# The temporal evolution of venture investment strategies in sector space

## TL;DR

This paper investigates how startup venture investment strategies in the US have evolved over time across sectors, revealing shifts towards lower-tech areas, increased investment concentration, and the emergence of accelerators.

## Contribution

It introduces a novel analysis of sectoral dynamics in venture financing using PCA and TCA, highlighting recent strategic shifts and new investor classes.

## Key findings

- Early investments moved towards lower-tech sectors.
- Investment concentration increased over the decade.
- Emergence of a new class of investors called accelerators.

## Abstract

We analyze the sectoral dynamics of startup venture financing. Based on a dataset of 52000 start-ups and 110000 funding rounds in the United States from 2000 to 2017, and by applying both Principal Component Analysis (PCA) and Tensor Component Analysis (TCA) in sector space, we visualize and measure the evolution of the investment strategies of different classes of investors across sectors and over time. During the past decade, we observe a coherent evolution of early stage investments towards a lower-tech area in sector space, associated with a marked increase in the concentration of investments and with the emergence of a newer class of investors called accelerators. We provide evidence for a more recent shift of start-up venture financing away from the previous one.