medium-sized organisations.

Operator of a health technology platform intended to quickly access integrated data from across the care continuum.

$8.5bn valuation

$8.0bn valuation

$2.7bn valuation Developer of a logistics technology platform designed to digitise the shipment life cycle. .

$2.3bn valuation Developer of a predictive analytics platform making the industry reliable, productive, safe, and secure.

Operator of an online real estate bidding platform intended to simplify real estate transactions.

Developer of a payment gateway platform helping businesses accepting payments through bank transfers, virtual accounts and credit cards.

Source: WSC Analysis (2023)

$2.0bn valuation

$1.0bn valuation

79

3 Our approach to investing in the Fourth Industrial Revolution

The Fourth Industrial Revolution: Our Approach

The Fourth Industrial Revolution is powered by several technological shifts These technological innovations are enabling greater productivity and generating many new investment opportunities Automation

There is a shift from Robotic Process Automation (RPA) to Intelligent Process Automation (IPA), which involves automating processes that require adaptive learning and repetitive tasks. Generative Artificial Intelligence (GenAI) can reduce the error rate and make smarter automations by creating data that can be used to train the automated processes or bots. This can improve the efficiency of bots, allowing them to perform tasks more quickly and accurately.

IPA, with the support of GenAI, can reduce human inefficiencies and streamline tasks, saving employees up to six weeks of work per year.

Low-code/nocode

Low-code platforms democratise access to advanced software technology, unlocking productivity for developers and reducing implementation time and technical debt. No-code tools are 10x faster than traditional development platforms, and provide a a flatter learning curve allows organisations to build solutions 56% faster than companies that use traditional methods.

Immersive technologies

Virtual Reality (VR) and Augmented Reality (AR) are gaining traction beyond gaming. Adoption is spreading across sectors, with the global market projected to reach $494m by 2030, a 29% CAGR. In the B2B space, these technologies are already utilised for prototyping, augmentation, and digital twins. The latter allows businesses to simulate and visualise products or processes in a virtual environment.

Data analytics and software development

Integrating advanced data analytics into software development processes is revolutionising how businesses approach problem-solving and decisionmaking. By leveraging large volumes of data and applying analytical algorithms, companies can gain deeper insights into customer behavior, market trends, and operational inefficiencies.

Cloud and edge computing

Large enterprises aim to migrate 60% of their digital infrastructure to cloudbased platforms by 2025, while 53% of organisations plan to use edge computing technologies in the next 12 months.

We’re excited about backing the companies driving the Fourth Industrial Revolution with the following qualities: Potential to achieve market scale

Demonstrate tangible ROI

Offer additive Fourth Industrial Revolution technology

Deliver recurring revenue and high gross margins

Capable of adapting to rapidly evolving industry standards Offer a hedge against macro events

Source: Harvard Business Review, Deloitte, PR Newswire, Open Access Government and Eclipse Foundation

81

The Fourth Industrial Revolution: Our Approach

We’ve created a WSC Investability Index to assess sectors and subsectors of interest The purpose of this report will be to help shed light on this burgeoning ecosystem, identifying opportunities for investment as a generalist venture capital fund Scoring: Yes = 1 / No = 0 Business Model Is this a recurring business model?

Technology Readiness Is the existing technology ready to scale?

Margins Are there software-like margins?

Company Stage Are there revenue-generating businesses raising at Series A? Market Size Does the potential market size at scale correspond to our criteria ($5bn+)?

Exit Environment Have we seen large exits in this sector ($1bn+)?

Capital Efficiency Can these businesses achieve scale without overly diluting early shareholders?

Market Readiness Are we seeing pull from the market and supportive regulatory regimes?

Barriers to Entry Are there barriers to entry?

Internationalisation Is this an internationally scalable model?

Legend Out of Scope

Work to be done

Within WSC Scope

Score 0-3

Score 4-6

Score 7-9

82

The Fourth Industrial Revolution: Our Approach

And broken down the Fourth Industrial Revolution into 6 sectors and 28 subsectors Industrial Technology • Connected Workforce • Digital Twin and Virtual Models

• Advanced Analytics and IoT in Manufacturing • Maintenance and Quality Management

Healthcare Technology Systems • Medical Practice Management • Patient Engagement and Monitoring

• Coding and Medical Billing • Medical Staff Management

Logistics and Warehousing • Supply Chain Optimisation • Warehousing Technologies

• Inventory Management and Demand Forecasting • Fleet Management and Delivery Services

Future of Work • Intelligent Process Automation • Sales and Marketing • [Task-specific tools] Intelligent Document Processing

• [Task-specific tools] Conversational Artificial Intelligence Solutions • Talent management

Financial Applications • CFO Stack • Banking and Fintech as a Service • B2B Insurtech Tools

• B2B Payments • Enabling infrastructure • Lending for small and mid-size businesses

Real Estate Technology • Data and Opportunity Discovery • Agent Tools and Facility Management

• Transactional Tools • Investing and Leasing • Design, Engineering and Construction 83

The Fourth Industrial Revolution: Our Approach

Our thematic approach to investing leads us to focus on specific subsectors We focused on the key sectors undergoing rapid structural change Enterprise SaaS

Precision Technology Tools

Intelligent Process Automation

Process Orchestration

In a data-intensive world, enterprise SaaS is essential for companies to simplify operations and boost efficiency

Quality assurance, production management and predictive analysis are improved orders of magnitudes by technology

Industrial production, manufacturing and workplace processes are being revolutionised through software productivity tools

Digitalisation drives a step change in productivity.

Orchestration adds to this by enabling communication across digital solutions

And identified the following subsectors as key beneficiaries Enterprise SaaS

Industrial Technology Digital Twins and Virtual Models Connected Workforce Advanced analytics and IoT in Manufacturing Maintenance and Quality Managem ent Healthcare Technology Systems Medical Practice Managem ent Patient Engagem ent and Monitoring Coding and Medical Billing Medical Staff Managem ent

✓ ✓ ✓ ✓ ✓

Intelligent Automation

Precision Technology Tools

Process Orchestration

✓ ✓ ✓ ✓

✓ ✓

✓ ✓ ✓

✓

✓

✓ ✓ ✓ ✓

Logistics and Warehousing SaaS Supply Chain Optim isation Warehousing Technologies Inventory Managem ent and Dem and Forecasting Fleet Managem ent and Delivery Services

✓ ✓ ✓ ✓

✓ ✓ ✓

Future of Work Talent Managem ent Sales and Marketing Intelligent Process Autom ation Conversational Artificial Intelligence Solutions Intelligent Docum ent Processing

✓ ✓ ✓ ✓ ✓

✓

Financial Applications CFO Stack Banking and Fintech as a Service Insurtech Tools B2B Paym ents Lending for sm all and m id-size enterprises Enabling Infrastructure

✓

Real Estate Data and Opportunity Discovery Agent Tools and Facility Managem ent Transactional Tools Investing and Leasing

✓

✓

✓

✓

✓ ✓

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

✓ ✓ ✓

✓ ✓ ✓ ✓

84

4

Sector Focus

Industrial Technology

Sector Focus: Industrial Technology

Industrial Technology Industrial Technology aims to revolutionise industrial operations, promising efficiency gains, cost reduction and deliver more sustainable production

29%

$20bn

Of EU's non-financial business economy’s value added by manufacturing sector in 2020

Expected manufacturing SaaS market size by 2026

66%

50%

Of manufacturing firms in the EU have adopted at least one digital technology

Shortage of manufacturing jobs by 2030 in the US

Manufacturing operations have traditionally relied on labour-intensive processes, resulting in systemic inefficiencies and reduced productivity. However, driven by evolving industry needs and technological advancements, the adoption of industrial technologies promises transformative efficiencies in the manufacturing sector.

The reasons driving the adoption of industrial automation are shifting, now prioritising resilience, flexibility, and sustainability alongside traditional cost and productivity concerns. This shift is fueled by disruptive technologies and pressing global trends, including reshoring, a growing shortage of skilled labour, and the rise of ESG initiatives.

Technology

WSC Score

Notes

Connected Workforce

10

Scalable solutions

Digital Twins and Virtual Models

8

Horizontal market

Advanced Analytics and IoT in Manufacturing

8

High market demand

Maintenance and Quality Management

6

Source: European Commission, EIB, MarketSplash, The Manufacturing Institute

87

Sector Focus: Industrial Technology

Market Drivers To mitigate supply chain and geopolitical risk, manufacturers are adopting reshoring or nearshoring strategies to bring operations closer to their national borders. North American companies have started nearshoring from China to Mexico, whilst European firms are increasingly looking to Central and Eastern Europe Number of jobs created by reshoring in the US since 2010

100,000

125,000

151,000

345,000

350,000

2022

2023YTD1

175,000

50,100 5,000 2010

2012

2014

2016

2018

2020

Source: U.S. Department of the Treasury

Policies and Regulation

Supply Chain Issues

Realising the importance of controlling production, governments such as the US are incentivising corporate relocations.

IRA and the CHIPs Act played a pivotal role in shaping these measures, resulting in a boom in the construction of manufacturing facilities. These shifts to regions with aging workforces and skilled labour shortages may strain labour markets, driving the adoption of SaaS solutions to optimise workforce and productivity.

The manufacturing industry faces persistent supply chain challenges, including labour shortages, sourcing bottlenecks, global logistics delays, cost pressures, and cyberattacks. These issues have dampened business confidence and lowered the Manufacturing Outlook Index to 55, a 4.2-point decline since the first quarter of 2022.

Governments support industrial policies to create new costs or deliver financial incentives in the manufacturing sector.

The US government offered subsidies and loans, erected tariffs, and provided extensive fiscal incentives. The EU responded with its Green Deal, its New European Innovation Agenda, and updated EU Industrial Strategy, to temporarily set aside state-aid rules that limited subsidies to companies in member countries.

Emergence of Lighthouses

The rise of lighthouses manufacturing sites integrating Fourth Industrial Revolution technologies such as connectivity, flexible automation, and intelligence at scale, including digital performance management and quality analytics, are driven by modern workplace practices such as hybrid work.

These technologies can successfully address financial hurdles, technology barriers, and organisational issues.

Currently, there are 18,600 lighthouses worldwide.

Source: Harvard Business Review, U.S. Department of the Treasury, McKinsey & Company Notes: 1) As of September 2023

88

Sector Focus: Industrial Technology

Technologies and Subsectors Score: 10

Connected Workforce

With a shrinking labour force in manufacturing, companies have to optimise their workforce productivity. Connected workforce solutions can enhance operational efficiency by streamlining tasks' creation, assignment, management, and supervision, improving communication, and sharing best practices.

Tailwinds Shrinking labour force and rising wages prompt companies to optimise their workforce Improved factory safety measures Facilitated data-driven decision-making

+ + +

Challenges + +Cybersecurity Difficult integration safety with other software + +Large-scale TimeVC required IoT infrastructure to onboard teams toIndex: manage, into new along WSC Investability 7 with software the complexity of interconnected systems + Potential disruptions, including network outrages, device failures or power supply issues

Score: 8

Digital Twins and Virtual Models

Creating digital twins and virtual models can optimise physical assets and industrial operations by involving real-time digital replicas of physical assets or processes to monitor and optimise performance.

Tailwinds + + +

Challenges

Market size projected to reach $110.1bn by 2028 (61.3% CAGR 23-28) Applications in industrial and data-driven sectors Simulations can help identify potential inefficiencies and allow for changes before materialisation of impact in the physical world

+ + +

Market entirely dominated by NVIDIA with its omniverse platform Low spending on digital twin software compared to general analytics Need for high-quality data infrastructure with reliable data from both testing and live environments

Advanced Analytics and IoT in Manufacturing

Score: 8

In today’s data-driven manufacturing landscape, integrating advanced analytics and IoT is essential to optimise processes and enhance productivity. The latest innovation features edge and IoT security platforms, real-time sensors, next-gen networks, connected smart homes, and 5G technology.

Tailwinds + +

+

IoT market size projected to reach $3.4tn by 2030 (26.1% CAGR 23-30) Significant growth of IoT in Asia-Pacific due to IT infrastructure development and government initiatives Increased adoption by small and medium-sized businesses

Challenges + + +

Additional measures are required to ensure cybersecurity safety Large-scale IoT infrastructure to manage, along with the complexity of interconnected systems Potential disruptions, including network outrages, device failures, or power supply issues

Source: Markets and Markets, Fortune Business Insights, WSC Analysis (2023)

89

Sector Focus: Industrial Technology

Technologies and Subsectors Score: 6

Maintenance and Quality Management

Companies seek efficiency gains through automated maintenance. Cutting-edge technologies allow for maintaining high-quality standards by analysing products and processes, identifying defects, and suggesting improvements.

Tailwinds + +

Market size projected to grow to $49.3bn by 2032 (11.9% CAGR 22-32) Increased demand for better maintenance monitoring to increase product quality and reduce downtime

Source: Prnewswire, Precedence Research, WSC Analysis (2023)

Challenges +

Adoption challenge amongst employees used to traditional maintenance

90

Sector Focus: Industrial Technology

Market Map: Seed – Series B Digital Twins and Virtual Models

Connected Workforce

Advanced Analytics and IoT in Manufacturing

Maintenance and Quality Management

Source: WSC Analysis (2023)

91

Sector Focus: Industrial Technology

Top Asset Light Startups $323m raised to date Developer of a predictive analytics platform to convert directly into the workflow to make the industry reliable, productive, safe, and secure.

$294m raised to date Developer of an AI-powered machine health platform to eliminate downtime, optimise maintenance and maximise productivity.

Developer of a cloud-based digital manufacturing platform designed to make industrial automation easier and more accessible.

$153m raised to date

$119m raised to date Developer of a platform designed to manage agreements with suppliers and customers to deliver actionable insights for smarter planning.

$109m raised to date Developer of an indoor spatial intelligence technology to digitise industrial facilities.

Source: WSC Analysis (2023)

92

Healthcare Technology Systems

Sector Focus: Healthcare Technology Systems

Healthcare Technology Systems Healthcare solutions are expected to continue disrupting the market by using data to support patient care, reduce physician burnout and administrative burden

$1.1tn

9.7%

Enterprise value of opportunity for investors in value-based care by 2027

Estimated OECD countries’ spending on health as a percentage of GDP

60%

$13.3bn

Total healthcare spending percentage going towards improving health and wellbeing by 2040

In yearly cost savings in the U.S. by reducing the administrative burden of healthcare professionals

The shift towards platform-enabled ecosystems and value-based care signifies a transformative paradigm in healthcare innovation. Platform-enabled ecosystems leverage digital platforms to connect patients, healthcare providers, and stakeholders, fostering data sharing and collaboration. This promotes a more patient-centric approach, with individuals accessing their health information and personalised care recommendations. At the same time, value-based care focuses on delivering high-quality care measured by patient outcomes rather than the volume of services provided.

Innovations in healthcare are poised to enhance service quality by aligning stakeholders' interests, driving improved health outcomes, and curbing healthcare costs.

Technology

WSC Score

Notes

Medical Practice Management

9

Streamlines operations

Patient Engagement and Monitoring

7

Profit margin improvement

Coding and Medical Billing

7

Shift towards digital transformation

Medical Staff Management

6

Source: Deloitte, CAQH, World Health Organisation, WSC Analysis (2023)

94

Sector Focus: Healthcare Technology Systems

Market Drivers The move to value-based care and shifting government regulations drive digital health startups to create innovative solutions centered on better patient outcomes and cost-effective, data-driven care.

B2B Healthcare: Capital Invested and Deal Count since 2010 4,700 4,437

61.7

4,302

3,761 3,376

46.9

3,056

2,910

2,588 33.5

2,305

28.5 1,702 1,315

494

697

925

2.9

2.9

2011

2012

12.6 5.4

5.4

2013

2014

6.9

17.0

16.5

2018

2019

9.1

3.6 2010

2015

2016

2017

Capital invested (in US$bn)

2020

2021

2022

2023YT D

1

Deal count 2

Source: Pitchbook (2023)

Shift to Value-Based Care

Changing Regulatory Landscape

The transition to value-based care, with value defined as health outcomes per unit of costs, offers a fertile ground for healthtech innovation.

Healthtech solutions have streamlined healthcare processes, leveraged data analytics for better decision-making, and enhanced patient engagement, aligning with valuebased care models' fundamental objectives: improved patient outcomes and cost reduction. By utilising advanced technologies, healthtech companies can transform the healthcare industry toward a more patient-centric, efficient, and costeffective approach to care delivery.

Evolving healthcare regulations worldwide are spearheading the integration of technological tools in healthcare, which enhances efficiency and transparency across the value chain.

This shift is also driven by the need to cater to the healthcare demands of an aging population and Generation Z. Better government funding and subsidies are lowering the barrier of entry for startups and small businesses to make meaningful contributions to democratising healthcare access and affordability.

Source: Deloitte, SVB, WSC Analysis (2023) Notes: 1) As of September 2023 2) Pitchbook deal count filters: Healthcare (Digital Health, Healthtech, TMT, AI&ML, SaaS, Big Data)

95

Sector Focus: Healthcare Technology Systems

Technologies and Subsectors Score: 9

Medical Practice Management

Medical practice management leverages technology to streamline back office administrative and operational tasks, improving efficiency, care, and the service quality of medical practices and the procurement and logistics of medical equipment.

Tailwinds +

Shifting healthcare models from fee-for-service to value-based care incentivises practices to focus on quality, cost-effective care, and better patient outcomes.

Challenges +

+

Navigating complex and evolving healthcare regulations can be time-consuming and may lead to compliance issues.

Fragmented customer base (e.g. SMB healthcare providers).

Score: 7

Patient Engagement and Monitoring

The aging population's rising healthcare needs drive a growing demand for patient monitoring and engagement software, which enables remote health tracking and early intervention. These technologies are crucial for patient engagement, medication adherence, and health insights.

Tailwinds +

+

Smaller profit margins per patient force healthcare providers to invest in lean improvement approaches to retain patient flow.

Payers and providers are investing in engaging earlier and finding new ways to deepen the relationship with patients.

Challenges +

+

Insufficient government funding and subsidies decrease the capacity to offer population-wide patient success platforms.

Integrating different systems and platforms to ensure seamless workflow and data exchange can be complex.

Score: 7

Coding and Medical Billing

Coding translates medical information into codes for insurance and records, while medical billing submits these codes for reimbursement and financial management. These processes contribute to developing medical innovation technologies by ensuring efficient data management and enabling advanced analytics for better patient care, resource allocation, and healthcare research.

Tailwinds +

+

Hospital reimbursement growth continues to trail cost increases, prompting the shift to digital solutions.

Better integration with digital insurtech players streamlines the coding process.

Source: WSC Analysis (2023)

Challenges +

+

Evolving healthcare delivery models, such as telemedicine, may require coding and billing software to iterate their business model constantly.

Misalignment of incentives with insurance players charging on a “cost-plus” basis

96

Sector Focus: Healthcare Technology Systems

Technologies and Subsectors Score: 6

Medical Staff Management

Medical staff management is the administrative process that encompasses the recruitment, credentialing, scheduling, and coordination of healthcare professionals within a healthcare institution, such as hospitals or clinics. This management function is essential for delivering safe and effective patient care while navigating the complexities of staffing shortages in healthcare.

Tailwinds +

Outsourcing credentialing and privileging tasks to specialised agencies can expedite the onboarding process.

Source: WSC Analysis (2023)

Challenges +

Healthcare professionals may experience burnout due to heavy workloads, affecting retention and recruitment efforts.

97

Sector Focus: Healthcare Technology Systems

Market Map: Seed – Series B Medical Practice Management

Patient Engagement and Monitoring

Medical Staff Management

Source: WSC Analysis (2023)

Medical Billing and Coding

98

Sector Focus: Healthcare Technology Systems

Top Asset Light Startups $678m raised to date Health technology platform intended to quickly access integrated data across the care continuum.

$461m raised to date Platform helping patients book appointments online and offering practitioners software to manage their patients and consultations.

$461m raised to date Digital employment platform facilitating the nurse recruitment process for healthcare facilities.

$205m raised to date Automation technology software leveraging data and eliminating manual work to drive efficiency for healthcare institutions.

$109m raised to date Application strengthening physician-patient relationship by helping practices succeed in delivering personalised care to patients.

Source: WSC Analysis (2023)

99

Logistics and Warehousing

Sector Focus: Logistics and Warehousing

Logistics and Warehousing Logistics and Warehousing aim to enhance supply chain efficiency, mitigate disruptions and improve visibility for better operations

$25tn

$6bn

Value of world merchandise trade in 2022

Expected market size for logistics SaaS in 2030, a +10% CAGR 2022-30

540m sqft

16

Square footage of owned and leased Amazon fulfillment centers

Logistics SaaS unicorns to date

Recent geopolitical events, such as the Russia-Ukraine conflict and COVID-19, have exposed inherent weaknesses in supply chains. Companies are actively seeking solutions to help them manage disruptions, diversify sourcing, and enhance visibility and tracking.

There is an opportunity to invest in Logistics and Warehousing, as these sectors are lagging in digitalisation. Logistics and Warehousing represent highly fragmented markets, with companies often relying on labour-intensive, archaic methods. These characteristics suggest the potential for breakthroughs and innovative solutions that could significantly add value to the sector.

Technology

WSC Score

Notes

Supply Chain Optimisation

8

Large market demand

Warehousing Technologies

7

Horizontal market

Inventory Management and Demand Forecasting

6

Highly scalable solutions

Fleet Management and Delivery Services

6

Source: World Trade Organisation, Amazon 2022 Annual Report p.17, Virtuemarketresearch, Tracxn

101

Sector Focus: Logistics and Warehousing

Market Drivers Under recent geopolitical friction, companies are seeking to build robust and resilient supply-chains to respond quickly to operational disruptions through flexible contingency planning and forecasting Global supply chain pressure index

Policies and Regulation

Labour Shortage

The outbreak of the Russia-Ukraine conflict and the upcoming US national elections in 2024 have led companies worldwide to reassess their supply chains, and governments have implemented measures to secure essential resources. In 2024, industrial and trade policies will remain a central concern, with ongoing tariff assessments, such as the US Section 301 duties on imports from mainland China, negotiations regarding steel and aluminum between the EU and the US, and an EU inquiry into mainland China's electric vehicle industry.

Recruiting and retaining skilled workers is one of the leading challenges for many supply chain operators. Technology is a key lever to automate routine tasks, easing the shortage by reducing reliance on manual labour while freeing up capacity for higher-value add activities.

Resource protectionism is expected to persist in certain countries due to escalating prices and government security strategies.

Supply Chain Resilience

Supply chain disruptions amidst COVID-19 and the Russia-Ukraine war have shown a need for supply chain resiliency. Apart from near-shoring, which has limitations, technology is expected to play a key role in fortifying the resilience and efficiency of global supply chains by driving connectivity and visibility, amongst other factors.

Source: McKinsey & Company, Statista, OECD and WSC Analysis (2023)

102

Sector Focus: Logistics and Warehousing

Technologies and Subsectors Score: 8

Supply Chain Optimisation

Enterprise supply chain management increasingly adopts cloud-based solutions to improve visibility and resilience. This evolution prioritises comprehensive oversight and adaptive capabilities, beyond just cost-cutting. Startups are integrating advanced technologies such as IoT, artificial intelligence, and mobile applications, whilst addressing broader ESG concerns.

Tailwinds +

+

Increased demand for solutions to better manage disruptions, diversify sourcing, and improve visibility and tracking Need to overcome shortages in the supply chain labour force

Challenges + + +

Cyber-attacks and DoS surge Material access in turmoil Geopolitical tensions with nations turning inward and exploring domestic self-sufficiency

Score: 7

Warehousing Technologies

The increasing importance of e-commerce and supply chain optimisation are expected to drive growth in smart warehousing. Big Data and analytics, artificial intelligence and IoT allow for optimising processes within the warehouse, decreasing costs and time by automating tasks and minimising labour.

Tailwinds + + +

Global Smart Warehousing market size expected to reach $29bn by 2028 (11.2% CAGR 22-28) Increasing digitalisation and automation of warehouses Need for a higher degree of connectivity among workers

Challenges + +

Resistance to changes in the processes amongst the workforce Lower penetration of smart warehousing across small-scale businesses

Inventory Management and Demand Forecasting

Score: 6

Supply chains are looking to benefit from faster and more accurate inventory management and shipment verification in light of recent geopolitical turmoil.

Tailwinds +

+

Inventory Management Software market size expected to reach $4.9tn by 2027 (9.9% CAGR 2127) More detailed and timelier information about consumers’ demand

Source: WSC Analysis (2023)

Challenges + +

Existing established market solutions offered by legacy WSCERP VCcompanies Investability Index: 7 Lower adoption amongst small and medium-sized businesses

103

Sector Focus: Logistics and Warehousing

Technologies and Subsectors Score: 6

Fleet Management and Delivery Services

Technological advances in autonomous delivery are on their way to disrupt the highly labourintensive transportation industry. Artificial intelligence and real-time data inflows will enable clients to improve their assets’ productivity.

Tailwinds + +

Underutilisation of assets (25% of US trucking capacity is unused) 5G expansion to increase the speed at which information travels, reducing latency and increasing productivity

Source: WSC Analysis (2023)

Challenges + +

Slower adoption among small fleet owners WSC VC Investability Index: 7 Recent rise in operational and fuel costs with recent geopolitical tensions and microchip shortage

104

Sector Focus: Logistics and Warehousing

Market Map: Seed – Series B Supply Chain Optimisation

Warehousing Technologies

Inventory Management and Demand Forecasting

Fleet Management and Delivery

Source: WSC Analysis (2023)

105

Sector Focus: Logistics and Warehousing

Top Asset Light Startups $2.5bn raised to date Developer of a freight forwarding platform designed to provide visibility and control over the entire supply chain.

$983m raised to date Developer of a logistics technology platform designed to digitise the shipment life cycle.

$617m raised to date Developer of a digital freight forwarder and shipping management platform designed to manage logistics.

$263m raised to date Developer of an omnichannel logistics platform to create an open logistics network that optimises the global delivery of goods.

$90m raised to date Supply chain visibility platform that provides shippers instant access to predictive information of all deliveries.

Source: WSC Analysis (2023)

106

Future of Work

Sector Focus: Future of Work

Future of Work B2B Future of Work comprises a set of tools that connect and streamline operations within and across different business units of an organisation

$2.5tn

$20bn

Spend on digital transformation technologies and services by 2024

Market size of workflow automation industry

84%

52%

Of small businesses still rely on some sort of manual process

Of business leaders believe that 10-30% of their daily tasks can be automated

Back-office automation has evolved significantly over the years and has now extended to the front office, addressing critical operational tasks. This trend benefits both large multinational corporations aiming to increase their profit margins and SMBs seeking substantial productivity improvements.

We expect notable advancements in the streamlining and automating processes across Talent Management, Sales and Marketing, and others. These advancements will be driven by smart tools that drastically reduce reliance on manual labour, such as Conversational Artificial Intelligence and Intelligent Document Processing.

Technology

WSC Score

Notes

Intelligent Process Automation

9

Demand for automation

Sales and Marketing

7

Large horizontal market

Intelligent Document Processing

7

Large horizontal market

Conversational Artificial Intelligence Solutions

5

Talent Management

4

Source: Statista, Mordor Intelligence, Small business trends, Cflow

108

Sector Focus: Future of Work

Market Drivers Capital invested in B2B Future of work software increased 15x from 2015 to 2022, indicating a strong appetite for this sector Future of Work Software: Capital Invested and Deal count since 2010 1,508 18.0 1,600 1,444

15.9

16.0 14.0

1,200 1,000

913

10.0

773

764

800

661

8.0

600

465

6.0

4.4

328

4.0

0.0

13.6

1,088

12.0

2.0

1,400

1,267

46 2010

91

2011

126

2012

3.3

204 0.4

0.6

0.9

2013

2014

2015

1.6

1.7

2016

2017

4.3

400

3.6

200

2018

Capital invested (in US$bn)

2019

2020

Deal count

2021

2022

2023YT D 1

2

Source: Pitchbook (2023)

Shift in workforce demographics

By 2030, millennials will constitute 40% of the workforce. Unlike previous generations, they are averse to engaging in manual, repetitive tasks and hold high expectations for their digital workplace experiences to mirror their seamless consumer interactions. This will drive the adoption of B2B Future of work applications to increase efficiency.

Rapid advancement of artificial intelligence and machine learning

2023 is the breakout year for generative artificial intelligence. AI investment could reach U$200bn globally by 2025. This rapid advancement and investment in AIrelated tech accelerate the development of automation tools by enhancing data processing, improving predictive analytics, reducing errors, etc.

Increasing adoption of transformation and automation

digital

Organisations are increasingly undergoing digital transformation to stay competitive. 91% of businesses are engaged in some form of digital initiative.

By 2025, 75% of business executives will be able to adapt to new markets and industries using digital platforms. As such, this provides a good foundation for automation software as digital transformation pushes companies to collect, store, and leverage data.

In fact, 70% of respondents in McKinsey Global Survey say their organisations are at least piloting automation technologies in one or more business units or functions, up from 66% in 2020 and 57% in 2018.

Source: WSC Analysis (2023), US department of labour, Goldman Sachs, Gartner, Quixy, McKinsey, Pitchbook (2023) Notes: 1) As of October 2023 2) Pitchbook filter: Productivity Software across functions incl. in HR, Sales&Mkt, Automation

109

Sector Focus: Future of Work

Technologies and Subsectors Score: 9

Intelligent Process Automation

Intelligent Process Automation tools are software that automates business processes by enabling the orchestration of diverse sets of actors (human, systems, bots) involved in executing simple and more complex processes.

Tailwinds +

Challenges

Solutions to reduce corporate cost structure with a lasting impact

+

+

+

Complex to implement due to lack of skilled manpower and technical expertise required for a successful deployment Time-consuming and requires significant initial capital investment, which can be a barrier for some organisations Potential resistance from employees due to concerns about job displacement

Score: 7

Sales and Marketing

Companies are operating in a data-rich world. There has been a rise of data-driven and technology-focused approaches with the introduction of tools to automate and personalise communication, track sales, execute and manage different marketing tools, etc.

Tailwinds + +

Challenges

Improved user engagement and retention Increase in topline growth by leveraging the sales and marketing datasets, among the largest and most liquid in a company

+

+

Complexity of handling various software vendors and ensuring smooth integrations and upgrades while seeing rapid changes in technology Overwhelming quantity of available technologies with redundancies complexify the selection process

Score: 7

Intelligent Document Processing

These platforms use machine learning and natural language processing to enhance business efficiency by automating data extraction from complex documents with semi-structured or unstructured formats.

Tailwinds

Challenges

+

+

+

+

Key driver in digital transformation efforts across various industries Good ability to convert unstructured data (e.g. emails, text messages, photos, PDFs, others) into meaningful insights crucial for informed business decisions Enable companies to handle the growing volume of data and document processing requirements in a scalable way

Source: WSC Analysis (2023)

+

Managing data access and rights to prevent data misuse Handling various types of documents, particularly those with complex formats and quality, posing a significant challenge

110

Sector Focus: Future of Work

Technologies and Subsectors Conversational Artificial Intelligence Solutions

Score: 5

Conversational Artificial Intelligence solutions are poised to be pivotal in enhancing automation, flexibility, and remote work capabilities while improving customer service and workplace communication.

Tailwinds + +

+

Market set to grow at a CAGR of 22.6% from 2023 to 2028, reaching nearly $30bn by 2028 Development of chatbots with advanced emotional intelligence, enabling more nuanced and empathetic interactions Growing trend of integration with other technologies

Challenges +

+

+

Constant evolution of human language requires continually adjusting to new trends and speech patterns Significant challenges in effectively engaging customers and at risk of being commoditised with generative artificial intelligence Potential latency, breakdowns, and high costs associated with implementing and maintaining API solutions

Score: 4

Talent Management There is a shift toward all-in-one platforms, integrating various workforce-related functions into a single streamlined system for enhanced efficiency and user experience. Emerging solutions combine everything from recruitment tools, storing employees’ files to performance tracking.

Tailwinds +

+

+

Improve employee and employer experience and engagement from onboarding to ongoing career development and performance monitoring Allow for more informed decision-making, trend analysis, and predictive insights related to workforce management Accentuate shift from human resources to talent management, supporting employees’ professional growth

Source: Markets and markets, WSC Analysis (2023)

Challenges + +

Concerns over security and privacy of data Artificial Intelligence faces a challenge in replacing human tasks, particularly in conflict resolution

111

Sector Focus: Future of Work

Market Map: Seed – Series B Talent Management

Sales and Marketing

Business process automation

Task-specific Tools

Source: WSC Analysis (2023)

112

Sector Focus: Future of Work

Top Asset Light Startups $13bn raised to date Developer of an artificial intelligence-based research and deployment platform.

$760m raised to date Developer of marketing automation platform offering marketing pitches, web development, etc.

$725m raised to date Developer of human resources management and recruitment platform designed to serve small and medium-sized organisations.

$299m raised to date Developer of AI-based enterprise software designed to reduce monotonous manual entry and automate office work.

$127m raised to date Developer of process orchestration software that offers detailed visibility into business operations across distributed systems.

Source: WSC Analysis (2023)

113

Financial Applications

Sector Focus: Financial Applications

Financial Applications B2B Fintech solutions aim to digitise financial operations and transactions that occur between businesses.

$725bn

80%

Revenue from B2B Fintech by 2030, up 9x from 2021

Of B2B transactions expected to be online by 2025

70%

68

Of jobs and GDP composed of SMBs, who will who benefit the most from B2B Fintech

B2B Fintech unicorns to date

Historically, B2B financial services and operations have been very manual, leading to inefficiencies and lower productivity. Advancements in technology and user preferences have made adopting B2B Fintech much more feasible today.

The next wave of Fintech innovation is expected to enable business operations and transactions, targeting the CFO stack, B2B payments, Banking and Fintech as a Service, SMB lending, insurance and enabling infrastructure.

Technology

WSC Score

Notes

CFO Stack

8

Demand for automation

Banking and Fintech as a Service

8

Digitalisation trend

Insurtech Tools

8

Digitalisation trend

B2B Payments

7

Large international market

Enabling Infrastructure

6

Lending for small and mid-size businesses

5

Source: BCG, World Economic Forum, Gartner, Pitchbook

115

Sector Focus: Financial Applications

Market Drivers B2B Fintech funding has risen steadily and surpassed B2C, supported by strong policy support and push to digitalise financial services B2B Fintech: Capital Deployed ($bn) 3017 2788

52.2 2274 1920 34.3

1582

35.6 1412

1289 845

24.3

21.3

605

21.9

15.9

1.9 1.7

2.6 2.8

2015

2016

4.0 4.2

2017

Source: PitchBook (2023)

7.2

9.1

9.9 10.8

2018 B2B

2019 B2C

8.0

2020

2021

2022

2023YTD

1

Deal Count 2

Policies and Regulation

Shift in workforce demographics

Governments globally are making a regulatory push to encourage digital invoicing. Various members of the EU have committed to shifting to mandatory e-invoicing as part of the EU Commission’s initiative, VAT in the Digital Age (ViDA). Many governments also implemented open finance regulations, albeit to varying degrees, creating access to data that enables various forms of Fintech innovation. This includes PSD2 in the EU and Consumer Data Right in Australia. Moreover, companies are pressuring their governments to reform the traditional financial sector. Canadian Fintech leaders signed an open letter in November 2023 calling on the government to move forward with open banking.

Millennials and Gen Zs use mobile banking 5x more than their parents.

They are digital natives; their familiarity and comfort with technology will drive businesses to adopt more advanced fintech solutions to increase efficiency and transparency, supporting a digitalised work experience.

Real-time payments (RTP) RTP technology has increasingly become the focal point for financial institutions, payment providers, and businesses. RTP catalyses B2B fintech by significantly reducing time and cost for payment transactions, improving cash management, and providing a wealth of data in real-time.

Source: PitchBook, Pymnts, WSC Analysis (2023) Notes: 1) As of September 2023 2) Pitchbook filter: Enterprise Fintech (B2B)

116

Sector Focus: Financial Applications

Technologies and Subsectors Score: 8

CFO Stack

Teams need to allocate resources to strategic initiatives. Hence there is need for tools to streamline manual finance workflows such as accounting, AP/AR, spend management and payroll.

Tailwinds

Challenges

+ Increase in hybrid work arrangements calls for software to enable automation and collaboration + Shift in CFO’s focus from being an accountant to strategic leader

+ Finance stacks are often complicated and intermingled + Adoption and implementation can be long drawn

Score: 8

Banking and Fintech as a Service

Banks and non-banks need access to digital banking capabilities and services in a digital-first world. Platforms that provide this digital experience are beneficiaries of digitalisation.

Tailwinds

Challenges

+ Growing demand for digital user experience design and user interface design (UI/UX) driven by the increasing share of the millennial workforce + Push for cost optimisation, which drives traditional institutions towards digital offerings

+ Highly regulated sector + Risk of being disintermediated as a middleman

Score: 8

Insurtech Tools

The insurance industry is served by large and traditional incumbents. The main innovation in this space is technology tools to enhance and improve the efficiency of incumbents.

Tailwinds

Challenges

+ Insurers increasingly prioritising improvements in operational efficiency and customer experience through digital solutions

+ Consolidated customer base (insurers) reduces bargaining power + Industry is mature and can be reliant on legacy systems

Source: WSC Analysis (2023)

117

Sector Focus: Financial Applications

Technologies and Subsectors Score: 7

B2B Payments

Paper and offline remain the standard mode of payment even in the most developed economies.

There is huge potential for digital B2B payment solutions across checkout, cross-border, real-time, billing, BNPL and other payments infrastructures.

Tailwinds + +

B2B payment market is expected to reach $200tn by 2028, which is 5x the B2C market B2B digital payments significantly lag in adoption vs B2C; only 30% of global B2B expenditures are processed electronically compared to 60% for B2C

Challenges + +

B2B payments are complex and hence more difficult to digitalise Adoption of digital payments can be long drawn

Score: 6

Enabling Infrastructure

Both finance and non-finance companies are increasingly looking to provide or digitalise financial services. Infrastructure providers are key enablers, supporting on compliance and fraud, open banking and API integrations, amongst others.

Tailwinds + +

Growing demand to provide digitalised financial services Strong regulatory support for digital financial transactions and open access to financial data

Challenges + +

Highly complex operating environment Heavily subjected to changes in regulation and policy

Lending for small and mid-size enterprises

Score: 5

Small and mid-size enterprises have traditionally lacked access to bank loans. With advancements in technology and underwriting abilities, tech-enabled lenders are now providing alternative sources of financing.

Tailwinds + +

Advancements in technology such as big data and AI/ML that enable smarter underwriting White space untapped by traditional banks

Source: WSC Analysis (2023)

Challenges + +

Rising cost of capital makes it more difficult to profit on loans Can be capital intensive to scale

118

Sector Focus: Financial Applications

Market Map: Seed – Series B CFO Stack

Banking and Fintech as a Service

SMB Lending

B2B Payments

InsurTech Tools

Enabling Infrastructure

Source: WSC Analysis (2023)

119

Sector Focus: Financial Applications

Top Asset Light Startups $636m raised to date Cloud-native core banking platform designed to identify banking problems.

$348m raised to date Online payments platform designed to expedite B2B invoicing and payments.

$315m raised to date Cloud-based security platform designed to improve the insurance claims process.

$314m raised to date Cloud-based accounting software designed to make online invoicing easy and secure.

$300m raised to date Finance management platform to make business banking easy, fast and transparent.

Source: WSC Analysis (2023)

120

Real Estate Technology

Sector Focus: Real Estate Technology

Real Estate Technology Proptech has the potential to disrupt one of the world’s oldest and largest industries to tackle critical issues related to housing affordability

$228tn

$19.5bn

Value of the global real estate industry, the largest of any asset class

Value of the global proptech market

10-20%

96,000

Commercial real estate will be repurposed

New affordable homes need to be built globally every day to tackle the housing crisis by 2030

Real estate technology companies will navigate new challenges in today’s difficult macroeconomic climate, housing crisis, and shifting demand patterns. The real estate technology sector currently lags behind many other asset classes in digitalisation. The sector is ripe for disruptive innovation with many intermediaries involved and a noticeable lack of transaction transparency.

Successful proptech startups will find solutions in scaling their operations and achieving vertical integration to deliver a consistent user experience, optimise data utilisation, and streamline transaction processes, all while embracing sustainability as an opportunity for growth.

Technology

WSC Score

Notes

Data and Opportunity Discovery

8

Large horizontal market

Agent Tools and Facility Management

8

The need to streamline operation

Transactional Tools

7

Demand for online transaction and adherence to compliance

Investing and Leasing

6

Design, Engineering and Construction

6

Source: Deloitte, Vantage Market Research, Forbes, Unhabitat, WSC Analysis (2023)

122

Sector Focus: Real Estate Technology

Market Drivers The evolving dynamics of supply and demand in the real estate sector present stakeholders with the opportunity to leverage advanced technological tools for enhancing the efficiency and effectiveness of real estate construction, sales, resales, and property management processes Major Sectors Net Operating Income (NOI) Growth (indexed to 100 in 2010)

Indicating high occupancy and strong rent growth for residential and industrial sectors 250

200

150

100

50 2010

2011

2012

2013

2014

2015

Residential

2016

2017

Industrial

Retail

2018

2019

2020

2021

2022

Office

Source: National Council of Real Estate Investment Fiduciaries

Affordability and Housing Trends

Supply and demographic change

Migration towards affordable housing is on the rise, and there's a significant demand for innovative policies and technologies to meet this demand efficiently.

Housing construction has slowed down since 2022 due to labour shortages and the high cost of borrowing. Alongside the persistent migration trend toward developed countries, there is a supply backlog for construction and property transactions.

However, increasing interest rates offset the positive affordability impacts of any potential decrease in home prices.

In addition, affordability pressures are forcing many potential purchasers to consider renting homes instead of buying, further impacting a constrained supply in the rental market and leading to increasing rents, thereby worsening the affordability crisis.

Source: IMF, PwC, World Forum, WSC Analysis (2023)

Real estate professionals are increasingly turning to innovative technologies to accelerate the speed of construction while also facilitating the simplification of intricate real estate deals, thus ensuring that the industry remains agile and responsive in meeting the ever-growing demand.

123

Sector Focus: Real Estate Technology

Technologies and Subsectors Score: 8

Data and Opportunity Discovery

The rapid adoption of artificial intelligence and big data enables companies and individuals to analyse vast data quickly. This technology empowers modern real estate developers with tools for immediate market analysis, democratising the industry previously dominated by seasoned investors.

Tailwinds +

+

Access to new and unconventional data sources such as resident surveys and mobile phone signal patterns helps leverage more advanced insights Predictive-model outputs can forecast future risks and opportunities in a hyperlocal area

Challenges + +

Building and accessing advanced analytics into a portfolio is time-consuming and costly Progress in AI is frequently exponential, with late adopters possibly failing to integrate it into their business model

Score: 8

Agent Tools and Facility Management

Technological platforms such as property management tools, CRMs, 3D virtual tours, and smart buildings provide agents and property managers with innovative software to streamline operations, enhance customer experiences, and improve overall efficiency.

Tailwinds + +

Data-driven decision-making allows agents to personalise the customer journey Scalability and flexibility of digital tools streamline the adaptation process in an ever-changing industry

Challenges +

Implementing advanced technological tools often requires a significant upfront investment

Score: 7

Transactional Tools

Digital transactional solutions streamline the transaction process by centralising critical information, enhancing collaboration, ensuring compliance, and enabling accurate data management, which increases transparency in the real estate transaction lifecycle.

Tailwinds +

+

Embedded compliance features help adhere to legal requirements and reduce the risk of noncompliance.

Remote work pushes transactions to be completed online within a shorter time frame

Source: WSC Analysis (2023)

Challenges +

Real estate professionals prefer interoperability and a one-stop-shop platform for their transaction needs while avoiding long onboarding and training periods

124

Sector Focus: Real Estate Technology

Technologies and Subsectors Score: 6

Investing and Leasing

Changing demographic needs have led to the urbanisation of house ownership while short-term and long-term rental platforms have fundamentally transformed cities. Investment and leasing tools allow owners to repurpose their real estate assets.

Tailwinds +

+

Population growth creates increased demand for housing, commercial properties, and infrastructure development Sustainability and environmental consciousness is driving demand for energy-efficient, eco-friendly properties, promoting green building practices and technologies

Challenges +

Interest rates and a volatile macroeconomic environment have decreased customer appetite for real estate.

Design, Engineering, and Construction Technology

Score: 6

Advances in construction technology tools is helping tackle the affordable housing crisis and changing consumer needs with innovations like augmented reality property design, modular building, and robotics, which decrease construction costs and time by automating tasks and minimising labour. Younger generations of homebuyers reflect the demand for homes that suit individual lifestyle needs.

Tailwinds + +

Challenges

Opportunities are ripe for consolidation in a heavily + fragmented, point-solutions-driven market The rise of platform solutions that comprises multiple use cases will increase customer stickiness and + revenue

Source: WSC Analysis (2023)

Lower amounts of investments in digital transformation translate into slower innovation speed Market volatility and supply chain bottle necks can significantly impact the profit margin of Contech companies

125

Sector Focus: Real Estate Technology

Market Map: Seed – Series B Data and Opportunity Discovery

Design, Engineering and Construction

Investing and Leasing

Transaction tools

Source: WSC Analysis (2023)

Agent Tools and Facility Management

126

Sector Focus: Real Estate Technology

Top Asset Light Startups $2.1bn raised to date Provider of an end-to-end platform that empowers residential real estate agents to deliver exceptional service to clients.

$232m raised to date Operator of a real estate platform designed to help in buying and selling homes.

$89m raised to date Operator of an online property listing marketplace intended for sale and rent.

$105m raised to date Developer of a streamlined home renovation platform intended to plan, design, and build homes.

$49m raised to date Developer of a direct channel technology designed to make it convenient for vacation rental marketing.

Source: WSC Analysis (2023)

127

Data-driven Transformation Through the eyes of an international investor

Executive Summary $22.1tn

$1.2tn

Potential use-case driven impact of generative AI technologies1

Projected data infrastructure and management market size by 2032²

$8tn

95%

The global cost of cybercrime in 2023³

Of businesses struggle with unstructured data⁴

Looking at Data-driven Transformation from a VC perspective An unprecedented surge in data generation, enhanced computational capabilities, increased cybercrime, and advancements in data science and generative AI related technologies are all factors that have made data leaders scrutinise previous tools and infrastructure frameworks previously renowned in the modern data stack. The time is right for a new data-driven transformation where companies and tools are designed to help organisations extract the most value out of their data while providing high cost-effectiveness, return on investment, and low implementation time.

Current conditions are particularly conducive for a data-driven transformation. The rapid maturation of technologies, coupled with an increase in skilled data and engineering talent, lays a solid foundation for growth. Historical data suggests that companies focusing on innovation during economic disruptions tend to outperform their counterparts significantly, with up to 240% higher shareholder returns.² Furthermore, the substantial economic impact of generative AI, and its potential value creation across multiple use cases, underscores the critical role of data as a key driver of growth. This environment not only encourages but necessitates a shift towards data-centric business models, making it an optimal time for VCs to invest in data infrastructure, management, security, and tooling sectors. We believe the best opportunities within these sectors should address (i) evolving organisational needs amidst the data surge, consolidation of tools and data categories, and (ii) how companies must adapt their tech stacks for effective AI integration and leverage AI-centric technologies.

With this in mind, this report details the significance and potential influence of data and AI, explores the core aspects of the data value chain, including both its upstream and downstream processes, and outlines key investment opportunities.

Sector Leads

Nicholas Stocks General Partner

Alberto Toledo Partner, CTO

Authors

Sanjay Zimmermann Partner

Usamah Khan Vice President

Blanche Ajarrista Vice President

Source: 1 McKinsey (2023), ² Custom Market Insights, ³ Cybercrime Magazine, ⁴ Fingent, WSC Analysis (2023)

Neel Patel Associate

Jevyn Ong Analyst

129

Contents Section 1

Data-driven Transformation: An Overview

131 - 135

Section 2

Data-driven Transformation: Ecosystem

136 - 145

Section 3

Our approach to investing in Data-driven Transformation

146 - 150

Section 4

Sector Focus

151 - 192

Post-Modern Data Stack

152 - 159

Data Management

160 - 167

Data Security

168 - 176

AI & Analytics Tools

177 - 184

Productivity & Developer Tools

185 - 192

1

Data-driven Transformation: An Overview

Data-driven Transformation: Overview

Data-driven Transformation: maximising asset value through data The surge in data generation requires companies to responsibly manage, secure, and provision data, going beyond usage and analysis, to harness its full value Coupled with the vast increase in data generation each year, data also now exhibits remarkable variety and complexity. We are in an era where the physical and digital worlds are increasingly intertwined. Everything from cameras and traffic sensors to heart rate monitors is producing data, offering deeper insights into the behaviours of humans and objects.

Consequently, data has emerged as a new class of corporate asset. For companies to truly capitalise on this asset, fully embracing digital transformation is essential. By digitising both their internal and external operations, companies can gather critical data. The current era offers an unprecedented opportunity to leverage this data. This is due to an ever-growing abundance of data, coupled with rapidly advancing computational power that makes managing this data more feasible, and breakthroughs in mathematical techniques and data science which enable us to extract more value from this data than ever before.

Technologies ranked by the share of organisations surveyed who are likely or highly likely to adopt certain technologies from 2023-2027 Big-data analytics

86%

Internet of things & connected devices

81%

Cloud computing

80%

Encryption & cybersecurity

77%

E-commerce & digital trade

77%

Artifical intelligence

76%

Environmental management tech

75%

Climate-change mitigation tech

75%

Text, image & voice pro cessing

62%

Augmented & virtual reality

59%

Power storage & generation

52%

Electric & autonomous vehicles

51%

Source: World Economic Forum

0%

20%

40%

60%

80%

100%

Innovative solutions, related to data infrastructure, management, governance, and tooling, continue to emerge to help companies leverage their data. As a result, tech stacks and strategies are constantly and rapidly being augmented to better support enterprise businesses to operate, serve customers, and scale. Ultimately, an organisation's success hinges on its agility—the speed at which it can make and adjust strategic decisions to enhance results. A strong technological infrastructure is crucial for making informed, data-driven decisions, executing strategies efficiently, and collecting vital insights for continuous improvement.

Because of the above factors, "digital" and "data" have become buzzwords in contemporary discussions. While analogies likening data to 'new oil' or 'new gold' are prevalent, there are still technical and business complexities in unlocking its full value which present significant opportunities. These challenges in data-driven transformation offer fertile ground for venture capitalists to invest in solutions that address these issues.

Source: WSC Analysis (2023)

132

Data-driven Transformation: Overview

Economic boom driven by Data and AI Convergence of rapidly maturing technologies, historically high returns on innovation, and the substantial economic potential of generative AI is reshaping the data landscape Why now?

Several factors are creating a favourable environment for technology and data-centric businesses.

First, there’s a rapid maturation of technologies and the increased availability of skilled data and engineering talent. Second, historical data from past recessions and economic disruptions indicate that companies that continuously invested in innovation during these times achieved 240% higher shareholder returns than their counterparts1. Third, the potential economic impact of the generative AI, as an emerging technology, is substantial, with the possibility of adding $2.6tn to $4.4tn annually across 63 use cases and a total potential impact of $13.6tn to $22.1tn as analysed by McKinsey1. These developments are not only exciting but also highlight the critical role of data as the driving force behind this new era of growth.

Impact of Generative AI While traditional tools that comprise the modern data stack are unlikely to become obsolete, the rapid rise of new technologies in AI is creating a need for developers and engineers to upskill and re-tool. Data teams and vendors must adapt to this shift, where AI applications with compute and data processing needs that were once unthinkable are now a new standard across a plethora of industries, and as such incumbent infrastructures need to be scaled to compete in this new environment.

Data leaders and management teams are now recognising AI's immense capabilities, its potential applications, and the ripple effects it can create. As a result, there's an uptick in investment to develop AI capabilities while managing associated risks.

Generative AI has a Steeper Initial Adoption Curve Than Other Recent Technologies Generative AI 2022-2025 Tablets 2010-2013

124.7

Millions of US users

Smartphones 2007-2010

100.1 77.8

16.3 12.9

7.8 Year 1

33.4

92.8

116.9 62.2

30.4

27.6

Year 2

Year 3

Year 4

Source: Insider Intelligence

What does this mean for WSC? We are at the very beginning of a new data-driven transformation, driven by macro and micro tailwinds, which should see the development of entirely new industries, jobs, and businesses. This provides us an exciting opportunity to invest in multiple avenues related to data and AI that leaves us excited for the future. At White Star Capital, we believe we can play here, without having to redesign our investment strategy, by identifying the sectors and businesses that match our investment criteria.

Source: 1 McKinsey, WSC Analysis (2023)

133

Data-driven Transformation: Overview

10-year horizon predictions for Data-driven Transformation As we look to invest in the top startups from across the globe, we believe the following key trends will result in a growing number of opportunities within the Data-driven Transformation theme

Chief Data Officer roles will be prevalent

Data-ecosystem collaboration will become necessary

Chief Data Officers (CDOs) and their data teams will operate as a distinct business division with accountability for profits and losses.

Large, intricate organisations will increasingly adopt data-sharing platforms to foster collaboration on data-centric projects, both internally and with other entities.

This division will collaborate with other business groups to set governance and process guidelines, brainstorm innovative data usage methods, create comprehensive strategies to manage company data that integrates with the overall business strategy, and generate new revenue streams by capitalising on data services, data sharing, and data exchange.

In the data economy, companies will actively participate in pooling data, yielding richer insights for all involved. Data teams will also work together to establish policies and governance for standardisation, consistencies, and continuous improvement across organisations; akin to collaboration seen in open banking.

This will be driven by (i) prevalent data literacy within unit leaders and internal teams to enable collaboration with CDOs, (ii) recruitment of top data experts and talent that will focus on innovation and creative data use cases, and (iii) continuous experimentation to extract value from data.

Cybersecurity: table stakes for businesses of all sizes Cybersecurity will become a necessity across all levels and sizes of business due to the escalating frequency and severity of cyberattacks, which are already causing severe financial damage. Small and medium businesses, midmarket enterprises, and large organisations are all targets due to less sophisticated security measures in one or more areas.

Shortage of cybersecurity talent and increasing regulatory pressures to safeguard data will make cybersecurity solutions and service providers extremely vital.

Source: WSC Analysis (2023)

Data marketplaces will facilitate data exchange, sharing, and enhancement, enabling businesses to create unique data products and extract valuable insights. This trend, already evident with open-source models, is expected to grow with the demands of AI model training.

Commoditisation of AI As AI and ML commoditise, paralleling payment processing's evolution, the future will favor those with proprietary cutting-edge models, datasets, established brand and distribution, and those providing innovative infrastructure and tools for developers. This shift diminishes the strategic significance of AI itself, placing greater emphasis on modular, best-in-class tools that enable efficient and customised management of AI workflows.

Winners will be those who invest in creating flexible, robust infrastructure, catering to the specific needs of diverse organisations, thereby providing a competitive advantage in an increasingly AI-driven tech stack and world.

134

Data-driven Transformation: Overview

Succeeding against incumbents Emerging companies with data and/or AI offerings must leverage all their advantages to successfully compete with incumbents

Incumbents

Emerging Data + AI Companies

Vast troves of data

Innovative and creative; not limited to legacy tech stack

Significant capital

Attracts top-tier tech talent

Established infrastructure and resources

Ability to move and adapt quickly

Costly and slow to adapt to regulations

Can integrate regulatory requirements by design

Potentially slow to adapt to major trends

Requires substantial funding

Key traits required to succeed against incumbents Repeatable enterprise sales

This age-old formula will continue to be prevalent and important Deploying product led growth

This is a key GTM for businesses in the post-modern data stack era and tooling companies Solving problems in proven categories

Data categories will continue to converge into one or get bundled, so emerging companies must stay ahead of this to remain differentiation

In thriving markets, companies with a singular focus can prosper. However, past market downturns have shown that businesses offering a suite of interconnected enterprise services often prevail. This trend is likely to persist.

Therefore, new companies should either aim to develop such integrated solutions or ensure behavioral shift in consumers or enterprises. This approach is essential for them to effectively challenge incumbents and stand out.

135

2

Data-driven Transformation: Ecosystem

Data-driven Transformation: Ecosystem

Ecosystem Highlights $129bn

$38bn

Raised by Data-driven Tech Seed – Series B startups in the last 3 years

Raised by Data-driven Tech startups in 2023YTD2

1,857

20.4%

Mega rounds1, out of which 281 in 2022 and 141 in 2023YTD2

Increase in number of exits from 2020-2022

$20.1bn

333

In seed funding from 2016-2023YTD2

VC-backed Data-driven Tech unicorns2

1,076

4.0x

Data-driven Tech exits in 2022

Increase in total capital invested from 2016 to 2022

Source: Pitchbook (2023) Notes: 1) Rounds >$100m, 2) As of November 2023, inclusive of OpenAI and Anthropic 2023 rounds

137

Data-driven Transformation: Ecosystem

Deal activity has seen strong growth over the last couple years Deal volumes grow 20% on average in Europe and SEA, while North America sees steady 10% growth YoY Data-driven Tech Deal Count across Seed, Series A and Series B by Region 3,830

2,855

2,686

1,083

3,596

1,056

2,422 2,044 1,619

639

2,354 842

739

490

369

1,210

2016

2,602 1,498

2017

1,695

1,850

1,901

2018

2019

2020

North America

Europe

2021

2,398

2022

2023YTD

1

Southeast Asia

While deal values have grown 2x on average from 2019-2022, with 2021 being an exception Total Capital Invested in Data-driven Tech across Seed, Series A and Series B by Region ($m) 41,371 6,860

36,450 7,677

27,895

23,648 17,256

8,772 757

11,126

2,256

1,526

7,957

9,461

2016

2017

Source: Pitchbook (2023) Notes: 1) As of November 2023

18,997

3,526

2,738

33,283 27,596

14,713

16,007

2018

2019

North America

19,825

2020 Europe

2021

2022

1

2023YTD

Southeast Asia 138

Data-driven Transformation: Ecosystem

Most of the active funds investing in datadriven tech are based in North America Part 1

Top generalist VC funds in order of assets under management Investor

Founded

HQ

AUM

2

Stage

Deal Count1

Notable Deals

Post-Modern Data Stack 2009

$35.0bn

Seed / Series A+ / Growth

31

1977

$25.0bn

Seed / Series A+ / Growth

34

1983

$19.1bn

Seed / Series A+ / Growth

39

1995

$90.0bn

Seed / Series A+ / Growth

27

2014

$1.0bn

Pre-Seed to Growth

46

2006

$5.7bn

Early to Growth Stage

24

2000

$25.0bn

Early to Growth

49

1911

$20.0bn

Early to Growth

48

1996

$4.0bn

Seed / Series A+

51

Data Management

Data Security

Represents number of deals in Data-driven Transformation sectors since 2016, 2 As of November 2023 Source: WSC Analysis (2023) 1

139

Data-driven Transformation: Ecosystem

Most of the active funds investing in datadriven tech are based in North America Part 2

Top generalist VC funds in order of assets under management Investor

Founded

HQ

AUM

2

Stage

Deal Count1

Notable Deals

AI & Analytics Tools 1972

$85.0bn

Seed / Series A+ / Growth

86

2009

$35.0bn

Seed / Series A+ / Growth

100

2009

$8.0bn

Seed / Series A+

39

1972

$20.0bn

Seed / Series A+ / Growth

10

1983

$19.1bn

Seed / Series A+ / Growth

15

1996

$4.0bn

Seed / Series A+

9

2009

$5.0n

Seed / Series A+

20

2005

$3.8bn

Seed / Series A

15

Productivity & Developer Tools

Represents number of deals in Data-driven Transformation sectors since 2016, 2 As of November 2023 Source: WSC Analysis (2023) 1

140

Data-driven Transformation: Ecosystem

Data-driven sector has experienced significant valuation decline in the last two years Since 2021 data-drive companies have seen larger corrections in valuation from Series B onward, influenced by rising interest rates and global uncertainties (COVID-19, Russia-Ukraine conflict). This has led to a market that values profitability over growth, resulting in lower exit multiples and repricing of valuations % Change in Median Post-Money Valuation by Series Globally 2021 – 2023YTD1

34%

Data-driven Tech

43%

6%

Other Tech

4%

-16%

-25%

-31%

-36% -50% -74% Median PostMoney Valuation 2023YTD

Seed $13m $10m

Series A $49m $35m

Series B $136m $90m

Series C $230m $160m

Series D $275m $130m

Sub-sectors seeing varying valuation impacts from 2022-2023YTD1 Median Post-Money Valuation per Sub-Sector Sub-sector

2022

2023YTD1

% Change

Post-Moden Data Stack

40.1

32.0

-20.0%

Data Management

24.9

29.5

+18.9%

Data Security

38.0

29.8

-21.6%

AI & Analytics Tools

25.0

28.0

+12.0%

Productivity Tools

30.4

27.9

-8.3%

Developer Tools

15.6

20.4

+31.2%

Source: Pitchbook (2023) Notes: 1) As of November 2023

141

Data-driven Transformation: Ecosystem

AI & Analytics Tools led the way for funding while Data Security has seen the most exits Startups in the AI and Analytics Tools sector attracted the most funding as of 2023YTD1 2023YTD1 Funding per Subsector

$2.7bn

$4.8bn

Data Management

Data Security

$10.0bn AI & Analytics Tools

$1.9bn

$0.9bn

Post-Modern Data Post-Modern StackStack Data Data

Developer Tools

Productivity Tools

$0.6 bn

Data Security, Post-Modern Data Stack & Data Management led the count of exits from 2020-2023YTD1 Count of Data-driven Tech exits across M&A and IPO since 2020 by sub-sector 1,333 1,076 894 748

2020

2021

2022

Data Security

Post-Modern Da ta Stack

Data Ma nagement

Developer Tools

AI & Analytics Tools

Productivity Tools

Source: Pitchbook (2023), funding per sector not inclusive of OpenAI and Anthropic 2023 rounds Notes: 1) As of November 2023

2023YTD

1

142

Data-driven Transformation: Ecosystem

The exit environment is strong, which is key to the long-term viability of the ecosystem Exit activity in the Data-driven Transformation sectors saw a 30% increase from 2020 to 2022

93%

45%

Of exits from 2020 to 2023YTD1 were M&A transactions

Of exits since 2020 came from 2022 to 2023YTD1 alone, signaling a robust exit environment

4,382

$650bn

Data-driven Tech companies have exited via M&A, SPAC, and IPO since 2020

In total Exit Value from 2020 to 2023YTD1 disclosed through IPOs and acquisitions

Large Data-driven Tech exits across key verticals since 2020

IPO

2020

M&A

2021

(NYS: PLTR) Share price of $9.5 valued at $20.6bn

Acquired by Salesforce (NYS: CRM) for $27.1bn

M&A

M&A

2020

Acquired by Digital Realty (NYS: DLR) for $7.0bn Source: Pitchbook (2023) Notes: 1) As of November 2023

2021

Acquired by Analog Services (NAS: ADI) for $27.1bn

M&A

2021

Acquired by Thoma Bravo for $12.3bn

IPO

2022

(NYS: SNOW) Share price $120, valued at $33.2bn

143

Data-driven Transformation: Ecosystem

Corporates and large tech-giants have historically been active acquirers Corporates were the most active acquirers of Data-driven Tech companies Top 100 acquirers (acquisition count) by acquirer type from 2020 to 2023YTD1 83%

8%

Co rporation

VC-backed Co mpany

5%

4%

PE-backed Co mpany

Holding Company

1% Others

The most active acquirers are larger tech-giants Most active acquirers of Data-driven Tech companies by count since 2020

Accenture

33

IBM

17

EY

13

Cisco

10

Deloitte

10

The 20 MSP

10

Co gnizant

Source: Pitchbook (2023)

9

144

Data-driven Transformation: Ecosystem

Select Unicorns $85bn Valuation Research organisation that focuses on creating and advancing AI technologies; known for its creation of ChatGPT

$43bn Valuation Data intelligence platform intended to offer an open and unified platform for data and artificial intelligence sectors

$25bn Valuation AI safety & research company intended to build reliable, interpretable and steerable large-scale artificial intelligence systems

$10bn Valuation Web-scale platform designed to simplify the way companies protect, manage, and extract value from their data

$8.3bn Valuation Unified cloud security platform designed to automate cloud security at scale

Source: WSC Analysis (2023)

145

3

Our approach to investing in Data-driven Transformation

Data-driven Transformation: Our Approach

Conditions are right for new data-driven transformative companies, funded by VC The market and macro conditions today are ripe for outsized data investing returns and impact 1- Data leads to revenue generation: Companies are increasingly using data as a fundamental part of their operations. Instead of relying on extensive, multiyear road maps to tackle issues, they're now equipped to consider how cutting-edge data methods can solve problems in a matter of hours, days, or weeks – often opening new avenues for generating revenue

2 - AI is changing the tech stack: AI is reshaping tech stacks, necessitating an understanding of each layer's dynamics and their differences from previous stacks. There are opportunities for innovation ranging from the foundational data infrastructure to effective management and governance to make AI widely accessible.

3 - Talent interest: Talented and creative technical professionals are either drawn to work on groundbreaking data and AI projects or motivated to start their own businesses in this field. This drive often stems from the challenges they encountered while part of internal tech teams in established companies which have been held back by their legacy data architecture and stack.

4 - Increased regulations and adoption of data security: As digital enterprises mature, they are integrating more cybersecurity strategies to address heightened risks from identity management and data privacy, to mitigate escalating costs and cyberattack threat. Increased focus on data sovereignty and the usage of AI across different regions is likely to drive fragmentation.

5 - Lower Barriers to Entry: Digitally mature businesses with MLOps teams and BI investments have been the fastest to adopt and implement AI in their toolkits. Start-ups who are developing tools to streamline development and make integration easier are poised to have first mover advantage in this space.

In keeping with WSC’s investment guidelines, it is still possible to invest in Data-driven Transformation if companies can: Offer solutions that converge across data and security categories

Innovate on business models with repeatable enterprise sales

Attract top-tier technical talent with business acumen Source: WSC Analysis (2023)

Create solutions for companies of varying maturity

Solve problems in proven categories and avoid the bundling trap (absorption by tech giants)

14 7

Data-driven Transformation: Our Approach

We’ve created a WSC VC Investability Index to assess sectors and subsectors of interest The purpose of this report will be to help shed light on this burgeoning ecosystem, looking at every single industry and identifying opportunities for investment as a generalist venture capital fund Scoring: Yes = 1 / No = 0 Market Size Does the potential future market size (up to 2028-2032) at scale correspond to our criteria ($5bn+)?

Market Readiness Are we seeing pull from the market and C-suite adaptation of these technologies?

Innovation Are these businesses engaged in a meaningful innovation to stay competitive?

Barriers to Entry Are there barriers to entry? Will regulation make it difficult to scale?

International Scalability Is this an internationally scalable model?

Qualified Talent Are product and engineering talent willing to work within this sector?

Recurring Business Model Is this a recurring business model? Is there potential for high revenue retention?

Technology Readiness Is the technology mature and stable? Is there a robust development process in place?

Margins Are there software-like margins and potential for margin improvement at scale?

Stage Do these businesses have strong growth trajectory?

Exit Environment Have we seen large exits in this sector ($1bn+)?

Legend Out of Scope

Work to be done

Within WSC Scope

Score 0-3

Score 4-6

Score 7-9 148

Data-driven Transformation: Our Approach

Data-driven Transformation is broken down into 5 sectors and 34 subsectors WSC will explore the following subsectors for potential investment opportunities Post-Modern Data Stack • DataOps • Data Streaming

• Data Mesh Enablers • Data Reliability

Data Management • Active Metadata Management • Data Marketplaces • Synthetic Data Generation

• Vector Databases • Data Curation Tools • Data Catalogs

Data Security • Identity & Access Management • Threat & Vulnerability Management

• Cloud & Infrastructure Security • Governance, Risk & Compliance

AI & Analytics Tools • Predictive Analytics • Visualisation Dashboarding • Generative AI UI/UX

• AL/ML-Enhanced DevTools • AIOps

Productivity and Developer Tools • Software Delivery Lifecycle

• Project Management Tools • Collaboration Tools

• Developer SaaS

• Design Tools • Low-code/No-code Platforms

• Developer Infrastructure

• Build & Development Tools

• Cloud Services/Platforms • Integrated Development Environments (IDEs) • Source Control/Version Control Systems • Build Tools • Code Review Tools • Static Analysis/Code Quality Tools

• Containerisation & Orchestration Tools • Configuration Management Tools • Package Managers • Continuous Integration/Continuous Deployment (CI/CD) Tools • Testing Frameworks 149

A thematic approach to investing WSC will focus on these four key sectors undergoing rapid structural change Data infrastructure and management

Data protection and governance

Data volume and velocity will reach 465 exabytes/day by 2025, requiring storage and management for unstructured and structured data created

Data driving real-time business decisions creates a need for security and compliance tools which overcome risks of cybercrime, threats, and leaks

Productivity and Developer tools

DevOps and MLOps tools

Digital transformation requires tools to streamline application development, enhancing agility and innovation in a tech-driven economy

As AI models grow in complexity, DevOps and MLOps tools are essential to seamlessly develop, deploy, and monitor within intricate tech environments

Using the WSC VC Investability Index, we have identified the following subsectors as the most investable for generalist VCs and thus WSC Post Modern Data Stack Data Reliability DataOps Data Streaming Data Mesh Enablers Data Management Active Metadata Management Data Marketplaces Synthetic Data Generation Vector Databases Data Curation Tools Data Catalogs Data Security Identity & Access Management Governance, Risk & Compliance Threat & Vulnerability Management Cloud & Infrastructure Security AI & Analytics Tools Predictive Analytics

Data Infrastructure & Management

Data Protection & Governance

Productivity & DevOps & Developer Tools MLOps Tools

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

✓

✓

✓

✓ ✓ ✓ ✓

✓

✓ ✓ ✓ ✓

Visualisation Dashboarding Generative AI UI/UX AL/ML-Enhanced DevTools AIOps Productivity & Developer Tools

✓

✓ ✓

Software Delivery Lifecycle Project Management Tools Collaboration Tools

✓

Developer SaaS Design Tools Low-code/No-code Platforms

Developer Infrastructure

✓

Cloud Services/Platforms Integrated Development Environments Source Control/Version Control Systems Build Tools Code Review Tools Static Analysis/Code Quality Tools

✓ ✓

✓

✓ ✓ ✓ ✓ ✓

Containerisation & Orchestration Tools Configuration Management Tools Package Managers Continuous Integration/Deployment Tools Testing Frameworks

Build & Development Tools

✓ ✓

✓

✓ ✓ ✓ ✓ ✓ ✓

✓ 150

4 Sector Focus

Post-Modern Data Stack

Sector Focus: Post-Modern Data Stack

Post-Modern Data Stack Signifies a pivotal shift from the resource-intensive modern data stack to an architecture that champions intelligent automation, streamlined processes, and a focus on value-driven data products

$1tn

95%

Expected global data infrastructure market size by 20321

Of businesses struggle with unstructured data²

120 zettabytes³ $29.7bn Amount of data created in 2023⁴

Invested in the sector at Seed-Series D stages from 2020-2023YTD⁵

As data leaders scrutinise tools and infrastructure frameworks, previously renowned in the modern data stack, for cost-effectiveness, return on investment, and implementation time, the post-modern data stack is emerging as a solution.

It responds to the modern demands of handling vast quantities of high-velocity data and the need to democratise data access for complex use cases in the face of tightening IT budgets, evolving enterprise needs, and AI-centric tech stack.

By reducing the operational overhead associated with the modern data stack, this new approach allows teams to future proof their business to allow AI integration and develop strategic solutions to unlock the full potential of their data. Key features of this evolution involves reworking the data infrastructure for faster data delivery, real-time insights, decentralised architectures, and convergence of previous tools for enhanced data quality.

Technology

WSC Score

Notes

Data Reliability

9

Convergence of categories

DataOps

8

Agile data architecture

Data Streaming

8

Real-time data delivery

Data Mesh Enablers

8

Treating data as a product

Custom Market Insight, ² Fingent, ⁴ Statista, ⁵ As of November 2023; Pitchbook, WSC Analysis (2023) ³ One zettabyte conceptually refers to storing 250 billion DVDs or streaming 36 million years of HD videos 1

153

Sector Focus: Post-Modern Data Stack

Market drivers Postmodern data stack era is characterised by a shift from a proliferation of isolated SaaS tools to treat data as a dynamic product, streamlining their architectures to improve data integration, quality, and delivery through agile, cloud-based systems and flexible practices Capital Invested and Deal Count in Post-Modern Data Stack from 2016-2023YTD1 ($bn) Ca pita l Invested

8.0

Deal Count

279

7.0

300 266

250

6.9

6.0 189

190

202

5.7

203

200

173

5.0

155

4.0

150 2.7

3.0 1.7

2.0

3.0

2.8

100 1.9

1.8

50

1.0 0.0 2016

2017

2018

2019

2021

2022

2023YTD

1

Efficiency and Agile Integration

Shift towards Treating Data as a Product

Modern organisations, faced with vast data volumes and rapid data generation, are adopting agile, scalable, cloud-first, microservices-driven systems instead of rigid, monolithic architectures. This is being done to enable better integration and management of diverse data sources.

Traditional ETL processes are being replaced by more streamlined workflows that require less manual intervention, enhancing efficiency in data warehouses.

Currently, data is often redundantly stored in expansive, compartmentalised systems, posing challenges for internal users, like data scientists, who need to efficiently locate, retrieve, and amalgamate data for analytical purposes.

This transition is further propelled by the proliferation of SaaS tools, which, while offering tailored solutions, also lead to tool overload and data fragmentation. The postmodern data stack addresses these challenges by converging data categories and bundling tools, aiming to improve cost containment, data quality, and delivery.

1

2020

As of November 2023, Source: Pitchbook

However, there is a shift where data assets are now managed as products with dedicated teams ensuring their enhancement, serving both internal and external users. These teams work on transforming and updating data, as well as deploying self-service and analytical tools, ensuring the data products adapt flexibly to user needs through DataOps and ongoing integration and delivery practices. This will be necessary to leverage generative AI and extract high value uses-cases using the technology.

154

Sector Focus: Post-Modern Data Stack

Necessary upgrades to existing data infrastructure to enable Generative AI The post-modern data stack emphasises the need to overhaul the existing data architecture to facilitate high-value use cases

Potential Revamped Data Architecture Data sources

Data ingestion

Data repositories

Structured data

Batch data integration

Rational database

Unstructured data

Event streaming

Graph database

Data services Unstructured data & active metadata stores Vector database (chunking, indexing, & creating embeddings)

Documentoriented database Processing

Batch processing

Gen AI preprocessing • Pre aggregate data for facilitate responses to commonly asked questions, focusing on the most queried information

AI/ML

•

Stream processing

LLMs (closed source, open source, and/or private)

Ready data for input into LLM models by converting file formats, purifying for quality, and managing sensitive information

Data API endpoints & API management Access data (structured & unstructured data) Prompt engineering • Integrate endpoints of data model ontologies & knowledge graphs • Remove PII information (if not done during preprocessing) • Perform data retrieval for prompt inclusion • Conduct similarity query against vector database

Data consumption Advanced analytics Business intelligence, reporting, data visualisation Gen AI application

Data and model governance Master Data Management ML model governance

Data governance: data model ontologies, data transparency & quality, access policies, data product cards, data usage by gen AI, data tagging

AI model governance: model transparency, outcome monitoring & model shift

Central command portal DataOps

MLOps/LLMOps

LiveOps

FinOps

Gen AI extensions, with mature/sophisticated tooling/solutions

LLM gateway (traffic monitoring, request logging, credential management, FinOps, model access, PII protection Gen AI extensions, with innovative/developing tooling/solutions

The above upgrades, outlined as sophisticated or developing tooling, to existing data stacks underscore potential opportunities to invest in from a White Star Capital / VC investor standpoint Source: WSC Analysis (2023), McKinsey

155

Sector Focus: Post-Modern Data Stack

Technologies & subsectors Part 1 WSC Score: 9

Data Reliability

While data observability and quality have been around for a long time, there is now a convergence of these subsectors into a larger “data reliability” category. This is centered around enabling companies with data hygiene to provide high-quality data and simplification of observability processes.

Tailwinds +

+

Challenges

Companies in the space continue to redefine themselves and attract funding, creating strong attention for the category Significant open-source growth with existing data observability libraries

+

Challenges remain in simplifying observability processes while maintaining high data quality standards

WSC Score: 8

DataOps

Agile approach to designing, implementing, and maintaining a data architecture and analytics infrastructure. DataOps tools aim to reduce the cycle time of data analytics, from the gathering of data to deriving insights, while ensuring data integrity.

Tailwinds + +

Challenges

Market size to reach $14.6bn by 2030 (21.2% CAGR from 2023) Broad understanding and adoption across organisations

+ + +

Building a data-first mindset amongst teams Necessitates data science, data engineering, software development, and operations experts Wide range of technology manufacturers, service providers, and consulting companies that offer solutions

WSC Score: 8

Data Streaming

Need for real-time data and operational analytics is driving the growth of data streaming technologies, which are becoming essential for enterprises aiming to transition from data-driven to data-led decision-making. This shift emphasises queries that demand to know "What is happening now?"

Tailwinds + +

+

Market size to reach $50.1bn in 2026 (26.5% CAGR from 2021) Useful for applications that require immediate action based on live data, such as financial trading platforms, live monitoring systems, etc.

High ROI with investment

Challenges + + +

Source: WSC Analysis (2023), Yahoo Finance, MarketsandMarkets

WSC VC Investability Can contribute to data isolation Index: without a 7 common model Fragmented projects and uncoordinated teams/budgets Lack of standalone private company winners as of now 156

Sector Focus: Post-Modern Data Stack

Technologies & subsectors Part 2 WSC Score: 8

Data Mesh Enablers

Decentralised approach to treat data as a product, allowing organisations domain-specific control over data, which is a shift from monolithic and centralised data lake or warehouse architecture.

Technologies enabling this would involve analytics, integration, observability functionalities to allow for scalable and agile decentralised data as a service.

Tailwinds +

+

Part of the expected $122.9bn advanced data management solutions market size by 2025 (9.5% CAGR from 2020) Enables self-service and governed data access and removes data silos for business users

Source: WSC Analysis (2023)

Challenges +

Organisational structures need to adapt to enable a steady flow of data products

157

Sector Focus: Post-Modern Data Stack

Market Map: Seed – Series B Data Reliability

DataOps

Data Streaming

Data Mesh Enablers

Source: WSC Analysis (2023)

158

Sector Focus: Post-Modern Data Stack

Top Asset Light Startups $5.3bn raised to date* Data lake, warehousing, and sharing platform

$4.2bn raised to date Cloud-based, big data analytics platform

$640m raised to date Data intelligence software

$533m raised to date Open-source cloud data platform for data pipeline creation

$415m raised to date Data transformation and workflow software platform

* Indicates public company; included to showcase a category-defining company Source: WSC Analysis (2023)

159

Data Management

Sector Focus: Data Management

Data Management Cornerstone for any company looking to generate revenue from Data and AI. Data management is vital in enhancing data's role throughout the entire data stack and AI lifecycle

706

80%+

Number of exits in the sector from 2020-2023YTD1

Of Data Analysts spend around half their time cleaning and organising data²

$222bn

$22bn+

Global data management market size by 2030³

Total funding for generative AI application and model layers since 2019⁴

Data management has and will continue to be vital as the process of collecting, storing, organising, maintaining, and using data effectively and efficiently. The sector is undergoing changes to prioritise fewer, more unified tools and embrace automation powered by centralised metadata to allow engineering leaders to unlock full potential of their data.

Meanwhile, the AI-centric tech stack is transforming, highlighting the need for a deep understanding of each layer and their interplay. Effective data management becomes pivotal for companies looking to extract maximum value out of their data and those implementing AI. Reliance on high-quality, pre-cured datasets, exploring synthetic data, and leveraging vector databases, among other factors will allow companies to fully harness the capabilities of data and AI. Technology

1

WSC Score

Notes

Active Metadata Management

10

Key to multiple use cases

Data Marketplaces

8

Will be necessary for ML models

Synthetic Data Generation

8

Effectiveness leading to usage

Vector Databases

8

Suited for GenAI applications

Data Curation Tools

7

Increases quality of ML models

Data Catalogs

6

Replaced by active metadata

As of November 2023; Pitchbook, ² Forbes, ³ GrandView Research, ⁴ TheNextWeb

161

Sector Focus: Data Management

Market drivers Efficient data management is key to harnessing the deluge of modern data and unlocking competitive advantages, particularly as generative AI enhances the ability to process and analyse diverse, unstructured data forms within an AI-centric data ecosystem Volume of data created, captured, copied and consumed worldwide (zettabytes)

Data volume in zettabytes

200

181 147

150

120 97

100

79 64

50

9

7

5

2

13

16

18

26

33

41

0 20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

Source: Statista

Data-driven Decision Making

AI-centric Stack

Data plays a pivotal role in the operation and functionality of businesses. This is especially true for those that are navigating digital transformations and handling immense data volumes. For companies to extract meaningful insights from the myriad of data generated by various systems and technologies, an effective data management model is essential. Without proper management, the abundance of data can become overwhelming and unproductive.

Data practitioners have started to adopt an array of database types to better organise and manage data. This change is speeding up the process of querying and interpreting unstructured and semi-structured data, leading to rapid advancements in AI-driven capabilities and the discovery of new data relationships.

However, with appropriate data management tools, it can unlock revenue generating opportunities and create a competitive advantage.

Source: McKinsey, WSC Analysis (2023)

When volume of data and its potential value are skyrocketing, especially with generative AI's adeptness at handling varied data forms like chats, videos, and code, organisations are compelled to refine their data management strategies. This shift to embrace an AIcentric data stack is essential for maximising value extraction.

162

Sector Focus: Data Management

Generative AI convergence across the data value chain Generative AI can enhance business processes with its applications across the data value chain, speeding up and refining tasks. Its effectiveness depends on the management and structure of the underlying data WSC Area of Interest

1. Data discovery Performs queries to create interactive data profiles for each major data repository, making them user-friendly and accessible

2. Data ingestion Develops templates for data ingestion, complete with connection strings and ports, generates/replenishes tokens, and prepares data for deployment, thereby simplifying the system for data engineers

3. Data storage and curation Applies advanced data compression and archiving algorithms, informed by usage logs, to maximise storage efficiency and minimise costs

4. Data processing and streaming Identifies the most suitable computing frameworks for processing large data volumes in real-time, tailored to specific use case profiles

5. Data access Establishes access guidelines by analysing policies and active directory metadata to determine which individuals should or should not have access to specific types of data

6. Data consumption Connects with business intelligence and reporting tools to enhance data storytelling and facilitate better collaboration within the organisation

7. Data governance Synchronises with data privacy and security measures, including data masking and encryption, while delivering continuous monitoring and immediate alerts for data breaches and irregular activities

8. Data interpretation Enhances understanding of data by offering suggestions derived from the analysed insights

There are opportunities to invest in tools and/or products that enable parts of the above value chain from a White Star Capital / VC investor standpoint Source: McKinsey, WSC Analysis (2023)

163

Sector Focus: Data Management

Technologies & subsectors Part 1

WSC Score: 10

Active Metadata Management

Dynamic approach to handling metadata, the descriptive information about data that helps in its discovery, understanding, and management, and ensuring it flows effortless across the entire data stack. Unlike passive metadata, active metadata is continuously updated and managed through automated processes to facilitates real-time, bidirectional updates across different tools.

Tailwinds +

+

Challenges

Functions as a layer on top of modern data stack by leveraging open APIs to connect all tools in your data stack and ferry metadata bi-directionally Holds the key to many use cases like observability, cost management, remediation, quality, security, programmatic governance, optimised pipelines

+

Existing passive metadata players in the space transitioning to active metadata

WSC Score: 8

Data Marketplaces

Platforms or dynamic hubs where users can buy, sell, exchange or license different types of datasets and data streams. With the rise of generative AI, access to datasets to train models creates tremendous opportunities within this space.

Tailwinds + + +

Backbone of foundational generative AI models are datasets Major tech companies with proprietary data cracking down on data access Major tech giants also getting sued for accessing data without adequate licenses

Challenges +

Potential regulations may create complexities within and/or ability to licence WSCthis VCsubsector Investability Index: 7 data assets

WSC Score: 8

Synthetic Data Generation

Synthetic data is artificially created data, generated using models or simulations that can be based on real data, rather than being directly collected from real-life environments. To be usable, this data has statistical properties similar to real data, and synthesis techniques which can be applied to both structured and unstructured data using various algorithms Tailwinds + + +

Mission-critical for many industries, creating prevalent use cases Has become prevalent for ML model training Quality of synthetic data has been deemed reliable, accelerating its usage

Source: WSC Analysis (2023)

Challenges +

+

Small market size, expected to reach $6.9bn by 2032 (37.5% CAGR from 2022). May be much larger, however, with ML model training Adhering to privacy laws like GDPR and ensuring high quality of synthetic data does somewhat remain a challenge

164

Sector Focus: Data Management

Technologies & subsectors Part 2

WSC Score: 8

Vector Databases

Vector databases, key to interpreting unstructured data and central to search functions, are akin to the "shovels" in the generative AI gold rush. Their widespread use in LLM-powered apps, soon to be integrated into major applications, positions investing in companies providing managed vector databases as a strategic move in this modern gold rush.

Tailwinds Search queries for vector databases having low latency makes it well-suited for generative AI applications Significant VC funding in the space in 2022 and 2023

+

+

Challenges + + +

Small market size, expected to reach $4.3bn by WSC VC CAGR Investability 2028 (23.2% from 2023) Index: 7 Uncertainty if capped at around ~$10bn market size or much larger Optimal implementation of vector databases often requires specialised knowledge

WSC Score: 7

Data Curation Tools

In regard to AI/ML model training, these tools are essential for selecting high-quality, relevant data and ensuring efficient labeling to ultimately enhance model accuracy and reduce development time. These tools offer scalability, diversity in data, and advanced features for managing large datasets. Unrelated to AI/ML model training, this category is also part of the large data preparation sector Tailwinds

+ + +

Market size to reach $12.9bn in 2028 (18.6% CAGR from 2021) Pre-curated datasets can strongly improve model training quality and reduce costs Significant opportunities exist within visual and audio datasets, given they are often incorrectly labelled, broken, missing, or have duplicates

Challenges +

WSC VC Investability 7 in Data accuracy concerns require Index: curation early the data lifecycle to eliminate imbalance and errors

+

Security and privacy issues with data leakage and hacking, especially for government or public sector projects

WSC Score: 6

Data Catalogs

Catalogs act as an inventory of data assets, enabling improved data discovery, governance, and usage. Companies are now looking to active metadata management tools to essentially enhance and replace their data catalog tools.

Tailwinds +

Definite need in enterprises with large unstructured and structure data volumes

Challenges

+ Data accuracy concerns require curation early in + Will into a larger data-related the get datamerged lifecycle to eliminate imbalance category and errors large players in the space + Existing + Small market size, expected to reach $8.1bn by 2032 (27.1% CAGR from 2021)

Source: WSC Analysis (2023), Yahoo Finance, Grand View Research

165

Sector Focus: Data Management

Market Map: Seed – Series B Active Metadata Management

Data Marketplaces

Synthetic Data Generation

Vector Databases

Data Curation Tools

Data Catalogs

Source: WSC Analysis (2023)

166

Sector Focus: Data Management

Top Asset Light Startups $853m raised to date Automated data integration platform

$340m raised to date Enterprise collaborative data platform

$266m raised to date Data management platform designed to automate data governance

$132m raised to date Cloud-native data catalog platform

$91m raised to date Hybrid virtual data management platform

Source: WSC Analysis (2023)

167

Data Security

Sector Focus: Data Security

Data Security Attack surfaces continue to expand while cybercriminals continue to exploit new vulnerabilities, emphasising the need for cybersecurity solutions more than ever

1,318

800,000

Number of exits in the sector from 2020-2023YTD1

Number of cyber attacks per year²

$8tn

49 days

Estimated global cost of cybercrime in 2023³

Average number of days it takes an organisation to identify a cyberattack⁴

As digital enterprises mature, cybersecurity has become a crucial focus area.

Emerging organisations are busy implementing tooling and defining core policies and risk management strategies. However, the proliferation of SaaS solutions in enterprises, though cost-effective and productivity-enhancing, introduces heightened exposure to cybersecurity risks. This trend has reached a critical juncture where, if not properly managed, it can escalate costs and amplify cyberattack threats.

Thus, it's imperative for enterprises to develop comprehensive cybersecurity strategies encompassing all aspects of their digital infrastructure. Key aspects like identity and access management, increased threat velocity, AI/ML applications, and persistent talent shortages in cybersecurity further underscore the urgency for organisations to adapt and strengthen their cybersecurity posture.

Technology

1

WSC Score

Notes

Identity & Access Management

9

Increasingly important for CISOs

Governance, Risk & Compliance

9

Regulations driving adoption

Threat & Vulnerability Management

8

Proactive approach is key

Cloud & Infrastructure Security

8

Large market size

As of November 2023; Pitchbook, ² Cobalt Labs, ³ Cybercrime Magazine, ⁴ Houlihan Lokey

169

Sector Focus: Data Security

Market drivers Evolving regulations, increased awareness of data rights, decline in cybersecurity efficacy, and the need for CISOs to adapt strategies to manage the growing challenges in cloud-based and SaaS environments is leading to prioritisation of data privacy and security Cybercrime Cost ($tn)

$23.8 $20.7 $17.7 $14.6 $11.5 $8.4 $6.0 $3.0

$0.9

$1.2

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

Source: Statista

Regulations Leading to Prioritisation of Privacy, Security

Erosion of Cybersecurity Efficacy

Companies now prioritise data privacy, ethics, and security as essential skills, influenced by changing laws like the Virginia Consumer Data Protection Act (VCDPA), General Data Protection Regulation (GDPR), and California Consumer Privacy Act (CCPA). This shift is also due to growing public knowledge of data rights and the significant impact of security breaches.

Additionally, security leaders report a decline in cybersecurity effectiveness, highlighting an expanding technological divide between cyber attackers and defense systems. Only 48% of security leaders indicated their cybersecurity defenses were effective against common security threats. This underscores the continued necessity for innovation in cybersecurity.

CISOs are Becoming Enablers of Innovative and Adaptive Security Strategies Although many CISOs possess an extensive array of tools for securing data in the cloud, the rapid expansion of cloud providers, SaaS solutions, and emergence of generative AI has pushed data sharing to its limits. Conventional methods, effective in on-premises settings, are struggling to match the surge in users, data sources, and policies that need governance, management, and security in the current landscape.

This situation is compelling CISOs to take proactive measures, implement strategies around the data stack to adapt and keep up with the rapid pace of data evolution.

Source: Solutions Review, Statista, Houlihan Lokey

170

Sector Focus: Data Security

Evolving regulatory landscape in AI Regulators are on notice with discussions over regulation of generative AI heating up in the EU, U.S., and around the world. This will only lead to increased importance and adoption of data and cybersecurity solutions as it pertains to AI related data and content

Proposed legislation set for 2025 aims to enhance current consumer protection and human rights laws by acknowledging the importance of "high-impact" AI systems adhering to human rights and safety regulations

California Governor Gavin Newsom's executive order positions the state as a leader in AI strategy by mandating a proactive regulatory approach, promoting trustworthy AI through state procurement, emphasising fairness and equity in AI products and services, and prioritising workforce development for AI deployment

The EU has provisionally agreed on the Artificial Intelligence Act, which addresses the challenges of AI in terms of safety, fundamental rights, and business development. The act mandates obligations for AI systems based on their risk level, focusing on transparency for generalpurpose AI and stricter rules for high-impact AI models. This legislation is set to become EU law pending formal adoption by the European Parliament and policies.

2023 Australian budget unveiled the Responsible AI Network, a program aimed at ensuring the ethical implementation of AI technologies There are ongoing debates around using analytics and biometric data for training models which highlights the need for enhanced privacy safeguards

Source: Industry.Gov, DLA Piper, NY Times, ISED, Data Guidance, LOC.Gov, CNBC, Reuters

171

Sector Focus: Data Security

Generative AI has high-value usage in cybersecurity Threat Intelligence

Malware Detection & Analysis

Models can analyse extensive historical data to provide insights for predicting and understanding emerging threats. They identify patterns, assisting security analysts in prioritising defense strategies

Algorithms trained on extensive malware datasets can identify common features and behaviors. This training facilitates the development of advanced malware detection systems capable of identifying and neutralising new malware strains.

Anomaly Detection

Detecting GenAI Texts in Attacks

LLMs assist in anomaly detection by modeling typical system behavior and spotting deviations.

They continuously learn from network traffic, user behaviors, and system logs, enabling them to detect and flag suspicious activities

Detecting AI-generated text helps identify phishing emails, polymorphic code, and unusual email senders, and verifies if links in texts lead to known malicious websites

Examples of industry-wide adoptions Introduced Charlotte AI, a generative AI security analyst that uses the world’s highest fidelity security data and is continuously improved by a tight feedback loop with CrowdStrike’s threat hunters, managed detection and response operators, and incident response experts.

Used its advanced AI technology, including Darktrace DETECT™ and RESPOND™, to protect more than 8,400 customers worldwide from security and privacy risks associated with generative AI tools and LLMs, enabling businesses to leverage the power of AI safely and responsibly while guarding against potential threats and data breaches.

Introduced Purple AI, a generative AI dedicated to threat-hunting, analysis and response. It uses a variety of models both open source and proprietary and aims to increase the organisation’s efficiency by arming security analysts with an AI engine that can help identify, analyse and mitigate threats using conversational prompts and interactive dialog.

Announced an expansion of its partnership with Google Cloud to leverage Security Workbench capabilities to revolutionise threat detection and risk reduction for organisations, enabling security professionals to improve decision making processes. Using NLP, the platform will transition from the traditional search-based interaction model to a conversation-based experience.

Announced the launch of its AI platform, which incorporates its 100+ terabyte intelligence cloud and 10+ years of threat reporting experience with OpenAI’s GPT LLM to provide a host of benefits for both executives and analysts.

Introduced an automated cyber threat intelligence linguist that can take inputs from any language on earth and deliver actionable intelligence at scale. Flare AI Assist also seamlessly explains complex technical exposure at a level that enables senior security professionals to work faster, and junior security professionals to come up to speed.

Source: WSC Analysis (2023), Houlihan Lokey

172

Sector Focus: Data Security

Technologies & subsectors Part 1

WSC Score: 9

Identity & Access Management

Managing digital identities and regulating access to organisational resources is a vital priority.

This subsector encompasses areas like authentication and access control and is essential for cybersecurity approaches like "zero trust," emphasising strict verification before access is granted.

Tailwinds + + +

Challenges

Market size to reach $41.5bn by 2030 (12.6% CAGR from 2023) Growing importance for CISOs and expansion of existing cyber spend on IAM tools ML enhancing authorisation capabilities with granular permissions

+

+

Ongoing lack of skilled cybersecurity talent raises worries around capacity to effectively thwart and tackle cyber threats and attacks Midsized enterprises see a significant drop in budget growth, raising concerns about their ability to address current and emerging cybersecurity threats

WSC Score: 9

Governance, Risk & Compliance

Part of a large cybersecurity framework that helps organisations align their information technology with business objectives, while effectively managing risk and meeting compliance requirements. Companies are continuously seeking solutions that provide real-time insights from governance and risk management to help navigate strategic compliance decisions. This is only becoming more top of mind for CISO in an ever-evolving data and AI landscape.

Tailwinds + +

Challenges

Market size to reach $134.9n by 2030 (13.8% CAGR from 2023) Increasing regulatory complexities may drive the need for more integrated GRC tech solutions

+

Financial constraints, as compliance represents a significant and rising cost to organisations

WSC Score: 8

Threat & Vulnerability Management

Focused on identifying, evaluating, and mitigating cyber vulnerabilities using threat intelligence and insights into information technology and business operations for timely risk management.

Tailwinds + + +

Market size to reach $37.1bn by 2032 (10.0% CAGR from 2023) Increasing complexity and frequency of cyber threats demand robust vulnerability management Advancements in automation and AI is improving the efficiency and effectiveness of vulnerability management

Source: WSC Analysis (2023), Grand View Research

Challenges +

+

Organisations have historically adopted a reactive rather than proactive approach to security, WSC VC Investability focusing on recovery after attackIndex: 7 Overload of data from vulnerability scans, most of which is irrelevant, leads to difficulty in prioritising threats

173

Sector Focus: Data Security

Technologies & subsectors Part 2

WSC Score: 8

Cloud & Infrastructure Management

In the realm of cloud computing, it is crucial to implement protection strategies and solutions that encompass the entire digital infrastructure. These strategies need to dynamically scale alongside the growth of application resources and automatically adjust to new infrastructure demands.

Tailwinds + +

Market size to reach $106.0n by 2029 (18.1% CAGR from 2022) As cloud adoption increases, so does a company’s attack surface, given the diverse nature of the cloud infrastructure, with its multiple applications and service model

Source: WSC Analysis (2023)

Challenges +

Misconfigurations and a lack of user awareness around security features can lead to vulnerabilities

174

Sector Focus: Data Security

Market Map: Seed – Series B Identity & Access Management

Governance, Risk & Compliance

Threat & Vulnerability Management

Cloud & Infrastructure Security

Source: WSC Analysis (2023)

175

Sector Focus: Data Security

Top Asset Light Startups $1.9bn raised to date Automated cloud security platform

$1.1bn raised to date Privacy and data governance platform

$1.1bn raised to date Continuous vulnerability and risk management platform

$801m raised to date Cloud security and identity management platform

$287m raised to date Verification platform intended to automate the identity verification process

Source: WSC Analysis (2023)

176

AI & Analytics Tools

Sector Focus: AI & Analytics Tools

AI & Analytics Tools AI is transforming business operations across all sectors. Industry leaders are recognising its vast potential and expansive applications, leading to increased spending to develop and manage AI capabilities in products

496

97%

Number of exits in the sector from 2020-2023YTD1

Of surveyed developers are using GenAI and AI tools today²

$1.9tn

$17.8bn

Estimated market size for AI tools by 2030³

Total funding for Generative AI investments in 2023⁴

Generative AI in particular has emerged as one one of the most important technological developments of 2023. Initially, businesses with advanced digital infrastructure were the first to invest in and implement Generative AI technologies. However, over the past few months, there has been a noticeable shift with a slew of start-ups building tools to support companies at various stages of digital maturity to leverage Generative AI and the associated challenges with implementing and maintaining these tools.

The broad adoption of AI has been to support and enhance Sales, Marketing, and Customer Service. However, AI is seeing the largest adoption among developers.

Nearly 100% of engineers in one survey2 reported using AI in their work. Yet despite this, some of the greatest challenges are faced in models and tools, such as monitoring model performance in production, fine-tuning for better results, and retraining models over time5 representing an opportunity for companies to build for.

Technology

1

WSC Score

Notes

Visualisation Dashboarding

10

Priority for data-driven orgs

Predictive Analytics

10

Drives revenue opportunities

Generative AI UI/UX

7

Used to better leverage AI

AL/ML-Enhanced DevTools

7

A new suite of tools for devs

AI/MLOps

7

Critical to manage & deploy AI

As of November 2023; Pitchbook, ² Sonatype, ³ Statista, ⁴ Dealroom 5 McKinsey

178

Sector Focus: AI & Analytics Tools

Market drivers AI, as a tool available to the public, is still in its early days. For years, it required teams of Data Scientists and Engineers to develop specialised products with narrow focus. Now, individuals from various professional backgrounds are experimenting and using a new suite of AI tools to drive results in their professional and personal lives AI Tools Market Size ($tn)

$1.9

$1.4 $1.1 $0.8 $0.6 $0.4 $0.1 2021

$0.1

2022

$0.2

2023

$0.3

2024

2025

2026

2027

2028

2029

2030

Source: Statista

Great Economic Potential Generative AI is set to revolutionise the global economy, potentially adding $2.6 to $4.4tn annually across various use cases, outstripping the GDP of countries like the United Kingdom. The most significant gains are expected in customer operations, marketing and sales, software engineering, and R&D, with industries like banking, high tech, and life sciences poised to benefit the most.

In banking alone, the impact could be an additional $200 to $340bn each year, and in retail and consumer goods, up to $660bn annually.

Source: McKinsey, WSC Analysis (2023)

Companies are Increasingly Adopting AI Tools in the Workplace 2023 was a year of experimentation for companies. Large tech incumbents such as Google, Meta, Microsoft, and Nvidia saw significant growth due to their involvement in building AI models and infrastructure.

Looking ahead to 2024, companies across all industries will be in a place to integrate AI tools in their processes to reduce costs and enhance productivity.

This will be driven driven by learnings from extensive experimentation with AI in 2023, the upcoming launch of more AI products from tech giants and startups, and an easing in the market for AI talent making hiring for AI-related roles more feasible.

179

Sector Focus: AI & Analytics Tools

AI / ML Ops The development and delivery of AI and ML models is a robust pipeline. Activities such as model training, deployment, and monitoring form the core of AI/MLOps. Picking the right tools and practices that support each stage are crucial to developing and maintaining models that perform exceptionally well WSC Area of Interest

Model Governance

ML Operations

Model Development

Data Ingestion

1. Data Collection

The initial stage in developing a ML model is gathering relevant data from various sources. The quality and quantity of data collected significantly impacts the performance of the model being built

2. Data Pre-Processing

This involves cleaning and organising raw data into a suitable format for analysis. Handling missing values, normalising data, encoding categorical variables, and removing duplicates all ensure data is ready for model training.

3. Feature Engineering

This process involves selecting, modifying, or creating new features from the raw data to improve a model’s performance. Highlighting patterns and relationships in the data can enhance a model’s ability to learn

4. Model Training

During model training, a ML algorithm is chosen and applied to learn from the processed data. The model iteratively adjusts its parameters to minimise errors and improve its predictions based on the training data set.

5. Model Selection

Choosing a model is typically based on a model's performance metrics (such as accuracy, precision, and recall on datasets), its complexity, and its suitability for the data and problem.

6. Model Deployment

Once trained & selected, a model is deployed into a production environment where it can process real-time data and provide predictions or insights.

Deployment can vary from a simple script to complex cloud-based solutions

7. Performance Monitoring

A common issue is models working well in “lab” environments but not in production. Monitoring is important to assess performance degradation due to changes in data or the environment in which it is deployed

8. Retraining & Tuning

Models need to be periodically retrained. Fine-tuning models is becoming increasingly important for models that are generic by design to bring value to specific verticals. Automating this pipeline is a key aspect of AI/MLOPs

9. Model Governance

A framework of policies, and practices need to be in place to ensure responsible use and management of ML models. This includes addressing ethical considerations, and ensuring compliance with regulations

10. Model Security

Securing the data pipeline, implementing access controls, & safeguarding against threats like adversarial attacks, & data poisoning is crucial to protect the model and its data from unauthorised access and malicious intent

The greatest challenges facing Engineering teams are coincidentally attractive opportunities to invest in from a White Star Capital / VC investor standpoint Source: KD Nuggets, WSC Analysis (2023)

180

Sector Focus: AI & Analytics Tools

Technologies & subsectors Part 1

WSC Score: 10

Visualisation Dashboarding

Solutions that can deliver clear and concise insights and visualisations are crucial for businesses looking to become increasingly data-driven.

Tailwinds +

+

Challenges

There is a large pull from C-Suites to implement reporting and SaaS tools and often, this is where budgets are first allocated Organisations are using more tools as part of their tech stacks generating more data than before.

Centralising reporting across siloes is becoming increasingly important for organisations

+ +

Unlike other current trends, this is not a new space and there already exist many industry leaders Most products offer analytics tools as a part of their value offering. While these tools are not very effective or robust, the fact that they are integrated and offer free features makes them compelling for teams to keep

WSC Score: 10

Predictive Analytics

A relatively mature space, the future of predictive analytics is shaping up to provide more granular and accurate predictions, allowing for increased personalisation and better behavioral understanding.

Tailwinds +

New technologies, such as GenAI, are creating new opportunities for platforms to offer more sophisticated tools

Challenges +

Integrating various tools and ensuring compatibility is complex, especially in WSC VC Investability Index: 7 environments with a mix of legacy systems and modern applications

WSC Score: 7

Generative AI UX

For the most part, publicly available Generative AI is generic and not tuned to specific verticals. In addition to this, most models are difficult to interface with. While OpenAI has made some strides towards multi-modality, start-ups that are building new ways to interact with GenAI models and make them more accessible to specific verticals are poised to succeed in the next few years.

Tailwinds +

The increasing demand for personalised, dynamic, and multi-modal user experiences with the rapid evolution of AI technologies

Source: WSC Analysis (2023)

Challenges +

Very challenging to set up. Most interfaces don’t work well alongside trainable models and it takes considerable computational effort to implement in live environments

181

Sector Focus: AI & Analytics Tools

Technologies & subsectors Part 2

WSC Score: Score: 7 7

AI & ML-Enhanced DevTools

AI/ML-Enhanced DevTools are development tools augmented with AI and ML capabilities to improve software development processes, including coding, testing, and debugging.

Tailwinds +

+

The increasing complexity of software development and the ongoing demand for faster and more efficient development cycles The continuous advancements in AI and ML technologies also contribute to the growth potential

Challenges + +

Managing the quality control of AI models, especially in coding accuracy Index: 7 WSC VC Investability Data leakage from incorrect use of tools has driven some organisations to restrict the use of AI/ML enhanced DevTools in the workplace

WSC Score: 7

AI/MLOps

AI/MLOps involve best practices, guidelines, and technologies for deploying and maintaining ML models in production.

Tailwinds +

The rapid adoption of AI/ML in business processes largely due to advancements in GenAI creates a need for scalable and efficient AI/ML model deployment

Source: WSC Analysis (2023)

Challenges +

Integrating AI/ML workflows with existing IT infrastructure, especially legacy infrastructure, is a challenge for many organisations

182

Sector Focus: AI & Analytics Tools

Market Map: Seed – Series B Predictive Analytics

Visualisation Dashboarding

AI & ML-Enhanced DevTools

AI/ML Ops

Source: WSC Analysis (2023)

Generative AI UX

183

Sector Focus: AI & Analytics Tools

Top Asset Light Startups $1.4bn raised to date Digital experience insights optimisation platform

$852m raised to date Centralised data platform helping businesses in their data journey

$431m raised to date Platform of AI for IT operations

$334m raised to date Search and discovery application programming interface platform

$251m raised to date Open-source ML automation platform designed to democratise artificial intelligence

Source: WSC Analysis (2023)

184

Productivity & Developer Tools

Sector Focus: Productivity & Developer Tools

Productivity & Developer Tools In today's digital era, nearly every service and product we interact with has been shaped by software. Behind every software, there lies a robust foundation of tools and frameworks designed to streamline the development process

766

79%+

Number of exits in the sector from 2020-2023YTD1

Growth in market value for Big-AI focused companies in 2023²

$152bn

83%+

Global productivity and developer tools market size by 2030³

Of Web Traffic is represented by API calls, the result of digital transformation and cloudbased application deployment4

The Software Development Process, comprised of various stages, demands diverse expertise and the need to overcome unique hurdles. These challenges present opportunities for tools and frameworks that facilitate easier, more efficient build processes. The breakneck speed at which software is being developed is mirrored by the speed of growth of tools designed to support developers. Each new advancement propels this sector into an exciting space of innovation.

The nature of Developer tools is that they often solve similar problems but with small or niche differences. As such, tools often face fierce competition amongst each other. Yet once a tool proves its worth, it becomes an invaluable and sticky asset to developers, showing a tendency to rapidly gain traction within organisations and spread across the industry via talent mobility. This stickiness and potential for widespread adoption presents compelling investment opportunities.

Technology

1

WSC Score

Notes

Software Delivery Lifecycle

9

Support collaboration

Developer SaaS

8

New opportunities for GenAI

Developer Infrastructure

7

Necessary to deploy software

Build & Development Tools

6

All developers use this

As of November 2023; Pitchbook , ² The Economist, ³ GrandView Research, ⁴ Akamai

186

Sector Focus: Productivity & Developer Tools

Market drivers Building software demands time and people. Enhancing software quality involves superior tools that boost developers' efficiency. These tools streamline time management, enabling developers to concentrate on essential tasks, thereby accelerating the product release process Programming & Development Tools used by Software Developers Worldwide, 2022

84%

Source Control / Coll aboration Tools

74%

Integrated Development Environments (IDE)

Project Management Tools

45%

Continuous Integration / Deployment Tools

44% 40%

Coll aboration Tools

13%

Static analysi s Tools

9%

Code R eview Tools Source: Statista

0%

10%

Increased Complexity in Tech Stacks Modern applications often require integration with various systems, handling large data sets, and ensuring high performance across different platforms and devices.

This complexity has never demanded more sophisticated development tooling to support this, such as advanced coding assistance tools, debuggers, and integrated development environments (IDEs) that support multiple languages and frameworks.

Tools that offer automation, such as continuous integration and continuous deployment (CI/CD) pipelines, are becoming indispensable for efficient software development. These tools not only speed up the development process but also ensure consistent quality and easier maintenance of codebases.

Source: McKinsey, WSC Analysis (2023)

20%

30%

40%

50%

60%

70%

80%

90%

Agile Methodologies are More Crucial than Ever Before In a world where products need to be shipped fast and often, DevOps practices and agile methodologies focus on collaboration, flexibility, and speed, facilitate rapid development cycles and seamless communication between developers, testers, and operations teams.

Tools that support version control, realtime collaboration, and project management are crucial in this regard.

Cloud-based development environments and tools are also gaining traction due to their scalability and accessibility. They allow teams to work collaboratively, a feature that has become increasingly important in the wake of the global shift towards distributed engineering teams.

187

Sector Focus: Productivity & Developer Tools

The Software Development Lifecycle The Software Development Lifecycle (SDL) is a structured framework that outlines the stages and processes involved in creating and maintaining software. Developers often use different tools for each stage to support specific requirements and objectives.

Represents WSC Area of Interest

1. Planning Developers define project goals, scope and requirements. Project planning tools are essential to ensure alignment with stakeholders

2. Requirements Gathering Requirement gathering tools include collaborations tools, informational repositories, and other tools to document and detail product builds

8. Analytics Tools Developers often place analytics on top of data-streams to learn user behaviour and effectively iterate on their products

3. Design Design tools like wireframing and prototyping software facilitate collaboration between designers and developers

7. Operation & Maintenance Developers rely on monitoring tools, error tracking software, and customer feedback to continually improve software

4. Development

6. Deployment

Tools such as integrated development environments (IDEs), code editors, and version control systems help write, test, and manage code efficiently

Deployment tools and automation scripts are used to streamline the process of deploying to production environments, making it more efficient and less error-prone

5. Testing Developers use testing tools and frameworks to automate testing processes, ensuring that the software performs as expected and meets the defined requirements

Innovative tools that address specific pain points in the SDL process are likely to find receptive markets making them attractive opportunities to invest in from a White Star Capital / VC investor standpoint Source: WSC Analysis (2023)

188

Sector Focus: Productivity & Developer Tools

Technologies & subsectors Part 1

WSC Score: 9

Software Delivery Lifecycle (Inclusive of Project Management Tools, and Collaboration Tools)

Solutions that coordinate how teams design, develop, and test software. This sector contains further segments of products, services, and solutions that exert an influence on developers throughout the lifecycle of the development process.

Tailwinds +

+

Challenges

Rise in remote working has boosted the demand for tools that facilitate collaboration across distributed teams Tech layoffs have shifted from bottom-up buying motion and putting the purchasing power back in the hands of organisations

+

Fragmentation and fierce competition occurs from many different players in the space

WSC Score: 8

Developer SaaS (Inclusive of Design Tools, and Low-code/No-code Platforms)

These tools and services are accessed via the internet and offer a range of functionalities to assist developers and non developers in creating, deploying, and managing software applications. They often take the form of Low-code, Platform as a Service, or Design Tools.

Tailwinds +

New technologies, such as GenAI, are creating new opportunities for platforms to offer more sophisticated tools

Challenges +

Integrating various tools and ensuring WSC VC Investability Index: 7 compatibility is complex, especially in environments with a mix of legacy systems and modern applications

WSC Score: 7

Developer Infrastructure

(Inclusive of Containerisation & Orchestration Tools, Testing Frameworks, CI/CD Tools, Configuration Management Tools, and Package Managers)

All software that supports the distributed repeatable development of software that engineering teams depend on, such as Version Control, Testing Frameworks, CI/CD Tools, and package managers.

Tailwinds +

Mission-critical for engineering teams to deploy software at scale efficiently

Source: WSC Analysis (2023)

Challenges +

Integrating various tools and ensuring compatibility is complex, especially in environments with a mix of legacy systems and modern applications

189

Sector Focus: Productivity & Developer Tools

Technologies & subsectors Part 2

WSC Score: 6

Build & Development Tools

(Inclusive of Containerisation & Orchestration Tools, Testing Frameworks, CI/CD Tools, Configuration Management Tools, and Package Managers)

Tools that support the day-to-day workflows of an individual engineer. Similar to choosing what pen or notebook to use, developers put together an ecosystem of what works best for them.

Tailwinds + +

All developers of every level have a need for these tools. There will never not be users Developers influence others around them often leading to strong product led growth in this sector

Challenges + + +

Source: WSC Analysis (2023)

Many open-source tools making it hard to WSC VC Investability Index: 7 monetise Individuals can switch, and they switch often resulting in low stickiness Difficult to sell at enterprise level

190

Sector Focus: Productivity & Developer Tools

Market Map: Seed – Series B Software Delivery Lifecycle

Developer SaaS

Developer Infrastructure

Build and Development Tools

Source: WSC Analysis (2023)

191

Sector Focus: Productivity & Developer Tools

Top Asset Light Startups $4.7bn raised to date Coding software designed to manage the code quality of applications

$802m raised to date Application and delivery platform designed to integrate custom code

$443m raised to date Software container platform

$414m raised to date Platform for work management that helps teams orchestrate work

$351m raised to date Software development platform for open-source and private projects in organisations

Source: WSC Analysis (2023)

192

The Sustainable Global Economy Through the eyes of an international investor

Executive Summary $18tn

$97.3bn

Investment gap to deliver the net-zero energy transition

Amount invested globally in Climate tech in 2022

$370bn

$9tn - $12tn

In funding allocated by the Inflation Reduction Act (IRA) to mitigate climate change

Estimation of the climate tech market size by 2030

Looking at the Sustainable Global Economy from a VC perspective The global climate crisis and the urgent need for a green transition are fueling what is being described as the new industrial revolution and the growth of what we call the Sustainable Global Economy. As venture capitalists, we get to sit at the forefront of this revolution. We believe we should be involved in this revolution not only because it is necessary for the good of our planet, but also because from a purely financial perspective it will undoubtedly see the rise of the unicorns of the future.

The green transition has been gaining significant momentum in the last few years, driven by several key factors. Macroeconomic forces, including Europe’s energy crisis, ambitious government green initiatives (such as the US IRA, the EU Green Deal or Japan’s GX Basic Plan), substantial technological improvements in renewables, biomaterials, and carbon removal, and finally growing alignment in capital markets toward green investments are coinciding to drive major change across industries while creating new ones.

There are many ways for venture capitalists to be involved, and we hope this report sheds a light as to where and how as generalists we can also participate, without having to completely rethink our investment criteria. There are amazing new technologies and business models and it is up to us to discover them. Software will play a pivotal role in this Sustainable Global Economy, the way it has elsewhere, disrupting industries and powering the green transition.

There will continue to be setbacks, hopefully not as harsh as during the last climate winter, but we believe this new industrial revolution is underway no matter what. It is up to us to seize this opportunity.

Sector Leads

Matthieu Lattes General Partner

Cristina Ventura General Partner CCO

Authors

Sanjay Zimmermann Partner

Felix Winckler Venture Partner

Blanche Ajarrista Vice President

Source: Bloomberg (2023), Allianz Research Data (2023), McKinsey (2023), WSC Analysis (2023)

Jeremiah Yeo Vice President

Sara Schein Analyst

194

Contents Section 1

The Sustainable Global Economy: An Overview

196 - 199

Section 2

The Sustainable Global Economy: Ecosystem

200 - 210

Section 3

Our approach to investing in the

211 - 216

Sustainable Global Economy Section 4

Sector Focus

217 - 271

Green Fintech

218 - 224

Circular Economy

225 - 231

Carbon Management, Trading, & Capture

232 - 238

Electric Infrastructure

239 - 244

Construction

245 - 250

AgriTech & FoodTech

251 - 257

Packaging & New Materials

258 - 264

Clean Energy

265 - 271

1

The Sustainable Global Economy: An Overview

The Sustainable Global Economy: Overview

The Sustainable Global Economy: a new avenue of growth for venture capital Despite the previous boom and bust, the conditions are now right for traditional VCs to fund the innovations needed to get us to Net Zero It is now hopefully commonly accepted that a green transition is urgently needed. Indeed, small shifts in the earth’s temperature have already unleashed dramatic storms, droughts, and floods to various parts of the globe, displacing millions, deregulating ecosystems, and driving biodiversity loss. A chilling proof: the last Ice Age, tens of millions of years ago, represented only a 5°C shift in temperature. The risks of going above 2°C are just too high.

The good news is that after stalled efforts, there appears to be a global concerted initiative to address climate change and fund the technologies and businesses that will help us get to Net Zero quickly.

Monthly Mean Global Surface Temperature – Land & Ocean 1.5 1 0.5 0 -0.5 -1 1880

1900

1920

1940

1960

1980

2000

2020

Why now?

Regulatory pressure, combined with consumer demand for sustainable and clean alternatives, are pushing stakeholders to rethink the way they do business while encouraging entrepreneurs to build the innovative solutions required.

Governments around the world are pushing for major change, with the US allocating more than $370bn to climate as part of their Inflation Reduction Act while the EU passed a ‘Green Deal’ which could see them dedicate more than €1tn in public and private funds to mitigating climate change.

Similar pieces of legislation are being passed around the world, from Brazil’s National Plan to Japan’s GX Basic Plan or the Chinese Five Year Plan. These measures may open up many more opportunities, which McKinsey estimates could reach $9tn to $12tn in annual investment by 2023.

What does this mean for WSC? We are at the very beginning of a new industrial revolution, driven by macro and micro tailwinds, which should see the development of entirely new industries, jobs, and businesses dedicated to solving a single problem.

Sustainability tech is becoming mainstream. That said, there is a big gap between the types of businesses that can be funded by traditional VCs and those that will require longer-term, more infrastructure and moonshot-based approaches. At White Star, we believe we can play here, without having to redesign our investment strategy, by identifying the sectors and businesses that match our investment criteria.

Source: NASA (2022)

197

The Sustainable Global Economy: Overview

The sustainable global economy is picking up speed thanks to new policies and regulations Governments around the world have taken significant legislative and regulatory action to support their climate and energy priorities including mandates, subsidies and market design The EU The Green Deal (2019), Fit for 55 (2021) and RePowerEU (2022) programs have progressively raised the target for emission reductions by member states.

The EU has also broadened its Emission Trading System (ETS) to include new sectors such as the maritime and aviation sectors. In 2023, the European Commission introduced the Green Deal Industrial Plan, offering incentives for domestic production and CleanTech.

The EU Taxonomy Regulation symbolises governments’ commitment to promoting sustainable finance and achieving environmental and climate goals by directing private capital toward sustainable investments. Under the SFDR, all EU financial market participants are required to disclose their ESG activities, with funds and banks classified under articles 6, 8 or 9 based on their investments. Since its adoption in 2000 the financial industry has seen a considerable increase in “green” practices.

The US The Inflation Reduction Act stands as the most extensive piece of federal legislation ever addressing climate change, with an investment of $783bn in provisions centered on energy security and climate change.

Some of the levers include tax credits like the Investment Tax Credit (ITC) and Production Tax Credit (PTC), allowing taxpayers to deduct a portion of renewable energy systems costs from their federal taxes.

The largest allocation areas are $128bn for renewable energy and grid energy storage, $30bn for nuclear power, $13bn for electric vehicle incentives, $14bn for home energy efficiency upgrades, $22bn for home energy supply improvements and $37bn for advanced manufacturing.

Canada Canada has announced $60bn in clean energy tax credits and $20bn in sustainable infrastructure investments as part of its 2023 budget.

The largest portion of the Canadian budget’s energy transition-focused investments, representing more than $25bn through 2035, is made through the Clean Energy Investment Tax Credit.

The budget proposes a 15% refundable tax credit for investments including non-emitting electricity generation systems.

Japan On December 22, 2022 the Japanese government unveiled the Green Transformation (GX) Basic Policy. It outlines regulatory, financing, and technology development priorities for the green transformation of various industrial sectors. A key pillar of the GX Basic Policy is the support for energy transition.

Source: WSC Analysis (2023)

198

The Sustainable Global Economy: Overview

Our 10-year outlook for the Sustainable Global Economy As we look to invest in the top startups from across the globe, we believe the following key trends will result in a growing number of opportunities within the Sustainable Global Economy

Racing to reach Net Zero

Consumer pressure on corporates

There is a significant amount of work to be done to reach net zero by both reducing and removing carbon from the atmosphere.

Companies can no longer afford to ignore consumer demands when it comes to where goods come from, how they are made, packaged, and distributed and where they end up.

As a result, we will see the proliferation of technologies surrounding carbon emissions and carbon measurements, from deep tech to software, across both B2B and B2C. Certain technologies may finally reach enough scale to make substantial impacts on carbon emissions, although this remains far away for now.

1.5ºC

45%

98%

Limit to temperature rises

Reduction in emissions by 2030

Of electricity will need to be carbonfree by 2050

The circular economy will no longer be on the fringes but will make its way into business models across food and agriculture, manufacturing, packaging, logistics, and energy.

We will see both deep tech and SaaS companies that recycle and repurpose materials, reduce waste, and recirculate goods.

Changing climate and ecosystems

Decreasing reliance on fossil fuels

Nature is not the only loser in a changing climate – our built environment is not ready to sustain harsher storms, colder winters, and hotter summers.

Renewable energy and EVs are increasingly overtaking oil and petrol cars, coal plants are being shut down, biodegradable and biomaterials are slowly overtaking plastics.

We will see plenty of new infrastructures and technologies to improve cities’ resilience to these changes as well as financial and insurance companies that help people who have been directly affected.

Yet there is so much work to be done to fully replace fossil fuels, in terms of price parity, infrastructure, and distribution.

Source: WSC Analysis (2023)

We will see more and more businesses that tackle grid and EV management, address methane gas emissions, or reduce reliance on non-recyclables.

199

2

The Sustainable Global Economy: Ecosystem

The Sustainable Global Economy: Ecosystem

Ecosystem Highlights $181bn

$35bn

Raised by climate tech startups in the last 3 years

Raised by climate tech startups in 2023 YTD (Jan-Aug)

685

14.8%

Mega rounds1

Share of VC funding over the last 3 years

$7.4bn

43

Share of seed funding in the last 3 years

VC-backed climate tech unicorns2

140

+163%

Climate tech exits in 2022

Share price performance of the top 30 public climate tech companies since 20173

Source: PwC (2023), Pitchbook (2023), CTVC (2023) Notes: 1) Rounds >$100m, 2) As of 2022, 3) Using the EIP Index, performance data of the overall index between 2017-2023

201

The Sustainable Global Economy: Ecosystem

Deal activity has increased significantly over the last couple years Deal volumes have almost doubled in Europe and North America Climate Tech Deal Count across Seed, Series A and Series B by Region 1,538

628 978

615

162 368

408

473

2016

2017

2018

381

305

262

195

640

842

758 543

1,501

498

558

2019

2020

North America

Europe

859

792

284

2021

2022

2023YTD 1

Southeast Asia

While deal values are almost 3x vs. 3 years ago Total Capital Invested in Climate Tech across Seed, Series A and Series B by Region ($m) 217 3,525

12 274

616

2,755

2,316

2016

2017

1,037

5,079

4,733

2018

2019

8

1,766

10,299

9,279 2,861

North America Source: Pitchbook (2023) Notes: 1) As of August 2023

5,214

310

93

53 665

640

3,825 2020 Europe

2021

2022

2023YTD 1

Southeast Asia

202

The Sustainable Global Economy: Ecosystem

Despite worsening market conditions, climate tech VCs continue to raise funds Climate Tech VCs are raising more funds that ever Number of Climate Tech funds raised by Climate Tech VCs globally1

66 60 54

13

2016

25

21

20

2017

9

2018

2019

2020

2021

2022

2023YTD

2

LPs have increased appetite to invest into to Climate Tech Funds Value of funds raised by Climate Tech VCs globally ($m)

11,864

11,556

7,954 7,001

3,579

813

870

2016

2017

813 2018

2019

Source: Pitchbook (2023) Notes: 1) Includes NA, EU and SEA, 2) As of August 2023

2020

2021

2022

2023YTD

2

203

The Sustainable Global Economy: Ecosystem

VC funds fall within 4 broad categories when looking at Sustainability Classification of VC Investors: here we will use Sustainability and Climate Tech interchangeably Climate Specialists: climate general thesis across 7 climate verticals (e.g. energy, mobility, food & agriculture, construction, carbon) Vertical Specialists: single vertical focus within climate (e.g. energy, mobility etc.)

Deeptech: frontier, hard science technologies to address climate Generalist: predominantly enterprise or consumer software, with opportunistic climate investments

Climate

Generalist

Vertical Specialist

DeepTech

Source: CTVC (2023), WSC Analysis (2023)

204

The Sustainable Global Economy: Ecosystem

Active early-stage Climate Tech funds have raised over $13bn in AUM Select Top Climate Specialist VC funds in order of AUM Investor

AUM ($)

Stage

Deal Count

2015

5.0bn

Seed / Series A

190

2015

2.0bn

Series A / B

180

2013

1.5bn

Seed / Series A

142

1994

1.5bn

Seed

2,466

2016

1.2bn

Seed / Series A

43

20181

1.1bn

Seed – Growth

50+

2010

500m

Seed / Series A

389

2021

€350m

Seed

13

2013

€300m

Series A / B / C

4

2020

312m

Series A

16

2017

€130m

Seed / Series A

61

2020

€110.8m

Seed / Series A

22

Founded

HQ

Source: WSC Analysis (2023) Notes: 1) Includes the CleanTech Fund I, ClimateTech Fund II and the Sustainability Venture Fund

Top Deals

205

The Sustainable Global Economy: Ecosystem

So far ClimateTech has proven resilient to the downturn Early-stage valuations remain resilient amid market downturns % Change in Median Post-Money Valuation by Series Globally 2021 – 2023YTD1 Climate Tech 44%

Other Tech

36%

61%

44% 17%

13%

5%

-29% -42% Median PostMoney Valuation 2023YTD

Seed $12m $13m

Series A $45m $45m

-45%

Series B $125m $81m

Series C $240m $270m

Series D $1,209m $492m

Most sub-sectors saw boosted valuations from 2022 to H1-2023 Median Post-Money Valuation per Sub-Sector Sub-sector

2022

H1-2023

% Change

Carbon Capture & Management

23.4

22.3

-4.5%

Electric Infrastructure

21.0

AgriTech & FoodTech

20.8

24.1

+15.9%

Packaging & New Materials

22

32.0

-10.9%

Clean Energy

30.8

44.3

+17.1%

Construction

18.3

19.8

+8.3%

Circular Economy

14.2

22.0

+45.2%

Financing & Fintech

14.5

18.0

+27.4%

Source: Pitchbook (2023) Notes: 1) As of August 2023

24.1

+44.0%

206

The Sustainable Global Economy: Ecosystem

Most of the funding is going to Clean Energy, where there are the most exit opportunities Clean Energy, AgriTech & FoodTech, and Electric Infrastructure led overall funding H1-23 Funding per Subsector

$3.1bn

$3.9bn AgriTech & FoodTech

Circular Economy

$0.3 bn

$2.3bn

$6.0bn

$3.2bn

Clean Energy

Electric Infrastructure

Packaging & New Materials

Financing & Fintech

$0.3 bn

Carbon Capture & Management

$0.2 bn

Construction

Packaging & New Materials and Clean Energy led count of exits Count of climate exits across M&A and IPO since 2020 by sub-sector

913

869

596 391

2020

2021 Packaging & New Materials

2022 Clean Energy

Circular Economy

AgriTech & Foodtech

Electric infras tructure

Ca rbon Capture & Management

Co nstruction

Financing & Fintech

Source: Pitchbook (2023)

2023 H1

207

The Sustainable Global Economy: Ecosystem

The exit environment is picking up, which is key to the long-term viability of the ecosystem Climate tech exit activity has increased 70% YoY in the last two years, led by large energy companies and private equity firms

57%

63%

Of exits from 2020 to February 2023 were M&A transactions

Of climate tech acquisitions since 2020 were driven by corporate buyers

289

$400bn

Climate tech companies have exited via M&A, SPAC, and IPO since 2020

In total EV from the last three years’ disclosed exits

Large climate tech exits across key climate verticals since 2020

IPO

2023

M&A

[NASDAQ: NXT] $638m raised at $4.9bn

M&A

2023

2022

Acquired by BP (LON: BP) for $4.1bn

M&A

Acquired by Jera for €1.6bn

Source: Climate Tech VC (2023), Pitchbook (2023)

2022

Acquired by EDP Renováveis for €600m

M&A

2020

Acquired by Waste Management for $4bn

M&A

2022

Acquired by Cargill for £775m

208

The Sustainable Global Economy: Ecosystem

Corporate M&A from energy companies is driving overall exit count Corporates are the most active acquirers of climate tech companies Count of acquisitions by acquirer type

105

27

26 8

Corporate

Private Equity

Startup

Developer

The most active acquirers are energy companies, followed by financial institutions Most active acquirers of Climate Tech companies by count since 2020

Shell

7

Ara Partners

6

BP

5

Xpansiv

4

Schneider Electric

4

Blackrock

4

Brookfield Renewable Partners

3

BorgWarner

3

Nasdaq

3

Source: CTVC (2023)

209

The Sustainable Global Economy: Ecosystem

Select Unicorns $11.8bn valuation High-quality lithium-ion batteries for electric vehicles and energy storage systems

$5.0bn valuation Renewable energy supplier, offering affordable and sustainable energy solutions to customers

$4.0bn valuation Farmer-to-farmer agronomic information network to help farmers in the management of their data and gain insights from each other

$3.8bn valuation Simplify the solar design and sales process through the development of their cutting-edge cloud-based platform

$1.0bn valuation Developing modular, vertical farming systems that can be installed in supermarkets, restaurants, and warehouses Source: WSC Analysis (2023)

210

3

Our approach to investing in the Sustainable Global Economy

The Sustainable Global Economy: Our Approach

Climate Tech VC has had a chequered past due to the nature of cleantech companies Of the $25bn that VC investors poured into Climate Tech from 20062011, more than 50% was lost by 2015 •

•

Starting in 2006, growing consumer awareness, rising fossil fuel prices, and new legislation led to Silicon Valley VC firms going all in on climate tech, with a heavy focus on energy and renewables By 2011, almost all of the renewable start-ups founded in the previous decade were shut down or about to be, driven to bankruptcy by a combination of falling natural gas prices, inconsistent government policies, and the credit crunch of the 2008 financial crisis

Total Capital Invested across Seed, Series A and Series B Climate Tech startups globally ($m)1 6000

5000

4000

3000

2000

1000

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Cleantech companies developing new materials, hardware, chemicals, or processes, tend to be poorly suited to VC investment due to the significant capital requirements, long development timelines, and unclear exit opportunities Technologies take a significant amount of time to reach maturity, beyond typical VC funds’ return requirements

Expectations

SVB Climate Tech Innovation Hype Curve

Time Source: Pitchbook (2023), SVB (2022) Notes: 1) Includes NA, Europe and SEA

212

The Sustainable Global Economy: Our Approach

Yet we believe that the conditions are right for a new sustainable global economy, funded by VC The market and macro conditions today are ripe for outsized climate investing returns and impact 1 - Policies and regulations: Governments and regulatory bodies worldwide are increasingly prioritising climate action and implementing policies and incentives to accelerate the transition to a low-carbon economy 2 - Corporate or consumer demand: Businesses and consumers are increasingly seeking to be “greener”. Sustainable solutions have become central to consumers and thus to corporates. This creates a substantially more positive market environment 3 - Capital alignment: The rise of impact investing and Environmental, Social, and Governance (ESG) considerations in investment decision-making is a massive boost to the sustainable global economy. In addition, governments around the world are pledging trillions of dollars to reach net zero by 2050 4 - Tech maturity: The previous climate tech boom and bust resulted in economies of scale, particularly in solar where prices decreased by 89% in the last 10 years. Many climate tech companies are building on established technologies and have demonstrated commercial viability 5 - Talent interest: The climate issue and the desire to have a career with impact is top of mind for younger generations. These aspirations in new generations will create a formidable pool of talent ready to innovate 6 - Urgency of the crisis: If some on the conservative side of the political spectrum are still reluctant to recognise the issue, there is a consensus over the urgency of the matter. Only a 5°C change in temperature was necessary to move from the glaciation age to our current climate. With a projected 3°C change in the next 30 years the issue will become more pressing as time passes

In keeping with WSC’s investment guidelines, it is still possible to invest in Climate Tech if companies are able to: Deliver solutions at price parity with existing ones

Innovate on business models to reduce sales cycle

Leverage regulatory environments

Hedge against macro events

Leverage established technologies

Ramp up revenues with capital raises

213

The Sustainable Global Economy: Our Approach

We’ve created a WSC VC Investability Index to assess sectors and subsectors of interest The purpose of this report will be to help shed light on this burgeoning ecosystem, looking at every single industry and identifying opportunities for investment as a generalist venture capital fund Scoring: Yes = 1 / No = 0 Business Model Is this a recurring business model?

Technology Readiness Is the existing technology ready to scale?

Margins Are there software-like margins?

Stage Are there revenue-generating businesses raising at Series A? Market Size Does the potential market size at scale correspond to our criteria ($5bn+)?

Exit Environment Have we seen large exits in this sector ($1bn+)?

Capital Efficiency Can these businesses achieve scale without overly diluting early shareholders?

Market Readiness Are we seeing pull from the market and supportive regulatory regimes?

Barriers to Entry Are there barriers to entry?

Internationalisation Is this an internationally scalable model?

Legend Out of Scope

Work to be done

Within WSC Scope

Score 0-3

Score 4-6

Score 7-9

214

The Sustainable Global Economy: Our Approach

And broken down the Sustainable Global Economy into 8 sectors and 34 subsectors Green FinTech • Payments • Lending

• Insurance / Risk Management • Crypto

Circular Economy • Sharing Economy • Product Lifecycle Management

• Sustainable Materials • Waste Management

Carbon Management, Trading & Capture • Carbon Trading & Carbon Markets • Carbon Accounting & ESG Reporting • Carbon Utilisation

• Direct Air Capture (DAC) • Carbon Capture from Industrial Processes (CCI)

Electric Infrastructure • Smart Grid Technology • Energy Storage • EV Charging Infrastructure

Construction • Smart Buildings & Automation • Sustainable Materials • Prefabricated Buildings

AgriTech & FoodTech • Picks & Shovels • Precision Agriculture • Alternative Proteins

• Food Waste Reduction • Vertical Farming

Packaging & New Materials • Packaging Software & Infrastructure • Biodegradable & Compostable

• Waste to Value • Bio-Materials

Clean Energy • Solar Power • Wind Power • Nuclear

• Hydropower • Waste-to-energy • Hydrogen 215

The Sustainable Global Economy: Our Approach

Our thematic approach to investing leads us to focus on specific subsectors WSC focuses on these key sectors undergoing rapid structural change Climate SaaS

Climate Finance

Circular Economy

RegTech

Industrial processes are increasingly reliant on software to report, capture, or reduce emissions and become more sustainable

Financial innovation will be needed to fund society’s climate adaptation and mitigation, while improved data, hardware, and models will pioneer broad-based spectrum insurance

Reengineering of value changes will play a key role in the transition to net-zero emissions, leading to structural changes to markets that accompany the technological transition

Increasingly heavy regulatory burdens globally can only be addressed through software

Based on our scoring, we have identified the following subsectors as the most investable for generalist VCs and thus WSC Climate SaaS

Climate Finance

✓

✓

Circular Economy

Regtech

Green Fintech

Payments

✓

Lending Insurance / Risk management

✓

✓

✓

Circular Economy

Sharing Economy

✓

Product Lifecycle Management

✓

✓ ✓

Carbon Management, Trading & Capture

Carbon Trading & Carbon Markets

✓

✓

Carbon Accounting & ESG Reporting

✓

✓

✓

✓

Electric Infrastructure

Smart Grid Technology Construction

✓

✓

Picks & Shovels

✓

✓

Precision Agriculture

✓

Smart Buildings & Automation Agritech & Foodtech

Packaging & New Materials

Packaging Software & Infrastructure

✓

✓ 216

4 Sector Focus

Green FinTech

Sector Focus: Green FinTech

Green FinTech Green FinTechs can deliver the innovative power that financial institutions lack by leveraging big data and AI, and reducing costs and friction

$1.7bn

75%

Raised by Green FinTechs in H1-23

Of banking CEOs believe their future growth is determined by their ability to shift to a low carbon economy

$2.4tn

$53tn

Raised for green bonds globally as of Jan-23 to support sustainable projects

In AUM for global ESG assets by 2025

ESG and sustainability have become increasingly important to financial institutions. From carbon offsetting through payments, lending and investing into sustainable projects, to trading carbon, to risk analysis management and insurance, we are seeing increasingly innovative financial engineering to address environmental and sustainability challenges.

This is an area of sustainable technology that lends itself well to VC investments, given the asset light nature of these businesses. That said, VCs should be aware of the growing regulatory burdens these businesses face, especially against greenwashing.

Technology

WSC Score

Notes

Payments

7

Easy to build

Lending & Green Investing

7

Consumer demand

Insurance / Risk Management

7

Software play

Crypto

5

Source: KPMG (2023), Worldbank (2023), Barclays (2023), WSC Analysis (2023)

219

Sector Focus: Green FinTech

Market Drivers Sustainability efforts require the full backing of financial institutions, which are slowly reacting to regulatory and consumer pressure GSS+1 Volumes Reached $858.5bn in 2022 ($bn) 1200

1000

800

600

400

200

0 <2015

2016 Green

2017 Social

2018

2019

Sustainability

2020 2

SLB

2021

2022

Transition

Policies & Regulation

Corporate Pressure & Demand

The EU Taxonomy Regulation is symptomatic of the efforts of Governments willingness to promote sustainable finance and achieve new environmental and climate goals. The regulation aims to channel private capital towards environmentally sustainable investments. Since its adoption in 2000 the financial industry has seen the emergence “green” focus practices.

Industrial players and oil giants including Chevron and Exxon are taking the lead in investing in Carbon Capture and Utilisation (CCI) to reduce emissions from their extraction activities.

Increasing consumer awareness of climate change and environmental issues has led to a growing demand for investment opportunities that promote sustainability and responsible environmental stewardship.

Corporate Support

Stripe teamed up with Alphabet, Meta, Shopify, and McKinsey to launch Frontier, which aims to purchase $925m worth of carbon removal by 2030. Through Stripe, businesses can direct a % of their revenue to remove CO2.

Source: Climate Bonds Initiative (2023) Notes: 1) Green, social, sustainability and sustainability-linked bonds, 2) Sustainability-linked bonds

220

Sector Focus: Green FinTech

Technologies & Subsectors Score: 7

Payments

Consumers and companies need tools and infrastructure that enable them to make sustainable spending decisions. The next wave of innovation for payments companies are tying transactions to carbon offsetting.

Tailwinds + +

Challenges

Consumer demand Ease of implementation

+ + +

Growing transaction costs Lack of transparency from off-setting initiatives Already competitive market

Score: 7

Lending & Green Investing

Debt plays a major role in the green economy. The majority of heavy sustainability projects, such as solar panels or wind turbine installations are financed with debt. Sustainability-linked lending skyrocketed from $5bn in 2017 to $120bn in 2020.

Tailwinds Many new policies and incentives are put in place to encourage green investments, including the issuance of green bonds Institutional investors, including pension funds and asset managers, are increasingly interested in sustainable and responsible investment options

+

+

Challenges + +

Green bonds may have lower yields ”Greenwashing” concerns WSC VC Investability Index: 7

Score: 7

Insurance and Risk Management

Climate change affects insurance underwriting due to the prevalence of natural disasters in some regions. Innovations include climate projections; artificial intelligence and satellite monitoring; and insurance products, helping businesses assess climate-related risks and minimise losses.

Tailwinds +

The rising frequency and severity of climaterelated events, such as hurricanes, wildfires, and floods, are driving demand for insurance and risk mitigation solutions

Source: WSC Analysis (2023)

Challenges + + +

Difficulty of risk assessments Lack predictability for pricing Increasing loss ratios as prevalence of natural disasters grow

221

Sector Focus: Green FinTech

Technologies & Subsectors Score: 5

Crypto and Blockchain

Most serious crypto companies in the climate space are centered around carbon credits, like Switzerland’s Toucan, which tokenises credits on blockchain. Blockchain can be a useful technology to prevent fraud and provide more transparency in carbon trading.

Tailwinds +

Transparency and traceability of transactions is facilitated by blockchain technology

Challenges +

+

Source: WSC Analysis (2023)

Some blockchain networks, particularly proof-ofwork networks are criticised for their high energy consumption Blockchain networks often face scalability issues

222

Sector Focus: Green FinTech

Market Map: Seed – Series B Payments

Lending

Insurance & Risk Management

Crypto & Blockchain

Source: WSC Analysis (2023)

223

Sector Focus: Green FinTech

Top Asset Light Startups $450.3m raised to date Sustainable financial platform

$139.7m raised to date Climate focus insurance underwriting

$97.0m raised to date Data analytics platform

$37.5m raised to date Software designed to predict the physical risk of climate change

$26.3m raised to date Sustainability-focused digital banking services

Source: WSC Analysis (2023)

224

Circular Economy

Sector Focus: Circular Economy

Circular Economy Software can solve for the 3 Rs: reducing, reusing, recycling, which are key aspects of sustainability and reducing overall emissions

2.1bn

$4.3tn

Tonnes of waste dumped in landfills every year

Additional economic output created by the circular economy by 2030

1 Truckload

9.3bn

Of textile waste is discarded each second

Tonnes of CO2 emission that can be avoided by 2050 by implementing circular economy strategies

Our economy operates under a 'take-make-waste' system. In a circular economy, a fundamental requirement is that the materials re-enter the economy at the end of their use. The shift from a linear to a circular system is at the heart of the circular economy concept.

The sharing economy and second-hand market represent the most advanced sectors of the circular economy, largely thanks to major platform shifts (e.g. mobile, e-commerce, logistics), with some focusing on the optimisation of goods’ usage and promoting the idea of access over ownership.

Technology

WSC Score

Notes

Sharing Economy

7

Proven success

Product Lifecycle Management

7

WSC experience1

Sustainable Materials

5

Waste Management

2

Source: Ellen MacArthur Foundation (2022), WSC Analysis (2023) Notes: 1) WSC portfolio includes 900.care offering refillable hygiene products

226

Sector Focus: Circular Economy

Market Drivers The circular economy is rapidly gaining traction across various sectors, fueled by public concern about waste reduction and resource scarcity Global Waste Treatment

2022 Deal Volumes By Sector (%)

(%) 6%

14%

11% 4%

36%

25% 33%

Industrials & Manufacturing

25%

8%

TMT Composting Incineration

Controlled Landfill

21%

10%

8%

Landfill (Unspecified) Sanitary Landfill (Wi th l andfill gas collection)

Retail, Consumer and Leisure

Life Sciences

Food and Drink

Open dump Recycling

Policies & Regulation

Resource Scarcity

Manufacturing is adapting to new global regulations, including Extended Producer Responsibility (EPR) regulations which require manufacturers to factor in the environmental costs of a product’s entire lifecycle into its market price.

Depletion and increases in cost of natural resources like minerals, is driving the need for more efficient resource use and recycling. In the hightech industry, the rise in raw material costs has prompted manufactures to implement take-back schemes (e.g., Apple).

This mandates manufacturers to bear the responsibility of the-end-of-life phase, encouraging waste reduction via take-back programs and contributing to recycling costs.

Source: WSC Analysis (2023), Kaza et al. (2018)

In the fashion industry, supply chain disruptions threatens margins, and the fashion industry now needs to rethink its supply chain and manage excess production.

227

Sector Focus: Circular Economy

Technologies & Subsectors Score: 7

Sharing Economy

The sharing economy, exemplified by services like Uber and Airbnb, and the growth of secondhand market platforms such as eBay and Vinted, play a vital role by efficiently utilising resources and promoting product reuse.

Tailwinds + +

Challenges

The sharing economy encourages the idea of access over ownership Maturity and proven economic viability of these business models

+ + +

Market saturation Low margins Limited barriers to entry

Score: 7

Product Lifecycle Management

Technologies that improve product design and lifecycle management, or products that are easier to disassemble and recycle and using data analytics to optimise the use of resources.

Tailwinds Commercial value of imbedding recyclability in product manufacturing Can lead to cost optimisation in manufacturing process

+ +

Challenges +

Disrupts existing supply chain and infrastructure

WSC VC Investability Index: 7

Score: 5

Sustainable Materials

Startups are developing new materials that are more sustainable and have a lower environmental impact, such as bioplastics, biomaterials, and recycled materials.

Tailwinds +

Increasing awareness of environmental issues and resource depletion is driving demand for materials that have a lower environmental footprint

Source: WSC Analysis (2023)

Challenges +

Disrupts existing supply chain and infrastructure

228

Sector Focus: Circular Economy

Technologies & Subsectors Score: 2

Waste Management

Startups are working on advanced recycling technologies to reduce waste, recover valuable materials, and create a circular economy from waste streams.

Tailwinds +

Regulations and standards are being implemented to promote responsible waste management, recycling, and waste reduction

Source: WSC Analysis (2023)

Challenges + +

Supply chain and infrastructure complexity Achieving profitability

229

Sector Focus: Circular Economy

Market Map: Seed – Series B Waste Management

Product Life Cycle

Sharing Economy

Sustainable Materials

Source: WSC Analysis (2023)

230

Sector Focus: Circular Economy

Top Asset Light Startups $2.3bn raised to date Operator of a subscription-based electronics rental platform designed to offer pay-as-you-go consumer electronics

$562.5m raised to date Online marketplace for second-hand fashion products enabling individuals to buy, sell and swap clothes, accessories and lifestyle items

$32.3m raised to date Developer of hardware-enabled, machine-visiondriven software designed to detect textile defects in real-time

$23.6m raised to date Developer of digital tools designed to detect and provide analytics on waste management

$17.0m raised to date AI computer vision software to be deployed in recycling plants to measure waste flows and provide analytics to increase recycling rates Source: WSC Analysis (2023)

231

Carbon Management, Trading & Capture

Sector Focus: Carbon Management, Trading, & Capture

Carbon Management, Trading & Capture Carbon capture and management are intertwined, with a growing demand for direct carbon capture as companies seek to reduce emissions

14%

$2.7tn

Potential reduction in greenhouse gas emissions from carbon capture by 2050

Global carbon credit market by 2028

$250bn

$6.1bn

Growth expected by the carbon-offset market by 2025

Raised by carbon capture & management startups in the last 3 years

Carbon capture and management technologies are crucial in combating climate change. To prevent a 5°C global temperature increase by 2050, we must reduce emissions and remove 220 gigatons of CO2 from the atmosphere.

While technologies within Direct Air Capture are still in their infancy and require significant investments to scale, carbon trading and offsetting technologies are mature and ready to scale.

Technology

WSC Score

Notes

Carbon Trading & Carbon Markets

8

Market that can be improved

Carbon Accounting & ESG Reporting

7

Attractive SaaS models

Carbon Utilisation

6

Direct Air Capture

3

Direct Capture from Industrial Processes

3

Source: C2ES (2023), Globe News Wire (2023), WSC Analysis (2023)

233

Sector Focus: Carbon Management, Trading, & Capture

Market Drivers Carbon markets, especially in software innovations for carbon trading, accounting, and offsets, have seen a significant increase in funding Capital Invested into Carbon Markets 2016 – 2023YTD1 ($m, count) 900

90

83

800

80

700

70

57

600

49

500

50 846

400

40

24

300

30

14

200 5

100 0

60

0

1

2016

385

378

8

10

177

52

8

31

2017

2018

2019

Ca pita l Invested

2020

20

2021

2022

2023YTD

Deal Count

Policies & Regulation

Corporate Pressure

With the implementation of the Corporate Sustainability Reporting Directive, numerous EU businesses are mandated to partake in carbon reporting. Beginning in 2024, large enterprises operating within the EU with more than 250 employees must disclose their emissions including scope 3 value chain emissions.

Major industrial players and oil giants including Chevron and Exxon, are taking the lead in investing in Carbon Capture and Utilisation (CCI) to reduce emissions from their extraction activities, including fracking, while also enhancing their extraction capabilities.

In the UK, large enterprises, publiclylisted companies, and Limited Liability Partnerships (LLPs) must adhere to the Streamlined Energy and Carbon Reporting (SECR) policy, which mandates the reporting of their carbon emissions.

Source: Pitchbook (October, 2023)

234

Sector Focus: Carbon Management, Trading, & Capture

Technologies & Subsectors Score: 8

Carbon Trading & Carbon Markets

Carbon markets, established in the 90s following the Kyoto protocol have matured significantly.

Polluters can purchase credits to offset their emissions, tradable on open markets. Each credit equals one ton of CO2 equivalent.

Tailwinds + +

Challenges

Emissions and carbon trading has become an established practice Governments are reducing caps and demanding more transparency on emission levels

+

Oversaturated market

Score: 7

Carbon Accounting & ESG Reporting

Software enabling companies to generate carbon emissions and ESG compliance reports.

Tailwinds Carbon reporting mandatory in the EU for specific companies New regulations coming into place including the SECR policy where carbon emissions reporting is mandatory

+ +

Challenges +

Oversaturated market

WSC VC Investability Index: 7

Score: 6

Carbon Utilisation

Exploring ways of utilising captured carbon such as converting it into useful products including fuels, chemicals, and building materials.

Tailwinds +

Government support

Source: WSC Analysis (2023)

Challenges +

Capital intensive projects primarily financed by governments or oil and gas companies

235

Sector Focus: Carbon Management, Trading, & Capture

Technologies & Subsectors Score: 3

Direct Air Capture (DAC)

DAC technologies extract CO2 directly from the atmosphere through various chemical approaches which include solid DAC and liquid DAC. Solid DAC captures CO2 on the surface of a filter, while liquid DACs systems involve passing air through a chemical solution.

Tailwinds + +

Challenges

Government support Can be deployed around the world

+ +

+

Must demonstrate efficiency at scale Massive industrial projects requiring large investments (e.g., Climeworks have raised over $700m but remains unprofitable) Most expensive application of carbon capture

Carbon Capture from Industrial Processes (CCI)

Score: 3

Capturing carbon emissions from industrial processes, such as cement and steel manufacturing, power plants or oil and gas production.

Tailwinds +

Strong interest from oil and gas companies to finance such projects

Source: WSC Analysis (2023)

Challenges + + +

Requires significant capital to deploy Must demonstrate efficiency at scale WSC VC Investability Index: 7 Criticised for providing a “free pass” for oil and gas companies to continue drilling

236

Sector Focus: Carbon Management, Trading, & Capture

Market Map: Seed – Series B Carbon Trading & Carbon Markets

Carbon Accounting & ESG Reporting

Carbon Utilisation

Direct Air Capture (DAC)

Carbon Capture from Industrial Processes (CCI)

Source: WSC Analysis (2023)

237

Sector Focus: Carbon Management, Trading, & Capture

Top Asset Light Startups $114.5m raised to date Developer of a carbon footprint management SaaS platform to measure, analyse, and report carbon footprint

$97m raised to date Developer of machine learning-based tools designed to track the performance of carbon offsets

$81.5m raised to date Carbon offsetting API platform intended to manage and mitigate the carbon footprint

$26.8m raised to date Carbon footprint tracking application

$25.7m raised to date SaaS-based climate emissions management platform designed to help businesses scale the climate footprint down Source: WSC Analysis (2023)

238

Electric Infrastructure

Sector Focus: Electric Infrastructure

Electric Infrastructure The pressing need for better grids, better storage, and better electricity management systems can be solved with software

50%

70x

Of cars will be electric by 2035

Will be needed in a net zero world than we currently have today

90%

$40bn

Decrease in the price of Lithium-ion battery in the last 10 years

Went to investments in battery storage in 2023

The coming years will require a substantial increase in electricity supply, driven primarily by booming EV sales. As renewable energy and EVs gain momentum, the auto battery and energy storage markets are expected to grow at a 25%+ CAGR over the next decade. The widespread adoption of EV charging could lead to a 15% – 50% increase in peak electricity demand on local grids, requiring costly grid updates.

We believe software can address many of these issues. Energy creation and storage now goes hand in hand with software to help optimise loads at peak times, redistribute to the grid, and automatically rebalance how energy flows through our grids.

Technology

WSC Score

Notes

Smart Grid Technology

9

Many interesting SaaS companies

Energy Storage

6

EV Charging Infrastructure

6

Source: IEA (2023), Goldman Sachs Research (2023), US Department of Energy (2022), Reuters (2023), WSC Analysis (2023)

240

Sector Focus: Electric Infrastructure

Market Drivers Countries around the world are implementing EV-friendly policies and subsidies, encouraging car owners to make the switch Yearly global EV sales ($m)

28.8

23.9

19.4

29% CAGR

15.8 12.3 9.5 7.8 6.1 4.5 2.9

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

350 Kw Peak DC fast charging speed for consumer cars

300 kW

Peak load of 100 single family homes (avg. load = 1.2kW per house)

Policies & Regulation

Public Financing

In 2022-2023, significant policy changes were announced in the EU and the US, including new CO2 standards and the IRA, driving cleaner transportation and EV adoption.

To achieve 100% clean power by 2035 the Biden Administration has allocated $8bn to fund power-grid improvements.

Additionally, the March 2023 adoption of the AFID aims to promote alternative fuels, including EV charging infrastructure, setting targets for charging station deployment and common interoperability standards.

Source: Princeton Net Zero America (2023), WSC Analysis (2023)

In June 2023, the DOE announced its largest-ever loan in the LPO’s 15-year history to strengthen domestic battery production. Ford secured a $9.2bn commitment in 2023, following GM’s $2.5bn loan at the end of 2022.

241

Sector Focus: Electric Infrastructure

Technologies & Subsectors Score: 9

Smart Grid Technology

As the energy system decentralises and becomes more intermittent, startups are developing software platforms and services to optimise energy use, reduce costs and improve grid reliability.

Emerging spaces are Virtual Power Plants (VPPs) and Distributed Energy Resources (DERs).

Tailwinds + +

Challenges

Ageing grid infrastructure requires renovation Reduction in cost of installation and increase in energy cost incentivizing individual homeowners to become energy producers

+ + +

Renovating grid infrastructure requires public authority intervention Complexity around interconnection with the grid by energy systems “behind the meter” Slow sales cycles

Score: 6

Energy Storage

Energy storage spans various sizes, from small vehicle batteries to large grid systems like the Tesla Megapack. While Lithium-ion batteries dominate, promising alternatives include the use of rust in new iron batteries, sodium-ion batteries and liquid metal batteries.

Tailwinds Considerable reduction of cost (price per Kwt of energy stored with lithium-ion battery has dropped by 97% since 1991) US and EU legislation is cutting red tape, providing tax credits and public subsidies

+

+

Challenges + +

Highly competitive market China’s raw material dominanceIndex: in lithium, WSC VC Investability 7 graphite and battery anode materials

Score: 6

EV Charging Infrastructure

With the rising popularity of EVs, the need to improve EV batteries and charging infrastructure is growing. A promising new market is emerging, focusing on building charging networks and charging solutions.

Tailwinds + +

Many regulations are put in place to subsidise the sale of EV by consumers In 2022 the Zero Emission Government Fleet Declaration, requires governments to reach 100% zero emission vehicles in public procurement

Source: WSC Analysis (2023)

Challenges + + +

EV battery space is dominated by incumbents EV charging networks requires contracting with public authorities Low margins

242

Sector Focus: Electric Infrastructure

Market Map: Seed – Series B Energy Storage

EV Charging Infrastructure

Smart Grid Technology

Source: WSC Analysis (2023)

243

Sector Focus: Electric Infrastructure

Top Asset Light Startups $202.6m raised to date Developer of energy-internet applications designed to integrate all distributed energy resources

$76.6m raised to date Developer of predictive analytics software designed to optimise the development and operation of lithium-ion batteries

$56.5m raised to date Developer of energy intelligence software designed to make charging electric vehicles clean and cheap for utilities and their customers

$50.0m raised to date Developer of electrification software designed to connect electric vehicles to the grid

$17.3m raised to date Developer of digital infrastructures software as a service-based platform designed to connect energy hardware to applications Source: WSC Analysis (2023)

244

Construction

Sector Focus: Construction

Construction Despite the physical nature of the built environment, the sector leverages software to reduce emissions and improve energy efficiency

40%

30bn

Of annual world CO2 emissions

Tonnes of concrete made every year

$300bn

1 NYC

Market size of the global green construction market

Built every month for the next 40 years

The sustainable construction sector has experienced rapid growth in response to the demand for eco-friendly construction materials. Among various construction materials, concrete is the most crucial due to its significant global consumption, second only to water. Concrete accounts for 8% of human-made CO2 emissions, highlighting the urgent need for more sustainable alternatives.

Other emerging technologies include enhancing building energy efficiency through software and connected devices, which can tap into consumer markets.

Technology

WSC Score

Notes

Smart Buildings & Automation

8

Software + Consumer play

Sustainable Materials

4

Prefabricated Buildings

1

Source: Globe News Wire (2023), WSC Analysis (2023)

246

Sector Focus: Construction

Market Drivers Rising energy costs drive innovations supported by government regulations, including building isolation and energy management Global Green Cement Market Size

Global Green Building Material Market Size

($bn)

($bn) 769

69 686 11% CAGR

9% CAGR

567 480

512

439 32.3

392

35.7 285

2022

2023

2030

316

345

2022 2023 2024 2025 2026 2027 2028 2029 2031 2032

Policies & Regulation

Costs of energy

Regulations on building emissions, design, and efficiency standards are emerging around the US (California Green new deal). New certification systems and standards are being applied to construction, such as LEED (Leadership in Energy and Environmental Design) or BREEAM (Building Research Establishment Environmental Assessment Method).

The rise in energy cost for individual homes highlight the need for building renovations and figuring out better ways to manage heating, ventilation, and air conditioning (HVAC).

Over 50 US regions have proposed or enacted restrictions on natural gas in residential homes which will increase electricity needs.

Source: Globe News Wire (2023), Fortune Business Insights (2023), WSC Analysis (2023)

247

Sector Focus: Construction

Technologies & Subsectors Score: 8

Smart Buildings & Automation

Building automation systems can help reduce energy consumption by controlling heating, cooling, and lighting systems.

Tailwinds + + +

Challenges

Consumer demand for IoT and smart homes Growing energy costs Government regulations and standards pushing for more efficient energy systems

+ + + +

Competitive market High upfront costs Integrating various components and systems (e.g., HVAC, lighting, security) Compatibility issues and the need for skilled technicians

Score: 4

Sustainable Materials

Companies are developing sustainable building materials that have a lower environmental impact than the highly CO2 emitting cement and concrete. These new materials could be new biomaterials or reused materials. Organic materials, like hemp, are now being used for isolation.

Tailwinds Governments and municipalities are implementing regulations and standards that encourage or require the use of sustainable construction materials, such as energy efficiency requirements, green building certifications, and building codes

+

Challenges + + +

Sustainable materials may have a higher upfront cost compared to traditional materials WSC VC Investability Index: 7 Supply chain issues and raw material availability Competition from traditional materials

Score: 1

Prefabricated Buildings

Prefabricated construction involves building sections of a building off-site and then assembling them on-site. This is an area where 3D printing is playing an interesting new role. This reduces construction waste and can speed up the building process.

Tailwinds + +

Speed and efficiency Design flexibility

Source: WSC Analysis (2023)

Challenges +

High upfront costs (green premium)

248

Sector Focus: Construction

Market Map: Seed – Series B Sustainable Materials

Prefabricated Buildings

Smart Buildings & Automation

Source: WSC Analysis (2023)

249

Sector Focus: Construction

Top Asset Light Startups $576.0m raised to date Energy management and consumption tracking platform and solar energy equipment to monitor and optimise solar energy consumption

$77.5m raised to date Install, manage and finance renewable energy technologies in the home

$73.9m raised to date Enterprise software platform for commercial real estate

$57.6m raised to date Home improvement services intended to stop home energy waste and electricity

$30.2m raised to date Boiler control and indoor temperature sensor network designed to control heating systems in buildings Source: WSC Analysis (2023)

250

AgriTech & FoodTech

Sector Focus: AgriTech & FoodTech

AgriTech & FoodTech Food production remains a key focus for VC funds given its close ties to climate issues and the need to feed a growing global population

70%

26%

Increase in food production needed to feed the world population by 2050

Of annual world CO2 emissions come from the food industry

$260bn

1/3

Estimated global FoodTech market size in 2022

Of all food produced is lost or wasted, costing the global economy close to $940bn each year

A transition toward greener practices in agriculture and food manufacturing is critical, given that the current food system contributes to a third of CO2 emissions worldwide, consumes 70% of freshwater usage, drives 80% of global deforestation, and results in approximately one third of global food production going to waste.

Technological advancements combined to consumer demand for sustainable, healthy, affordable, and safe food options have led to the emergence of large unicorns in this space. Some solutions are more capital intensive than others, especially within alternative proteins, which saw substantial investment but has not reached global scale.

Technology

WSC Score

Notes

Picks & Shovels

9

Many asset light businesses

Precision Agriculture

7

Interesting AI and software play

Alternative Proteins

5

Food Waste Reduction

4

Vertical Farming

4

Source: Eurostat (2023), Agfunder (2023), Statista (2023), Our world in data (2019), WSC Analysis (2023)

252

Sector Focus: AgriTech & FoodTech

Market Drivers Agriculture and food manufacturing, heavily regulated and subsidised, can be a powerful tool against climate change Amount invested by category ($bn) 9.2

5.9

-68% Decrease in the amount invested in delivery startups in 2022 compared to 2021.

3.2

1.3 0.6

2014

2015

1.7

+21%

1.3

0.9

2016

3.01

2017

2018

Increase in the amount invested in the rest of FoodTech in 2022 compared to 2021.

2019

2020

2021

Delivery

Agtech

Food Science

Foodservice

Supply Chain

Co nsumer Tech

2022

Policies & Regulation

Growing World Population

Governments are passing legislation to support sustainable farming. The UK government is allocating grants from £500,000 to £1.5m from a £12.5m fund for sustainable agriculture projects.

To feed a projected global population of ~9.6bn people by 2050, a significant growth in food production will be required. At the same time, around 36.2m people worldwide currently struggle to afford a quality meal every second day. The UN anticipates a 15% increase in global meat demand by 2031.

Both the US and EU have committed to halving per capita food waste at the retail and consumer levels by 2030 and reduce food losses across the food production and supply chains.

Source: DigitalFoodLab (2023), WSC Analysis (2023)

253

Sector Focus: AgriTech & FoodTech

Technologies & Subsectors Score: 9

Picks & Shovels

The infrastructure and software supporting AgriTech companies as they expand throughout the the value chain.

Tailwinds +

Challenges

Market maturity and readiness in adopting new software

+ +

Competitive and saturated market Slow sales cycles

Score: 7

Precision Agriculture

New technologies are being developed to improve the efficiency and sustainability of farming practices, such as using drones, sensors, and AI to monitor crops and optimise inputs.

Tailwinds Reduces the need for excessive water, fertilisers, pesticides, and other resources Optimise crop yields and productivity

+ +

Challenges + +

Significant initial investment in hardware, software, andInvestability equipment WSC VC Index: 7 Farmers may exhibit resistance to adopting new technologies

Score: 5

Alternative Proteins

There is a growing trend towards alternative proteins, such as plant-based and lab-grown meat, as consumers become more interested in sustainable and ethical food choices.

Tailwinds +

+

As the global population continues to grow, alternative proteins offer a potential solution to food security Increasing awareness of environmental and ethical concerns related to traditional livestock farming has led to a growing demand

Source: WSC Analysis (2023)

Challenges + + +

Tough to scale Low margins Distribution challenges

254

Sector Focus: AgriTech & FoodTech

Technologies & Subsectors Score: 4

Food Waste Reduction

Startups tackling food waste through new uses for products that would otherwise be discarded, such as turning 'ugly' produce into snacks or converting food waste into biofuels.

Tailwinds +

+

Challenges

Some governments and regions are implementing regulations and initiatives to encourage food waste reduction Growing consumer demand

+ +

Supply chain and infrastructure complexity Low margins

Score: 4

Vertical Farming

With the rise of urbanisation and the need to produce more food with less land and water, vertical farming is becoming increasingly popular. Most of these companies are using LED lighting and hydroponics to grow crops in stacked layers in urban environments.

Tailwinds + +

Resource efficient using significantly less land and water than traditional farming methods Enables year-round production

Source: WSC Analysis (2023)

Challenges +

+ +

Reliance on artificial lighting and climate control systems that are energy-intensive and sensitive to energy price fluctuations High upfront costs Tough to scale

255

Sector Focus: AgriTech & FoodTech

Market Map: Seed – Series B Precision Agriculture

Alternative Proteins

Vertical Farming

Food Waste Reduction

Picks & Shovels

Source: WSC Analysis (2023)

256

Sector Focus: AgriTech & FoodTech

Top Asset Light Startups $300.0m acquired for Developer of machine vision technologies designed to monitor and analyse plant development

$284.0m acquired for Smart agriculture equipment designed to offer an alternative to chemical-intensive agriculture

$148.0m raised to date Fresh supply chain platform to deal with perishable categories

$111.0m raised to date Ingredient ordering application designed to connect restaurants and suppliers from all over the world

$72.0m raised to date SaaS tool forecasts food supply and demand, enabling food retailers and suppliers to manage their inventory and reduce food wastage Source: WSC Analysis (2023)

257

Packaging & New Materials

Sector Focus: Packaging & New Materials

Packaging & New Materials Sustainable packaging innovation is on the rise, with software firms playing a key role in advancing manufacturing and packaging design

380m

$917bn

Tonnes of plastic produced annually, 50% of which are for single-use items

Global packaging market size in 2019, reaching $1tn by 2024

9%

$57.9bn

Of global plastic waste is currently recycled

Market size of the global ecommerce packaging industry

In 2019, global plastic packaging production exceeded 360m metric tons, making up a $917bn industry. By 2050, plastic production is projected to triple and will account for one-fifth of global oil consumption. This poses significant environmental challenges and calls for a major shift in packaging practices, while the large market size also makes it an attractive sector for investors.

Emerging packaging startups are actively developing sustainable, efficient, and consumer-friendly solutions using advanced materials and technologies to foster a circular economy.

Technology

WSC Score

Notes

Packaging Software & Infrastructure

8

Pick and Shovels play

Biodegradable & Compostable

5

Waste to Value

5

Bio-Materials

5

Source: Plastics Ocean International (2023), OECD (2023), Smithers (2020), WSC Analysis (2023)

259

Sector Focus: Packaging & New Materials

Market Drivers Packaging accounts for nearly half of global plastic use, and this industry has seen a surge in investment driven by new legislations Global Green Packaging Market Size

Global plastic by end use

($bn)

(%) 409.2

19% 7.5% CAGR

45% 14%

229.46

12% 7%

2021

4%

Packaging Electrical Transportation Co nsumer Goo ds Other Building and Construction

2030

Policies & Regulation

Strong Consumer Demand

Regulations around the world cracking down on single-use plastics.

As consumers are increasingly aware of plastic pollution and its impact on ecosystems, the demand for sustainable packaging alternatives is rising.

The EU banned items including plates, cutlery, balloon sticks and straws in July 2021, and as of October 2023, the UK is implementing similar rules.

In the US, multiple states are enforcing laws to make all single-use products recyclable or compostable by 2032.

Brands must innovate in their packaging to show their commitment to environmental consciousness and attract eco-conscious consumers.

Source: Globe News Wire 2023), Bloomberg (2023), WSC Analysis (2023)

260

Sector Focus: Packaging & New Materials

Technologies & Subsectors Score: 8

Packaging Software & Infrastructure

The manufacturing of new materials requires infrastructure to scale up research but also to help consumers navigate this new packaging market.

Tailwinds +

Challenges

Market maturity and readiness in adopting new software

+

Already competitive and saturated market

Score: 5

Biodegradable & Compostable

Several startups are focused on developing packaging materials that are biodegradable and compostable. These bio-materials generally produces flexible packaging made from plant-based materials (for example mushroom or seaweed).

Tailwinds Regulation are favoring sustainable materials vs. single-use plastics Consumers are increasingly seeking products made from sustainable materials

+ +

Challenges + + +

Technologies are in the early stages of scaling Distribution an issue Index: 7 WSC VC remains Investability Low margins

Score: 5

Waste to Value

Startups are also developing packaging materials made from waste materials, such as compostable plant-based materials, and biodegradable plastics from food waste.

Tailwinds + +

Commercial value of imbedding recyclability in product manufacturing Can lead to cost optimisation in manufacturing process

Source: WSC Analysis (2023)

Challenges + + +

Technologies are just beginning to scale Distribution remains an issue Low margins

261

Sector Focus: Packaging & New Materials

Technologies & Subsectors Score: 5

Bio-Materials

Rapidly growing sector focused on developing and commercialising innovative materials as alternatives to traditional materials derived from fossil fuels. The main areas of research are Bioplastics, Bio-based Textiles, Biomimetic Materials, Bio-based Composites.

Tailwinds +

Increasing awareness of environmental issues and resource depletion is driving demand for materials that have a lower environmental footprint

Source: WSC Analysis (2023)

Challenges + + +

Technologies are in the early stages of scaling Distribution remains an issue Low margins

262

Sector Focus: Packaging & New Materials

Market Map: Seed – Series B Biodegradable & Compostable

Waste to Value

Biomaterials

Software and Infrastructure

Source: WSC Analysis (2023)

263

Sector Focus: Packaging & New Materials

Top Asset Light Startups $112.0m raised to date Developer of compostable materials

$70.0m raised to date Provider of grocery delivery services intended to reduce the use of plastic

$6.7m raised to date Platform intended to transform used products for a waste-free shopping experience

$6.0m raised to date Operator of a digital purchasing packaging platform intended to connect well-known brands with packaging suppliers

$3.5m raised to date Provider of supply chain infrastructure intended for circular packaging

Source: WSC Analysis (2023)

264

Clean Energy

Sector Focus: Clean Energy

Clean Energy Clean energy is achievable but will require hefty investments in new technologies and infrastructure, beyond the traditional VC scope

73%

$2tn

Of emissions are created by energy use

Investment required to get carbon free electricity for the US grid by 2035

89%

80%

Decrease in the price of solar energy in the last 10 years

Surge in capacity for solar and wind power by 2026

The renewable energy market is growing significantly thanks to cost competitiveness, supportive policies and rising demand. Renewables are finally more cost-effective to produce than fossil fuels. In 2022, wind and solar power generated 22% of the EU's electricity, overtaking gas for the first time. In the EU, renewables now account for nearly 40% of total electricity generation.

Direct energy production lends itself more to infrastructure-type investments due to the long-term nature and capital intensity of these projects. That said, investors are monitoring Software as a Service (SaaS) offerings in these sectors for designing solar field infrastructure and optimising engineer deployments.

Technology

WSC Score

Notes

Solar Power

5

Potential SaaS opportunities

Wind Power

5

Nuclear

5

Hydropower

5

Waste-to-Energy

5

Hydrogen

4

Source: S&P Global (2021), Lightsourcebp (2023), McKinsey (2022), WSC Analysis (2023)

266

Sector Focus: Clean Energy

Market Drivers Government subsidies, grants and tax breaks are driving unparalleled growth in the energy sector, particularly in solar and wind 12x Increase in Solar Capacity by 2050 (%) Historical global power generation mix

NEO 2020 global power generation mix 2019

56% solar & wind 69% renewables

24% fossil fuels by 2050

Policies & Regulation

Geopolitical and macro pressures

The US Inflation Reduction Act is the largest federal climate change legislation, allocating $783bn for energy security and climate initiatives including tax credits like the Investment Tax Credit (ITC) and Production Tax Credit (PTC), enabling deductions for renewable energy system costs for federal taxes.

Amid the Ukraine conflict and ongoing Gulf tensions, Western nations (particularly in Europe) are under pressure to secure their energy independence. This context played a role in the US passing the IRA and the EU introducing a new Green Deal Industrial Plan.

Source: Energize Ventures (2022), WSC Analysis (2023)

267

Sector Focus: Clean Energy

Technologies & Subsectors Score: 5

Solar Power

The solar industry has considerably matured in the last decade, with innovative technologies making solar energy more affordable and accessible, while software is coming in to reduce inefficiencies, help design infrastructure, monitor plants, and support engineers.

Tailwinds + + +

Challenges

Price has decreased by 89% in the last decade Capacity is growing steadily US and EU legislation is cutting red tape, providing tax credits and public subsidies

+

Market is dominated by large industrials

Score: 5

Wind Power

Wind turbines technologies have advanced significantly, primarily by increasing turbine size for greater energy generation. Innovations are also improving the efficiency and reliability of wind turbines, including vertical axis wind turbines, bladeless turbines, and offshore wind farm models.

Tailwinds US and EU legislation is cutting red tape, providing tax credits and public subsidies Governments are investing in offshore wind farms

+ +

Challenges + +

Criticised for their visual impact on land Offshore wind farms that requireIndex: shallow seabeds WSC VC Investability 7

Score: 4

Nuclear

Nuclear energy has progressed slowly, with most technologies relying on fission. Despite major investments like ITER, progress in fusion has been limited and attention is turning to Modular Reactors (SMRs), Molten Salt Reactors (MSRs) and new Fusion Energy approaches.

Tailwinds + +

Proven and reliable technology US and EU legislation is cutting red tape, providing tax credits and public subsidies

Challenges + + +

Source: WSC Analysis (2023)

Lack of significant breakthrough in fusion European governments have reduced research due to public pressure Capital intensive projects

268

Sector Focus: Clean Energy

Technologies & Subsectors Score: 5

Hydro Power

This category includes dams and tidal turbines. Hydro energy stands out as the most predictable source of energy, being the only renewable option capable of consistently providing reliable energy.

Tailwinds + +

Challenges

Proven and reliable technology Constant

+ +

Capital intensive projects Requires specific land available

Score: 5

Waste-to-Energy

Waste-to-Energy technologies cover various methods for converting waste materials into energy, including incineration, gasification, pyrolysis, and anaerobic digestion.

Tailwinds Proven and reliable technology

+

Challenges + +

Not entirely clean Limited profitability WSC VC Investability Index: 7

Score: 4

Hydrogen

Hydrogen, abundant in the universe, is a superior clean energy alternative for energy generation and storage, used in a variety of applications including transportation, heating and power generation and serves as an energy storage medium.

Tailwinds + + +

Ability to use existing fossil fuel infrastructure Versatility in energy applications Supported by new government regulations

Challenges + + +

Source: WSC Analysis (2023)

Limited natural hydrogen availability Green hydrogen production is challenging and costly Storage and production involve significant energy loss

269

Sector Focus: Clean Energy

Market Map: Seed – Series B Solar Power

Wind Power

Hydrogen

Nuclear

Hydropower

Waste-to-energy

Source: WSC Analysis (2023)

270

Sector Focus: Clean Energy

Top Asset Light Startups $523.6m raised to date Developer of engineering design and sales proposal software designed for distributed solar and storage enterprises

$451m raised to date Provider of installation and services related to solar, electricity storage, and charging infrastructure

$120m raised to date Renewable energy asset management

$68.4m raised to date Renewable energy transaction platform designed to connect corporate and institutional power buyers to offsite projects

$23.5m raised to date

Source: WSC Analysis (2023)

271