With $150B already invested, VC is set to have another recording breaking year

Q2 saw new records for angel, seed and early-stage venture capital

When businesses and people all over the country went into lockdown a year and a half ago (it's hard to believe that the pandemic has been around so long already!) there was some definite fear in the venture community that they too would be forced to shut down, or at least not be able to deploy their capital.

In reality, the opposite happened: 2020 turned out to be a record year for venture capital, with total deal value exit value, and capital raised for VC funds all reaching new highs. There was actually more money flowing than ever before, and that has not slowed down at all so far in the first half of 2021.

In fact, venture capital activity was up across all phases of the ecosystem in the first six months of the year, according to the PitchBook-NVCA Venture Monitor report from PitchBook and the National Venture Capital Association (NVCA).

There was $75 billion invested across an estimated 4,302 deals in the second quarter of this year; while the amount invested stayed the same quarter-to-quarter, the number of deals fell 4 percent. In all, this brings the total for the first half of the year to $150 billion invested across 8,406 deals.

Another record breaking year for venture is all but guaranteed now: 2021 has already raised over 91 percent of the $164.3 billion raised in 2020, and seen 68 percent of the 12,362 deals. 

A record setting year

One of the biggest beneficiaries of the swell of venture capital have been companies just starting out, as Q2 saw new quarterly records for angel, seed and early-stage VC investing.

In all, there were 1,733 estimated angel and seed deals during the quarter, a record high, bringing the total number to an estimated 3,324 for the year so far; that's the largest number of deals for the sector of any half year ever.

There was also more than $7 billion invested invested in the angel and seed sectors in H1, which is already more than the total deal value of every year before 2017. That included 23 deals of at least $25 million, another record for angel and seed deals, as round sizes continue to grow. 

Early stage deals (meaning those that raised either a Series A or B round) saw $19.6 billion invested across an estimated 1,303 deals in Q2, also a quarterly record for companies at this stage. That brings the total raised by early stage companies to $34.4 billion so far in 2021, or 79% of 2020's $43.5 billion total; the year is currently on pace to pass $60 billion, a number that NVCA points out "previously has only been observed at the late stage."While the early stages are seeing more money pouring in than ever before, these companies aren't the only ones seeing a bump: late-stage VC investment reached $108.8 billion through just the first half of the year, nearly already matching the full-year 2020 total of $109.8 billion.

The 2,564 late stage deals from the first half of 2021 is already 75% of the 3,453 late stage deals in all of 2020.  

These increased numbers for companies in the late stages can be attributed, at least in part, to the proliferation of mega-rounds, aka those of $100 million or more. Those have already reached an annual record high, contributing a total of $85.5 billion in capital across 323 deals, already 32% higher than the $64.6 billion across 321 deals in 2020. 

IPOs still beat SPACs

When it came to exits, the big story in 2021 were the proliferation of SPACs, which act as an alternative way for companies to enter the public market without needing to go through a traditional IPO. Basically, the way it works is a shell company is formed which goes through an IPO; it then acquires an established company so it can take over the stock. This allows companies to go public faster, bypassing the need for a months-long roadshow. 

This route became extremely popular, particularly for the healthcare space, with companies like Hims & Hers, Ambulnz, Clover Health, Science 37, Sharecare, Talkspace and 23&Me, all either announcing, or actually going public, this way. In all, there 34 SPAC in the first half of 2021 as compared to 33 in all of 2020.

Yet, despite all the press around SPACs, IPOs still dominated, with 123 public offerings in all, which represented 26 of the top 30 exits by size in the second quarter. The three top exits in H1 were all public offerings:  Coinbase, UiPath and Marqeta, which were valued at $85 billion, $29 billion, and $14.3 billion, respectively.

In all, there were 334 disclosed venture-backed exits in Q2, which totaled $241.3 billion; it was the fourth quarter in a row in which exit activity value was above $100 billion.

(Image source: incimages.com)