Fully Vested

Let's Call It Ebullient

In this episode, we discuss the record-breaking Q3 2021 global venture capital investing statistics.

Subscribe to Fully Vested at FullyVested.co or through your podcast app of choice.

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.

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?

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.