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Mother’s Day 2023 dampener for mom and newborn care startups: funding declines by 80%, no new IPOs since 2022

The amount of money raised by startups in the mother and newborn care industry fell by 80%, from $2.1 billion in 2021 to $418 million in 2022, while US companies raised a total of $5 billion, and China and India raised $2.8 billion and $1.4 billion, respectively. In Q1 2023, funding for seed and early stages increased, but no late stage investment was made.

A survey from Tracxn, a top SaaS-based market intelligence platform, found that financing for startups focused on mother and newborn care fell significantly in 2022. From USD 2.1 billion in 2021 to USD 418 million in 2022, these companies’ total investment raised fell by 80%.

According to an IANS article, mum and baby care businesses in the United States have raised a total of USD 5 billion to date, while businesses in China and India have raised USD 2.8 billion and USD 1.4 billion, respectively.

The lack of late-stage investments is mostly to blame for the decrease in funding. The research does however point out some encouraging developments in seed-stage and early-stage investment. Compared to Q1 2022, seed-stage funding decreased by 21% in Q1 2023, but it increased significantly from Q4 2022 by 444%. Similar to this, early-stage investments increased by 158% in Q1 2023 over Q1 2022 but decreased by 64% from Q4 2022.

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Despite these swings, the industry was nonetheless able to bring in investments totaling USD 21 million in Q1 2023, showing a major gain over the USD 3.86 million in Q4 2022 but a minor down from the USD 26.5 million in Q1 2022.

The paucity of unicorns and initial public offerings (IPOs) in the mom and infant care sector is also mentioned in the research. No new unicorn firms were founded in 2022 or the first half of 2023, and no IPOs have taken place so far in 2023. In comparison, 2021 saw two companies go public, and 2022 saw just one.

The top-funded business model in the mom and infant care sector over the previous two years, according to Tracxn’s analysis, has been gamified learning systems for Pre-K students. Significant financing was also obtained for breast pumps and online shops.

500 Global, Techstars, and New Enterprise Associates are some of the investors who are most engaged in this market. Innoven Capital, Andreessen Horowitz, and Sequoia Capital take the top spots among early-stage investors, while IPV, Angel List, and Techstars are the top seed-stage investors. The leading investors in the past two years for late-stage investments have been Sequoia Capital, General Atlantic, and IPGL.

The COVID-19 pandemic was a major factor in the mum and baby care industry’s acceleration of expansion and its subsequent spurring of innovation. Moreover, as noted in the Tracxn research, the emergence of the working-class population with better disposable means has aided in the overall expansion of this market.

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