Venture capital the market runs in front, the foot on the gas, the middle finger out the window, the hair on fire. It is our reading of the Q2 2021 data that has so far been published about how much money venture capitalists distributed around the world during the other three months of the year.
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The second quarter of 2021
Data from FactSet regarding the quarter are consistent. The second quarter was a record breaker in terms of invested dollars, although the total contract volume eased somewhat from the first quarter count.
The effect of the capital flow is what you expect: Round values rise. Agreements worth $ 100 million set records. Around the world, technology hubs enjoy a large number of expensive deals that enrich startups and provide them with capital at earlier stages that were previously reserved for IPOs and other groundbreaking financing events.
So today we are talking through the numbers. Next week, we will publish a series of geography-focused notes and reactions from investors and founders of the US start-up ecosystem, along with similar entries about the Asian and European start-up markets.
Chatting with venture capitalists in recent months led us to expect strong results for the second quarter; Investors have been talking about ever-faster follow-up rounds and the explosion of expensive big dollar deals from Tiger. SoftBank’s other vision fund is active. And there are countless seed, early-stage, late-stage and crossover funds that all compete with each other both within and outside their normal investment bands in hopes of either accrediting earlier, greater ownership than a larger investment group may have had years earlier or worked to defend early ownership past where former stage companies used to end the stage on the left.
But enough words. Let’s get into the numbers. We start with an overview of global results before diving into the US and Silicon Valley, Europe and Asia performances, and new data on venture capital in Africa.
A monster quarter
We pick up from a number of sources this morning, but for global data we lean on CB Insights, Crunchbase News and FactSet.
CB Insights has $ 156 billion booked for global venture capital activity in the second quarter, up from $ 60.7 billion in the second quarter of 2020. This is a gain of 157% on an annual basis. A FactSet chart shows that around $ 150 billion was raised in the second quarter, up a similar percentage from the previous year as CB Insights calculated.
For the first half of 2021, including record numbers in the second quarter, the data are equally shocking. Crunchbase News counts $ 288 billion invested in the first and second quarters of the year. CB Insights estimates the figure at $ 292.4 billion. FactSet comes to a figure that it describes as “over $ 280 billion.”
They are all close enough to us, and they say the same thing: Global startups increased either as much, or almost as much, in the first two quarters of 2021 as they did throughout 2020.
As a reference point, Crunchbase News notes that the first half of 2021 crushed the second half of 2020 by $ 110 billion, in terms of total capital.
But what about the tachometer? Was all that capital concentrated in a few investments, or did the money flow freely to more start-ups than ever before? Here things get a little difficult. CB Insights data states that there were 7,751 start-up agreements in the second quarter, a full-time high. FactSet counts 5400, far from the registered record. At this point, we see discrepancies in how different data-focused firms count; Alex was involved in similar conversations during his time at Crunchbase and is sympathetic to the difficulty of deciding what to include and not in this type of research.
But even FactSet data indicates that the second quarter was the second best three-month period for venture numbers since the beginning of 2019. No matter how you count, the data indicates many offers – and even more dollars.
A unicorn trampling