A few thousand startup investors sit down to some Zoom meetings. Six months later, they’ve written checks worth $155 billion, minted 161 new unicorns, and watched five of their most valuable portfolio companies go public at a collective valuation of $190 billion.
There’s no punchline here. Those are simply the tallies for North American startup investment in the first half of this year, per Crunchbase data. They’re very large numbers and record-setting investment totals, well above the prior all-time highs set just months earlier.
It’s a lot to break down, so we’ll look at venture investment for the first half of 2021 in pieces below, starting with overall funding across stages. Then we’ll focus on stage-by-stage investment, highlighting major rounds, and finish up with a look at exits.
Table of Contents
- Late-stage funding
- Early-stage funding
- Seed funding
- Public offerings
- The big takeaway
- Glossary of funding terms
The big picture
North American startup investment totaled $155 billion in the first half of 2021, across all stages from seed through technology growth. That represents a jump of 66 percent over the second half of 2020 and a staggering 116 percent gain over the first half of 2020.
In case you were wondering whether those jumps were due to last year being unusually weak, it was not. Both Q3 and Q4 of 2020 were supercharged quarters. But investment in the first two quarters of 2021 blew past previous highs to set a new record.
For perspective, we lay out totals for the past four years, color-coded by stage, in the chart below:
For a stage-by-stage analysis, we’ll start with late-stage deals, which account for the lion’s share of startup investment.
Like everything else in startup land, late-stage dealmaking was on fire in the past two quarters, with both round counts and investment totals way up. Just halfway through 2021, investment has already surpassed all of 2020.
Altogether, late-stage and technology growth funding hit $103 billion in the first half of this year. That’s a rise of 68 percent from the second half of 2020, and a whopping 144 percent increase from the first half of 2020.
To put things in perspective, we lay out totals for the past five quarters in the chart below:
As usual, a handful of supersized rounds significantly boosted the totals. For late-stage venture, some of the largest funding recipients for Q2 include Relativity Space, a developer of 3D printed rockets that raised $650 million in Series E funding, Brex, the company card provider that raised a $425 million Series D, and Olive, a developer of labor-saving AI for the health care industry that raised $400 million.
Early-stage investing was also on a tear in the first half of the year. Overall, investors put $46.2 billion into 2,074 reported funding rounds. In dollar terms, that’s a jump of 66 percent from the latter half of 2020 and a rise of 81 percent over the first half of 2020.
We lay out the comps in more detail in the chart below:
For Q2, some of the largest early stage funding recipients include Perch, an acquirer of Amazon retailers that raised $775 million, Beta Technologies, a developer of electric aircraft that raised $368 million, and Recharge, an online subscription management platform that raised $227 million.
It’s also worth noting that early-stage rounds don’t always go to young companies. The largest Series A and B deals, in particular, commonly go to companies that have been around awhile but did not previously raise venture funding. This was the case, for instance, for Q2’s largest Series A deal, a $1.5 billion financing for Articulate, an online training provider founded in 2002.
Seed funding also ticked up in the first half of the year. For both Q1 and Q2, investors put $5.4 billion into just over 3,800 reported seed financings.
Because seed rounds often only get reported to our database weeks or months after they close, we expect the latest half-year totals to shift a bit higher over time. However, even with rounds reported to date, we’re well above comparable periods for 2020, as illustrated in the chart below:
While seed funding is up in 2021, it’s notable that the rise is not as pronounced as we saw at early and later stage. Of course, reporting delays are a factor, and it’s difficult to attribute any one cause for the disparity. One possibility, however, is that robust public market and M&A prices are driving some of the later stage hoopla, as investors see a chance for fast, big returns even on high-valuation rounds.
And speaking of big returns, let’s now turn to exits. While startup investors were busy putting huge sums of money into newer portfolio companies, they also did a pretty good job overall in generating public market and M&A exits for older ones.
Below, we look at major public offerings for Q2 of 2021, followed by acquisitions.
Public offerings in Q2 took all forms: Traditional IPOs, direct listings and the increasingly popular route of going public via SPAC.
While many of the companies above had well-received debuts, aftermarket performance has been choppier. Coinbase, for instance, has shed roughly one-fourth its value since going public amid crypto volatility. And both UiPath and Marqeta are down a bit from their debuts.
We also saw a number of acquisitions of venture-backed companies in Q2 by both private equity firms and strategic buyers. Some of the largest include:
- Divvy, a platform that helps businesses manage payments and subscriptions, sold to Bill.com in a $2.5 billion deal.
- Iora Health, a patient care platform, sold to primary care provider One Medical in a deal valued at around $2.1 billion.
- Turbonomic, a developer of tools that optimize application performance, sold to IBM in a transaction reportedly valued at between $1.5 billion and $2 billion.
The big takeaway
Generally speaking, it’s easy to sum up venture investment and exit tallies for the first half of 2021 in a few words. Things are running hot. Really hot. Valuations are up, deal counts are high, and exit multiples are up there too.
Are there storm clouds on the horizon? Sharp share price declines for Coinbase and a number of companies that went public via SPAC this year demonstrate that not everything just goes up. As of yet, however, it does not appear that investors are feeling deterred, and the giant rounds keep rolling in.
The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of July 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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