Let's Call It Ebullient

General

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Reading list

• The Q3 2021 Global Venture Capital Report: Record Funding Trend Held Strong (Gené Teare for Crunchbase News)
• Tiger Global And SoftBank Vision Fund Vie For Top Slot As Q3’s Biggest Startup Investor (Joanna Glasner for Crunchbase News)

Key takeaways

The venture capital market is on fire:

• Crunchbase projects that $160 billion was invested worldwide in Q3 2021, up from $159 billion in Q2 2021.
• This makes Q3 2021 the biggest quarter ever for VC investments.
• The numbers speak for themselves, and they're staggering. As Crunchbase News points out, prior to 2021 there was no single quarter in which $100 billion or more was transacted.
• Putting this in perspective: Crunchbase projected that around $322 billion was invested in all of 2018, the previous high water mark. In other words, more venture capital has been invested in the past 6 months than was invested in the entire year of 2018.

Supergiant venture deals ($100M+) continue to dominate:

• According to Crunchbase News, supergiant deal volume in Q3 2021 was up 97% from the same period in 2020.
• Supergiant deals also accounted for the largest share of total dollar volume—64%—ever.

Let's get into some of the numbers:

• Seed stage. Crunchbase projects that $6.5 billion was invested in angel and seed-stage deals worldwide in Q3 2021, which is up 47% from the same quarter in 2020. With new, multi-hundred million dollar funds from the likes of Andreessen Horowitz, NfX, and Greylock coming online last quarter, it's likely that pre-seed and seed funding totals are going to continue to increase over the coming quarters.
• Early stage. Crunchbase projects that $49.3 billion was invested in early-stage deals in Q3 2021, which is up a whopping 104% from Q3 2020. Deal counts are projected to be up 19% from the same period last year. This is very good news, considering that a year or two ago there were concerns that seed and early-stage deal volume was declining, which could've resulted in downstream deal flow constraints in future years.
• Late stage and Technology growth. Crunchbase projects that $104.2 billion was invested in late-stage and technology growth rounds in Q3 2021, up YoY by 69%. Deal and dollar volume slipped slightly from Q2 2021 but there's nothing notable about that; dollar volume is still above $100 billion for the second quarter in a row.

Exits:

• Public market investors continue to invest in IPOs, direct listings, and SPACs. There may be some concerns about the quality of companies going public these days, however.
• M&A market keeps puttering along too.

Big numbers raise big questions

• Despite the economic hardship of the ongoing COVID-19 pandemic and uncertainty about the future, public markets are near all-time highs and the VC market is experiencing its biggest-ever boom. At some point, the punch at this party will either run out or someone is going to take away the punchbowl. When will this happen?
• With so much capital going into late-stage deals these days, will there be sufficient appetite by public investors or the M&A market to get liquidity for all these companies over the coming few years?
• Will macroeconomic factors in China, Europe, or the United States change the market dynamic in a material way in Q4 2021? In 2022?

About The Co-Hosts

• Jason D. Rowley is a researcher who has previously worked with Uzabase, Golden.com, Crunchbase News and others. He volunteers with startup outreach for the open-source community and sends occasional newsletters from Rowley.Report.
• Graham C. Peck is a Venture Partner with Cultivation Capital and additionally helps companies build technology development teams in partnership with Brightgrove and other technology development organizations.