venture capital

PitchBook and NVCA have published an initial look at the Venture Monitor Q4 2021, and the data already suggest an astounding level of activity in 2021. As of Dec. 31, PitchBook had identified $330 billion invested across more than 15,000 deals, substantial increases over the $167 billion invested across 12,000 deals in 2020. The increases were driven by venture capital stage investments (as opposed to seed and angel investments), which accounted for 80 percent of the additional deals. Firms raising new venture funds also did very well in 2021, with 730 funds raising $128 billion — up from $87 billion in 2020. These data are preliminary and will be updated when PitchBook and NVCA publish the formal Venture Monitor for 2021, which SSTI will then cover in detail (including by sharing state-level investment activity).

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.

The emerging innovation-intensive sector of urban farming is seeing heightened interest by venture capitalists, investments are growing faster than the crops: $2.4 billion so far this year at last count by PitchBook. That reflects a year over year (YoY) investment growth rate of 214 percent.  The number of individual deals also is rising 14 percent YoY. The sector is expected by many market analysts to capture an increasing share of the nation’s food supply for a number of reasons. Most notably, the historic drought in the western half of the U.S. is likely to have significant impact on the region’s agricultural industry, which currently accounts for up to 70 percent of the region’s water use.  Additionally, consumption of fresh vegetables tracks closely to income inequality and access to full service grocery stores and farmers’ markets, resulting in “food deserts” for many lower income neighborhoods. Thirdly, an ever increasing share of the world’s population is living in urban areas.

Increased adoption of environmental, social, and governance (ESG) principles has been empirically linked to improved financial performance, but venture capital (VC) has fallen behind other sectors in embracing such measures. With more than $100 trillion in assets under management (AUM) already being managed according to the ESG framework globally, a recent article by Johannes Lenhard and Susan Winterberg provides some guidance on how VC can improve in adopting ESG principles, while also giving some pointers to limited partners (LPs) in VC funds, regulators, and company founders — the groups that have been the drivers of what little ESG adoption VC has experienced.

The PitchBook-NVCA Venture Capital Monitor for the first half of 2021 reveals that the market is set to break a number of investing records, but strikingly, the record levels of investment activity are all being set by the later stages of investment. At the other end of the funnel, activity is increasing, but not at the same pace as the overall market.

If venture capital was water, then sea levels continue to rise.  Yet more and more innovation-based startups across the country seemingly are being left high and dry as private venture capitalists continue to push their money into bigger, later stage deals. Investors seem increasingly set to cruise toward cashing in on the currently hot exit path of public listings. All of the key metrics in the latest Pitchbook-NVCA Venture Capital Monitor suggest many of the youngest innovation opportunities have been left out of recent VC activity, a trend that typically hurts those geographic areas receiving less VC than national averages. 

For those looking for examples of the impact state investment, university involvement and tech-based economic development can have in rural parts of the country, one can examine news from Appalachian Ohio that Stirling Ultracold reached a definitive merger agreement on March 22 to be acquired for a reported $258 million by publicly-traded BioLife Solutions. The original lead investor in Stirling Ultracold is TechGROWTH Ohio, one of Ohio Third Frontier’s regional entrepreneurial service providers. BioLife intends to keep the Stirling Ultracold brand intact and maintain existing staff in Athens, Ohio. The 160 employees in the rural Southeast Ohio county is the equivalent on a per capita basis to more than 11,000 employees in Cook County, Illinois (the county Chicago is located in).    

The U.S. House of Representatives is working through the coronavirus relief package in committee markups this week, and there are several provisions that could have a significant impact for regional innovation economies. The highest-profile of these is $10 billion for a new State Small Business Credit Initiative (SSBCI) program. Reauthorizing this program has been a top priority for SSTI's Innovation Advocacy Council, as SSBCI was one of the federal government’s only sources of funding for equity investments in the past two decades.

While venture capital (VC) deal activity by women-(co)founded and women-led companies has increased over the last 15 years by some metrics, a new report indicates that the 2020 pandemic and global recession impacted these companies more than companies founded and led by men. In the second edition of its annual All In Report, PitchBook expands on its efforts to shed light on the dynamics of women’s participation in the VC market. While participation in the VC market was impacted for companies founded and led by men and women in 2020, the report highlights the impact on women-founded and -led companies by showing recent declines in nearly every measure used in the report compared to nearly constant pre-pandemic trends in increased deal count, deal value, company valuation, and exit rates by women-founded and -led companies.

Deals raising at least $50 million grew by nearly one-quarter in 2020, driving an additional $18 billion in deal value to a new record of $156 billion invested. This data, from the PitchBook-NVCA Venture Monitor, suggests that the total venture capital market will see a slight decline in investment deals overall from 2020.[1] This slip in deal activity is driven by what is currently an 11 percent decline in seed or angel deals and a 20 percent decline in early venture capital deals.