Q2 set new records for angel, seed and early stage venture capital
When businesses and people across the country were locked down a year and a half ago (it’s hard to believe the pandemic has been around for that long!) There was a certain fear in the venture community that they too would be forced to shut down or at least not being able to use their capital.
In reality, the opposite happened: 2020 turned out to be a record year for venture capital, with an overall exit value of the deal and capital raised for VC funds all hitting new highs. In fact, more money flowed than ever before, and that hasn’t slowed down in the first half of 2021 either.
According to the PitchBook-NVCA Venture Monitor report by PitchBook and the National Venture Capital Association (NVCA), venture capital activity increased across all phases of the ecosystem in the first six months of the year.
In the second quarter of this year, an estimated $ 75 billion was invested in an estimated 4,302 transactions; While the amount invested stayed the same from quarter to quarter, the number of deals fell 4 percent. In total, the total for the first half of the year amounts to 150 billion US dollars, which was invested in 8,406 transactions.
Another record year for ventures is now as good as guaranteed: in 2021, over 91 percent of the 164.3 billion US dollars raised in 2020 were raised and 68 percent of the 12,362 transactions recorded.
A record year
One of the biggest beneficiaries of the surge in venture capital were just getting started as the second quarter saw new quarterly records for angel, seed, and early-stage VC investments.
In total, there were 1,733 estimated angel and seed deals during the quarter, a record high, bringing the total for the year to date to an estimated 3,324; this is the largest number of deals for the industry in six months that there has ever been.
In addition, more than $ 7 billion was invested in the angel and seed sectors in the first half of the year, which is already more than the total value of any year prior to 2017. These included 23 deals worth at least $ 25 million, another record for Fishing and seed deals as round sizes keep growing.
Early-stage deals (meaning those that brought in either a Series A or B round) had an estimated $ 19.6 billion invested in an estimated 1,303 deals in the second quarter, also a quarterly record for companies at this stage. This brings the amount raised by early stage companies to $ 34.4 billion so far in 2021, or 79% of the 2020 total of $ 43.5 billion; the year is currently well on the way to surpassing $ 60 billion, a number that the NVCA “has only previously seen in the late-stage”.While more cash flows in the early stages than ever before, these companies aren’t the only ones experiencing an upswing: VC investments in the late stage reached $ 108.8 billion in the first half of the year alone, almost reaching full-year 2020 a total of $ 109.8 billion.
The 2,564 late-stage deals from the first half of 2021 already make up 75% of the 3,453 late-stage deals in 2020 as a whole.
Those increased numbers for companies in the final stages can be attributed, at least in part, to the proliferation of mega-rounds, aka those of $ 100 million or more. These have already reached an annual record high, raising a total of $ 85.5 billion in capital in 323 deals, 32% more than the $ 64.6 billion in 321 deals in 2020.
IPOs still beat SPACs
In terms of exits, the big story in 2021 was the proliferation of SPACs, which serve as an alternative way for companies to enter the public market without going through a traditional IPO. Basically, the way it works is to create a mailbox company going public; It then acquires an established company to acquire the shares. This enables companies to go public faster and bypass a month-long roadshow.
This route became extremely popular, especially in the healthcare sector, with companies such as Hims & Hers, Ambulnz, Clover Health, Science 37, Sharecare, Talkspace, and 23 & Me, all of which either advertise or actually go public that way. In total, there were 34 SPACs in the first half of 2021 compared to 33 in all of 2020.
Despite all the press around SPACs, IPOs continued to dominate with a total of 123 IPOs, which in the second quarter represented 26 of the 30 largest exits by size. The top three exits in the first half were all IPOs: Coinbase, UiPath, and Marqeta, which were valued at $ 85 billion, $ 29 billion, and $ 14.3 billion, respectively.
A total of 334 venture capital financed exits were reported for a total of $ 241.3 billion in the second quarter; It was the fourth straight quarter that Exit activities were worth over $ 100 billion.
(Image source: incimages.com)