Using available data and resources on VC funding from a range of sources, Grey Matter’s MD, Rodney Crouch breaks down the first three months of year, adding his thoughts, as company growth boomed and global venture funding hit an all-time high.
Last year proved that it would take more than a global pandemic to slow down tech investors’ appetites for a good deal.
Despite the troubles of 2020, many tech-driven businesses finished the year on a high as growth continued and investment flowed. Global funding topped $300 billion, up 4% year on year, with this growth the result of industries being forced to shift to online services to survive the disruption and in order to compete as before.
This shift created a significant boom for technology infrastructure and digital and cloud services, and put in place a renewed confidence among consumers, and importantly, investors.
It’s this confidence from investors which has carried over into 2021 in no uncertain terms.
How do the Q1 numbers stack up?
Look at the numbers and the data gathered by Crunchbase since January 2021 and one thing’s abundantly clear – investment is booming.
Whether you take seed funding, early-stage, late-stage or technology growth, the levels of investment surged during Q1, and there were more rounds raising $100 million or more than ever before across these stages.
Likewise, the total number of deals was up versus previous quarters, with around 2,300 companies raising funding from Series A onwards in Q1.
The data shows that Q1 2021 became the first quarter to see global venture investment reach $125 billion, setting a new record for investment in a single quarter.
It was also the first time that funding had surpassed $100 billion in any given quarter – you have to go back to Q4 2018 to find the next-highest global funding quarter, when $92 billion was invested.
The fact that these Q1 numbers are some $30 billion higher than the previous best quarter indicates the level of confidence from investors, even during a period of significant global uncertainty.
Continue to study the numbers and you’ll find a 50% increase quarter on quarter, as well as a 94% increase in investment year on year.
Across the UK and Europe, all signs point to a stellar year for tech startups, with investment in these companies accounting for $21.4 billion in the first quarter, a figure that’s nearly double that of Q4 2020.
The next breed of Unicorns
It wasn’t just levels of investment that boomed; the number of companies valued at $1 billion plus grew significantly throughout the quarter.
There was on average, close to two new unicorns created per working day globally, with these companies raising just shy of $58 billion, and nearly half of all funding, in the first quarter alone.
In total, 112 companies joined Crunchbase’s Private Unicorn Board during Q1 2021, an amazing feat if you compare these numbers to the total of 159 companies added throughout the whole of 2020.
Things looked excellent for European unicorns with 16 joining this list in Q1, and it was these businesses that were responsible for raising almost 40% of all investment ($8.2) throughout the period.
Although still mightily impressive, only 15 Europeans joined Crunchbase’s Unicorn Board throughout the whole of 2020.
Acquisitions & IPOs on the rise too
The rate of acquisitions was also on the up in Q1, rising 26% quarter on quarter and 44% year on year. Big names including Hitachi (deal size – $9.6b), Magnite ($1.2b) and Uber ($1.1bn) all made significant acquisitions globally throughout Q1.
Some 80 venture-backed companies went public between January and March, with household names such as Deliveroo in the UK (valuation ($10.4b), and US companies Bumble ($8.2b) and Coursera ($4.3b) among those to go public.
What lies ahead for Q2?
With funding at an all-time high, and following on from the strong investment in Q3 and Q4 2020, it’s an exciting time for technology companies and investors operating in the space.
2020 was a milestone year, and industries and businesses have changed significantly in a short space of time. Despite the world starting to creep it way towards normality, the way in which businesses operate has changed exponentially and will continue to be transformed over the coming years.
More than ever, investors recognise the impact the pandemic has had on consumers, both in the way they conduct business and in their everyday lives. There will be an increasingly varied list of investment options for investors, as companies across all industries seek to adapt, and take advantage of the opportunities to diversify to the ever-changing needs of global consumers.
With billions in funding raised already this quarter at the time of writing, and with investors determined to be a part of the technologies that are driving this innovation and transformation, don’t be surprised to see these investment records broken again in the not-too-distant future.