BY Fraser Tennant
Toppling previous records, US-venture capital (VC) fundraising hit £329.6bn in 2021, despite ongoing pandemic disruption and growing adversities such as supply chain issues and labour shortages, according to a new report by Pitchbook.
The ‘Q4 2021 PitchBook-NVCA Venture Monitor’ also reveals that total deal count increased substantially in 2021 to an estimated 17,054 deals – up from 12,173 in 2020.
Additionally, investment activity for seed and angel and early and late-stage companies all hit records, as did investment activity for companies receiving their first equity round of institutional financing and companies raising VC mega-rounds ($100m or more).
According to the report, partly what makes 2021’s VC industry activity so remarkable is that the coronavirus (COVID-19) pandemic disruption continued to have an impact despite the widespread availability of vaccines and national vaccination programmes.
“2021 began with a bang in VC activity and ended in spectacular fashion, producing another record-setting year,” states the report. “While many were bullish on the industry at the start of the year, possibly no one predicted how remarkable the year would prove to be.”
2021 VC highlights include: (i) US VC-backed companies collected nearly $330bn in 2021 – approximately double the previous record of $166.6bn raised in 2020; (ii) non-traditional investors such as corporate VC funds, hedge funds, private equity (PE) firms and sovereign wealth funds participated in nearly 77 percent of total annual deal value; and (iii) exits were a huge part of 2021's story, with more than $774bn in annual exit value created by VC-backed companies that either went public or were acquired.
Looking to 2022, the report forecast that non-traditional investor interest and momentum will likely continue, in part due to the continued strong outperformance of VC portfolios.
“At the same time, traditional VC investors are flush with capital to deploy,” concludes the report. “For entrepreneurs there is a deeper and wider pool of capital sources available to fund and scale the next generation of innovative companies.”