Venture Capital Benchmark
Q1 2021
North America, Europe and Latin America.
Welcome To the Status of Venture Capital Report Q1 2021
Join us remotely February 22nd - 26th to learn how your startup can build a repeatable playbook to acquire, retain & grow customers.
We will be breaking down VC activity in the US, EU, and LatAm and what it means to you as an investor or founder. After going through extensive market intelligence from the industry's most trusted sources, here’s the top-line review of what went down in the VC world last quarter…
Welcome To The NFT Craze!
NFTs or “Non-Fungible Tokens” have exploded in popularity over the past 4 months. They will no doubt have the potential to disrupt some stagnant markets. Recently, the artist Beeple had his famous “The first 5,000 days” auctioned off at Christie’s and sold for a staggering $69.3 million.
Beeple's collage, Everydays: The First 5000 days, sold at Christie's. Image: Beeple
Q1 in a nutshell
All-time record number of funding and unicorns minted - Covid is definitely not stopping the growth!
Startups have started 2021 by smashing through previous years’ records, with 98 new unicorns minted in Q1 alone compared to 61 in Q4’20, and it’s just getting started. Venture funding in the USA is up 74%, and in Europe is up 37% compared to Q4 2020. Deal value in Europe amounted to $19 billion. The USA topped $68 billion, which is over 2x above last year’s Q1 for both continents!
This Growth Is Likely Due To The Stabilizing Covid Situation
Particularly in the United States, which has yet to experience a major economic fluctuation. The emerging and existing startups operating within growing sectors that have not been affected by COVID and might even have benefited from it and accelerated their growth are also likely contributors to these numbers.
High Growth Sectors
Growth In VC Activity Was Particularly High Within A Few Key Sectors: delivery, robotics, logistics, automotive, fintech, and cloud computing.
Rise in Amateur Retail Investment
With the rollercoaster of a ride that was Robinhood and GameStop this year and the rise of the amateur retail investor, fintech has seen a resurgence in funding and much can be said about the SPAC boom.
Even Though They Continued To Drop Overall Vs. Q1 2020 As Investors’ Flight To Quality Continues
VC market also followed the public market, particularly in later-stage VC - Series C and later rounds – that grew by 262% over Q1 2020.
Funding in Q1 has overtaken Q4'20 at $90B, making Q1 the biggest quarter in investment dollars ever.
What Does This Mean...
The declining deal count is due to data shown for companies that have been able to use the pandemic lockdown to their benefit and actually significantly grow their business. The macro-economic situation, whilst far from perfect, has also stabilized with the rapid rollout of vaccines and with the Federal Reserve stating that it would not raise interest rates until 2024.
Let’s Look At The Numbers….
In The USA, The VC Dollars Invested Skyrocketed To 217% Versus Q1 2020 for a total of over $68 billion.
Europe Seems To Be Riding The Upward Trend That We Saw In The USA
as the VC dollar invested jumped 37% over last quarter and 135% over Q1 ‘20 for a total of $18.6 billion. The deal count rose even at 17% since Q4 ‘20.
In Latin America, The VC Dollar Invested Has Increased By 102% Since Last Quarter!
This is a phenomenal start to the year with $2.9 billion invested so far in Q1. The deal count equally managed to increase and was up 49% since last quarter but down 12% over Q1 ‘20.
Valuations will inevitably take a hit in the short/medium term
This is further accelerated by the public market crash which is causing revenue multiples to drop.
Nubank $400M Series G funding round, bringing total valuation to $25B.
Loggi $205M funding round led by CapSur Capital.
MadeiraMadeira $190M funding round led by SoftBank Group.
dLocal $150M investment round led by Alkeon Capital.
Something To Keep An Eye Out For:
SoftBank has requested authorization from the SEC for a $200M SPAC that will be exclusively focused on Latam tech startups.
Diving Deeper Into The Stages Tells Us What’s Happening At Ground Level…
Seed funding
At $2.7 Billion, Seed Funding In Q1 Was Up 8% Since Last Quarter And 17% over Q1 2020.
The Industry’s Transition To Digital Dealmaking Has Been Relatively Steady
As people become accustomed to the new norm, investors have ultimately closed roughly 55% less deals than in Q1 2020 and 12% less than Q4 2020.
Current Figures Show A Decline In First-Time Financings
Relative to the last several years, this goes to show how the VC market is shifting towards extracting value from “kindergarten” startups with high potential as they invest larger amounts of capital for higher valuations.
Early-Stage Deal Activity Started Remarkably Strong In 2021
Even within global uncertainty and the ongoing COVID pandemic, early-stage funding racked up $20 billion deal value in Q1, up 15% since last quarter (Q4 2020) and beating Q1' 20 numbers by more than two thirds at 66.5%.
The Recent $290 Million Series B By The Much Loved Gorillas Has Elevated The Company To Unicorn Status
It is one of the fastest companies to become a unicorn, achieving its status in a mere 10 months! Another indicator that the delivery sector, whilst consolidated, is still open to innovation and significant investor capital.
Late-Stage Funding Is Not Merely Riding The Wave… It IS The Wave!
Unsurprisingly, late-stage total deal value absolutely smashed both Q1 & Q4 2020 with an increase of 162% and 98%, respectively.
Sectors That Saw The Biggest Funding In Late-Stage Include, Non-Surprisingly, Health Care
But also financial services, transportation, commerce and shopping.
Exit Landscape
Starting Q1 there were over 600 acquisitions of VC backed startups totaling a staggering $57 billion in deal value. The pace of M&A only increased in Q1, rising 26% QoQ and 44% YoY.
Notable Acquisitions in Q1 '21
The largest acquisition of the quarter was for engineering services company GlobalLogic, which was acquired by Hitachi’s for $9.6 billion.
Other notable acquisitions include identity management platform Auth0’s which was acquired by Okta for $6.5 billion.
Notable IPOs in Q1 '21
In Q1, we saw 80 global venture-backed companies that went public.
The most highly valued were Beijing-based video streaming platform Kuaishou Technology, valued at $150 billion; Seoul-based e-commerce and delivery company Coupang, valued at $60 billion.
For Europe, electric vehicle startup Arrival was valued at $13 billion.
The NFT Craze, Explained
What is this you ask?
An NFT Is What's Known As A “Non-Fungible Token”.
These tokens represent a unique set of files stored within a blockchain and allow people to verify ownership of digital artworks.
According to data from DappRadar, the average NFT price peaked at $4334.21 on February 22, 2021, which was 40 times that of six months ago.
What We Are Expecting In 2021
As Q1 was a record quarter, it is setting the pace for what is likely to be another milestone year. With the rise of blockchain tech adoption, the increasing importance of emerging managers and the appearance of NFTs, we ask what effects will technologies of the next wave deliver?
Life slowly shifts back to normal
With the vaccines rolling out at an increasing pace and working toward mass distribution in 2021, it’s going to be exciting to watch how the industry evolves.