Yes, 2021 Is Shaping Up As A Wild Year For Supergiant Rounds. We Break Down Where The Money Is Going

So far, 2021 is proving to be a wild year for really big venture investments, breaking records for funding totals and round counts. Rather than the pandemic-inspired decline many predicted, we are instead seeing an industry scaling ever-higher peaks.

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In particular, so-called supergiant funding rounds of $100 million or more are taking off. Less than two months into the new year, investors already put at least $46 billion globally into such deals, per Crunchbase data. That puts this year on track to come in well above 2020’s already historically lofty levels.

While a few years ago it was common to see a couple supergiant deals in a week, lately it’s routine to see several in a single day. Many rounds are several multiples of $100 million. And so far this year, at least seven private, venture-backed companies have closed investments of $1 billion or more. (See list).

To put this in perspective, we look at both global and U.S. supergiant round totals by year for the past decade in the chart below:

Monthly supergiant round totals also hit extraordinary heights in January, well above any month in 2020. We chart out the monthly supergiant funding totals for global and U.S. investments in the chart below:

There are a few big drivers behind the surge in $100 million-plus rounds. These include heightened interest in hot categories such as fintech and transportation, large rounds for companies on the verge of going public, and willingness among investors to back bigger rounds for early-stage companies.

Hot sectors for huge rounds

We’ll start by looking at the sectors that are drawing the largest portion of supergiant rounds.

Using Crunchbase data, we can see that a handful of industries account for the vast majority of the biggest investments. Top sectors include transportation, fintech, health care, e-commerce and enterprise software. Here’s how it breaks down:

• Transportation: This is the biggest category, with $7.7 billion across nine rounds of $100 million and up (see list). Investments run the gamut from autonomous vehicles to electric bikes.
• Financial services: The next-biggest category is fintech and financial services with $5.5 billion invested across 21 rounds (see list). Focus areas include online stock trading, lending platforms and faster checkouts.
• Enterprise software and analytics: The enterprise space was also big for supergiant fundings, with $5.1 billion invested across 21 rounds, per Crunchbase data, dominated by cloud, analytics and AI (see list).
• Health care: As usual, health care was also one of the big categories. Investors have  put $4.1 billion to work across 24 supergiant health-related rounds this year, including at least 10 early-stage deals (see list). Biotech dominated the list, with a bit of insuretech and health data as well.

Supergiant funding sectors of interest track fairly closely with what we’re seeing on public markets, which have been highly receptive in recent months to venture-backed offerings in the sectors mentioned above.

Massive rounds of companies planning public debuts

Given the red-hot public market for new growth technology stocks, it’s not surprising that the largest rounds this year are in companies seen as on the fast track to exchanges. The list includes:

• Rivian, which raised $2.65 billion in a growth round led by T. Rowe Price and joined by several private-equity investors. The funding comes as the Michigan-based maker of electric trucks and SUVs is reportedly considering going public later this year.
• Robinhood, another talked-about IPO candidate for this year, has pulled in $3.4 billion since January in financing led by existing investors amid record customer growth for the Silicon Valley company’s zero-fee stock trading platform.
• UiPath, the robotic process automation unicorn, raised $750 million in a Series F round led by Coatue and Alkeon Capital Management. The financing, at a reported post-money valuation of $35 billion, comes as the company preps for an IPO later this year.

Seeing large, pre-IPO rounds is nothing new in the startup sphere. This time around, the investments are larger than in past cycles because public valuations are up as well. It also helps confidence that those who backed big rounds for other companies that went public in recent months — including Snowflake and Airbnb — have seen fast and impressive paper returns.

Early stage is revving up, too

It’s not just late-stage companies that are raising enormous sums. At least 41 of the supergiant funding rounds so far this year have been Series A and B deals, per Crunchbase data. U.S. rounds include $500 million for EQRx, a startup focused on making medicines more affordable; $350 million for Calendly, a scheduling tool; and $115 million for Savage X Fenty, a lingerie brand founded by musician and fashion icon Rihanna.

As we chronicled last week, the U.S. supergiant early-stage sphere also stood out for its higher-than-usual inclusion of companies with Black and female founders. Whether this is a fluke or the start of a broader trend remains to be seen.

Where we go from here

Every statistical trend begs the question: Where is it all leading? For supergiant rounds the answer for now is that it is leading up.

Lately, in the worlds of venture funding round sizes, valuations and public market exits, virtually everything seems to be going up. So that is the trend. Until, of course, things go down. This  usually happens eventually, but it hasn’t for a long time.

In recent days, we did see some pullback in public tech valuations amid escalating concerns about inflation impacting growth stocks. In private markets, however, it’s been more of the same, with each day delivering a fresh batch of giant rounds.

Illustration: Dom Guzman