Venture Capital investment in 2021 shatters records, says KPMG Private Enterprise’s Venture Pulse report

Fourth quarter marks another record for the US

Total venture capital investment. Corporate venture capital investment. Exits. Global fundraising.

Virtually, every aspect of venture capital hit record highs in 2021 with venture capital investment in Q4 nearing a new quarterly record, according to the latest edition of Venture Pulse by KPMG Private Enterprise, which analyzes VC trends globally and in key jurisdictions around the world.

“2021 was an incredible year for the venture capital market,” said Conor Moore, National Leader for Private Enterprise at KPMG US. “We have never seen this level of activity in the various parts of the ecosystem, and there is much to be optimistic about as we move into 2022.”

US 2021 performance breaks records with exits continuing

In the US, the VC market finished the year on a high note, setting a fourth consecutive record for VC investment. Specifically, US VC-backed companies raised $88.2 billion across 3,536 deals. Total investment in the US for 2021 reached $330 billion.

VC-backed exit value had another strong quarter and on an annual basis rose from $473 billion in 2020 to $1.378 trillion in 2021, passing $1 trillion for the first time ever. The US led the way with $774 billion in 2021.

How the pandemic shaped investments? COVID-19 has driven strong interest in a wide-range of US healthtech and biotech solutions, in addition to the accelerated use and acceptance of digital technologies, tracking and monitoring tools, and remote services.

  • ·During Q4’21, a number of diverse healthtech companies attracted $100 million+ funding rounds. Surging interest in the use of technology to support and deliver a broader range of healthcare services – such as mental health care – combined with an increased willingness to use digital tools, will likely keep healthtech investment strong well into 2022.
  • With companies starting to fully appreciate the difficulties associated with managing remote or hybrid workforces – on top of the challenges firms already face attracting and retaining talent – the value of HRtech will likely continue to increase.

A key takeaway: “Companies able to simplify and help with different parts of the HR and people management process are going to be in high demand,” said Moore. “This is no doubt going to lead to increasing VC investment in HRtech in the US.”

In 2022, global VC investment expected to remain robust, while U.S. IPO market continues shift to quality and readiness from speed

Heading into 2022, VC investment is expected to remain strong in most regions of the world, with less mature VC markets, such as Africa and the Middle East, expected to gain more attention from VC investors. Fintech will likely remain one of the hottest areas of investment, in addition to B2B services, healthtech, cybersecurity, and AI solutions across several sectors.

US Spotlight: “The US environment looks set to remain as heated as ever, said Moore. “IPOs may slow down from the record highs in 2021 as companies focus on readiness over speed, but investment and exit activity is expected to remain robust.”

Key trends to watch:

  • Key industries to watch: US VC investment is expected to remain strong in Q1’22, with areas like healthtech, B2B services (especially HRtech), and cleantech gaining additional momentum. As we move into 2022, IPO exits could also be on the horizon for many US-based fintech companies given the sector’s growing size and maturity.
  • What’s next after the IPO boom? The US IPO market is also expected to remain robust, however, the number of public listings could fall from 2021’s peak as companies increasingly focus on IPO quality and readiness over speed.
  • Will megadeals continue? Megadeals helped drive the Q4’21 surge in investment, including $1 billion+ funding rounds by thermonuclear power development company Commonwealth Fusion Systems, food delivery and consumer good company Gopuff, space tourism company Sierra Space, cybersecurity firm Lacework, and e-commerce aggregator Thrasio.  With the seemingly unending supply of available capital, this trend is likely to continue.  Decacorns will become the new unicorns.

“Venture capital activity will continue to fundamentally shape our economy and our society, from our response to the pandemic to how we tackle climate change,” said Moore.

View the full report here and see additional highlights below.

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Global Q4’21 highlights

Global quarterly venture capital investment surged past the US $150 billion mark for the fourth straight quarter, reaching $171 billion across 8,710 deals during Q4’21 – only slightly below the previous high of $180 billion on 9,953 deals achieved in Q3’21.  On an annual basis, global VC investment rose from $347 billion across 31,623 deals in 2020 to a record $671 billion across 38,644 deals in 2021.

  • On a regional level, the Americas led VC investment in Q4’21, with $95.2 billion, followed by Asia ($46.2 billion) and Europe ($28 billion).
  • Corporate VC remained strong, reaching $81 billion in Q4’21, slightly off the previous record of $90 billion set in Q3’21.
  • The percentage of investment by corporates reached an all new high in Q4’19, with corporates participating in 29.4% of all VC deals globally.

Global takeaways for 2021

Global VC investment rose from $347 billion across 31,623 deals in 2020 to a record $671 billion across 38,644 deals in 2021.  It was a record year for VC investment in all regions of the world. 

By the region…

  • VC investment in the Americas rose from $175 billion across 13,600 deals in 2020 to $361 billion across 17,449 deals in 2021.
  • European VC increased from $54 billion across 8,968 deals in 2020 to $123 billion across 9,710 deals in 2021.
  • The Asia-Pacific region saw $181 billion in VC investment across 10,498 deals in 2021 –compared to $116 billion on 8385 deals in 2020.

Investor appetite…

  • Global corporate VC remained hot to close out the year, with $81 billion invested in Q4’21 – making it the second highest quarter ever and capping of a record annual total of $315 billion.
  • First-time financings resurged in both count and aggregate VC invested, hitting 54.3 billion in 2021, up from 31.1 billion in 2020.
  • Global median pre-money valuations for D+ rounds more than doubled year over year, reaching $1 billion.

Media Contact

Melanie Malluk Batley

Melanie Malluk Batley

Associate Director, Corporate Communications, KPMG US

+1 201-307-8217

 

 

Conor Moore

Conor Moore

Partner, National Leader, KPMG Private Enterprise, KPMG US

+1 415-335-8401

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