Startups have never had it so good

The venture capital market is racing ahead, foot on the gas, middle finger out the window, hair on fire. That’s our read of the Q2 2021 data released thus far concerning how much money venture capitalists deployed around the world during the second three months of the year.

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The second quarter of 2021 was the biggest quarter for venture capital activity ever, measured by dollars invested. The wave of funding led to a quarterly record of new unicorns — startups that reach the $1 billion valuation threshold — born in the United States, Asia, Europe and Canada, according to CB Insights data reviewed by The Exchange.

Data from FactSet concerning the quarter agrees. The second quarter was a record-breaker in terms of dollars invested, even if total deal volume eased some from the first quarter’s tally.

The impact of the deluge of capital is what you’d expect: Round values are rising. Deals worth $100 million are setting records. Around the world, technology hubs are enjoying a flurry of high-priced deals that are enriching startups and providing them with capital at earlier stages that used to be reserved for IPOs and other seminal funding events.

So today we’re talking through the numbers. Next week, we’ll publish a host of geography-focused notes and reactions from investors and founders in the U.S. startup ecosystem, along with similar entries concerning the Asian and European startup markets.

Chatting with venture capitalists in recent months led us to expect strong second-quarter results; investors have spoken about ever-faster follow-on rounds and the explosion of high-priced, big-dollar deal-making from Tiger. SoftBank’s second vision fund is active. And there are myriad seed, early-stage, late-stage and crossover funds all competing with each other both inside and outside their normal investing stage bands in hopes of either accreting earlier, larger ownership than a bigger investing group might have in years past or working to defend early ownership past where earlier-stage firms used to exit stage left.

But enough words. Let’s get into the numbers. We’ll start with an overview of global results before diving into U.S. and Silicon Valley tallies, Europe and Asia’s performances, and new data concerning venture capital activity in Africa.

Buckle up.

A monster quarter

We’re pulling from a number of sources this morning, but for global data, we’re leaning on CB Insights, Crunchbase News and FactSet.

CB Insights has $156 billion on the books for global venture capital activity in the second quarter, up from $60.7 billion in Q2 2020. That’s a gain of 157% on a year-over-year basis. A FactSet chart indicates around $150 billion was raised in the second quarter, up a similar percentage from its year-ago result as what CB Insights counted.

For the first half of 2021, inclusive of the record second-quarter tally, the data is similarly shocking. Crunchbase News counts $288 billion invested during the first and second quarters of the year. CB Insights reckons the number of $292.4 billion. FactSet comes to a number that it describes as “over $280 billion.”

Those are all close enough for us, and they say the same thing: Global startups raised either as much, or very nearly as much, in the first two quarters of 2021 as they did in all of 2020.

As a reference point, Crunchbase News notes that the first half of 2021 crushed the second half of 2020 by $110 billion, in terms of global capital raised.

But what about round counts? Was all that capital concentrated in a few investments, or did the money flow freely to more startups than ever? Here, things get a little tricky. CB Insights data states that there were 7,751 startup deals in the second quarter, an all-time high. FactSet counts 5,400, far from its recorded record. At this juncture we’re seeing discrepancies in how different data-focused firms count; Alex was party to similar conversations during his time at Crunchbase and is sympathetic to the difficulty of deciding what to include and not in these types of surveys.

But even FactSet data indicates that the second quarter was the second-best three-month period for venture round counts since the start of 2019. No matter how you count, then, the data indicates lots of deals — and even more dollars.

A unicorn stampede