Voice Startup Funding Accelerates – Mangrove FI

Voice Startup Funding in 2019 Set to Nearly Triple Says European VC Mangrove and “Voice Economy” to Be a Trillion Dollar Market in 2025

Mangrove Capital Partners released a new study this morning that forecasts voice technology funding will nearly triple in 2019 over 2018 totals. The venture capital firm estimates that global funding for voice technology startups was $581 million in 2018 and will grow to $1.57 billion in 2019. This forecast is based in part on the first half of 2019 funding that totals $786 million. The report also noted that the size of voice technology funding rounds has risen sharply in 2019.

“Investment in voice startups is now accelerating according to our analysis. Voice startups have raised $786m already this year, significantly exceeding the $581m raised in 2018 and $298m raised in 2017. This rise in funding reflects a growing belief that voice technology will be transformative. The size of fundraisings has also increased markedly–with an average of $30m so far in 2019 versus $18m in 2018 and $17.5m in 2017.”

It is worth noting that the data set does not solely represent venture capital investment. Acquisition values are also included. That means the Anchor and Gimlet acquisitions by Spotify for $337 million are included in the figures. Without those transactions, total funding thus far in 2019 would be closer to $450 million. To be fair, there were acquisitions in 2018 figures as well, but it is worth noting the inclusion of corporate acquisitions in the funding totals.

U.S. Startups Dominate Investment Dollars

The report also broke down the relative investment dollars flowing to voice startups by region and geography. U.S. startups are expected to consume 64% of all voice tech investments this year at over $1 billion. Second place is expected to be Europe at $118 million and the third position goes to China at $100 million. Yannick Oswald, Principal at Mangrove Capital Partners commented, “It is still early days and investors in Europe will likely catch on once they see further momentum. We also hope that by sharing our views we can help move the ecosystem forward.”

U.S. voice tech companies have several structural advantages today when it comes to venture fundraising. First, the U.S. is the largest source of venture capital funding fluctuating between a third and just over half of global investment dollars over the past several quarters. Second, the largest investors in voice technology today are U.S.-headquartered companies Amazon, Apple, Facebook, Google, and Microsoft. Each of these companies has invested directly in their own technology, completed related acquisitions, and invested directly in voice startups.

The Amazon Alexa fund alone has made over 60 investments since 2015 according to Pitchbook data with at least one-third of those directly related to voice technology and its associated ecosystems. This does not mean that the majority of voice startup investing activity going forward will be dominated by U.S. companies. However, it does highlight the historical disparity and the advantages available to U.S. startups in the sector today.

Apple SiriOS to Arrive in 2020 and Trillion Dollar Voice Economy in 2025

According to the report, “Apple has been less effective at building an ecosystem around voice. With its vision of the ‘Knowledge Navigator’, Apple’s voice strategy was more clearly articulated in 1987 than it is now. The voice community expects Apple to release a SiriOS for its developer community at WWDC 2020 which would accelerate innovation and adoption.” Mangrove’s Oswald commented in an interview with Voicebot:

“It is not uncharacteristic of Apple to let other companies lead the charge. However, with Amazon now enjoying major traction we believe Apple is unlikely to delay a SiriOS beyond 2020. It will be fascinating to see how it plans to build its voice business. Indeed it could be its most important launch since unveiling the iPhone.”

Apple’s launch of SiriOS in 2020 will unleash huge innovation in the voice economy, which will be worth $1 trillion by 2025.

This sentiment echoes themes put forward in the June 2019 issue #42 of Voice Insider, The Apple Issue. Mangrove’s report goes a step further, however, by suggesting “Apple’s launch of SiriOS in 2020 will unleash huge innovation in the voice economy, which will be worth $1 trillion by 2025.” When asked how Magrove’s research team arrived at the trillion dollar figure, Oswald said, “We analyzed the growth of the mobile app economy and took into account a number of factors including the low learning curve of voice, the reduced friction of voice, and the considerable size of Apple’s developer community.”

So, there are your takeaways. Mangrove says voice tech startup investing will nearly triple this year with U.S. companies taking the lion share of the funding. In addition, Apple will launch a SiriOS next year and in about six years voice technology will be a trillion dollar market. These are some predictions worth tracking.

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