Venture capital on pace to break all kinds of records in 2021

The PitchBook-NVCA Venture Monitor Q3 2021 reports eye-popping investment activity through the first three quarters of the year. So far this year, the total venture capital market has invested more than $238 billion across an estimated 12,000+ deals, more than 1,300 exits have yielded more than $580 billion in value for investors, and 526 funds have raised more than $96 billion. Most of these metrics have already broken all previous annual records.

As has been the case since 2018, the market continues to be very top heavy: 57 percent of VC investment this year has gone to rounds of at least $100 million, and a comparable level of commitments to new funds occurred for funds with at least $500 million.

These trends continue to underscore the separation between the current reality of VC market and VC’s traditional image: the investment activity driving the topline numbers is less about making small and risky bets into new startups and more about taking large positions on relatively established companies. This separation raises questions about the value of VC activity (and particularly dollars invested) as a proxy measure of a region’s startup activity.

The level of activity at the early end of the investment spectrum is strong, but not nearly to the same degree as at the later stages. Angel and seed activity remains on pace for a comparable level of dollars invested across fewer deals than in the last few years. Intriguingly, this stagnation is occurring despite the number of startups closing their first round approaching a record this year (on pace for about 3,500 first financings in 2021).