In the first quarter of 2021, global venture investments reached $125 billion, a 50 percent increase quarter over quarter and a whopping 94 percent increase year over year, Crunchbase data shows.
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Global funding last quarter hit an all-time high, marking the first single quarter to reach above $100 billion, according to Crunchbase data.
Alongside the investment boom, new unicorn startups — those private companies valued at $1 billion or more — were created at a rapid pace in the first quarter, with an average of close to two new unicorns per working day, well above all previous quarter counts.
After more than a year of a global pandemic, the S&P 500 is also at an all-time high. Private companies have more avenues to go public, including via special purpose acquisition companies, or SPACs, which took off in 2020. And following a year of pandemic-led growth for many technology startups, the acquisition markets are stronger than ever.
The past three months mark a quarterly record for global VC investment. To find the next-highest global funding quarter, one has to go back to the fourth quarter of 2018, when global funding reached $92 billion. The second quarter in 2018 was not far behind at $91 billion. The fourth-highest funding quarter was the third quarter of 2020, when funding reached $87 billion.
Seed holds up
Seed funding held up in the first quarter of 2021, with $4.1 billion invested in seed-stage venture deals. Funding counts trended down, but it’s worth keeping in mind that this stage of funding tends to be heavily influenced by data lags, so that number is likely to go up as more deals are added to the Crunchbase dataset over time: Often, we find as much as 40 percent of deals are added in the year after a quarter closes, and as much as 50 percent to 60 percent two years out.
Back in the second quarter of 2020, we saw seed-stage funding counts dip, most likely as venture firms focused on supporting their portfolio companies through the emerging pandemic rather than seeking new investment opportunities. But by the third quarter of last year, that trend had reversed and venture funding went on to record highs.
Early stage, a new record
Early-stage funding experienced a surge in the first quarter of 2021, with $35.5 billion in funding, a 45 percent quarter-over-quarter increase and a jump of 63 percent year over year. This record in early-stage funding was in part attributed to an increase in rounds over $100 million, but not solely.
Funding counts are typically down for the most recent quarter due to the aforementioned data lags, but for this quarter already show an increase quarter over quarter, attesting to just how heated the market is for early-stage funding and signaling that more funding will come should these growth trends continue.
Late stage grew at a greater rate
Late-stage funding and technology growth — private equity into venture-backed companies — grew the most in the first quarter of 2021, at 56 percent quarter over quarter and more than doubled at 122 percent year over year.
A higher proportion of the growth in late-stage growth is in rounds above $100 million. Fully 79 percent of dollars at late stage is in rounds of $100 million and above this quarter, compared to 74 percent in the previous quarter and 63 percent in the first quarter of 2020.
Sectors that led for investments include health care, financial services, transportation, and commerce and shopping. Sectors that saw the biggest increase year over year include administrative services, lending, and sales and marketing.
Acquisitions are up
The pace of acquisitions increased in the first quarter, rising 26 percent quarter over quarter and 44 percent year over year. Amounts were flat quarter over quarter but still up year over year.
Leading acquisitions in the quarter included San Jose-based GlobalLogic’s acquisition by Hitachi for $9.6 billion, Seattle-based identity management platform Auth0’s acquisition by Okta for $6.5 billion, and Shanghai-based video game publisher Moonton’s purchase by Nuverse for $4 billion.
Billion-dollar acquisitions in the first quarter totalled 15 venture-backed companies, down from 20 in the fourth quarter, when that figure hit an all-time high.
In this past quarter, 80 global venture-backed companies went public. The most highly valued at their public offering were Beijing-based video streaming platform Kuaishou Technology, valued at $150 billion; Seoul-based e-commerce and delivery company Coupang, valued at $60 billion; and RELX Technology, valued at $45.8 billion and also headquartered in Beijing.
The largest U.S.-based IPO in the first quarter was Silicon Valley’s gaming platform Roblox, which went public via a direct listing and was valued at $30 billion. And London-based Arrival, an electric-vehicle company, was valued at $13 billion in its debut via SPAC.
Growth in new unicorns
In the first quarter of 2021 a total of 112 companies joined the Crunchbase Private Unicorn Board, a list of private companies valued at or above $1 billion — pacing at an average clip of almost two new unicorns per working day.
That contrasts with the whole of 2020, when a total of 159 companies, or roughly one new unicorn every two working days, joined the board.
Unicorn companies have raised $57.9 billion in the first quarter alone, close to half of all funding raised. This contrasts with 2020, when unicorn companies raised one-third of all venture capital.
Late-stage funding dominated in the first quarter, representing 68 percent of venture and growth equity in venture-backed startups. However, early-stage funding is also at an all-time high, per Crunchbase data.
The unprecedented global pandemic created the tailwinds for technology’s adoption growth in the past year. With over 770 companies on our private unicorn board — and a further 220 companies on the emerging unicorn board, along with the 2,300 companies that raised funding from Series A onwards in the first quarter — 2021 is shaping up to be a blockbuster year as long as the public markets hold up.
The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of April 6, 2021.
Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.
The most recent quarter/year will increase over time relative to previous quarters. For funding counts, we notice a strong data lag, especially at the seed and early stages, by as much as 30 percent to 40 percent a year out.
Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.
For M&A transaction analysis, we include venture-backed companies and exclude companies that previously went public.
Glossary of funding terms
Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.
Early-stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.
Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.
Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)
Illustration: Dom Guzman
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