Main Article: Venture Investing
2024: China overtakes the United States in the number of new startups worth from $1 billion
China for the first time overtook the United States in the number of new startups, the cost of which exceeds $1 billion. This became known on August 14, 2024. Read more here.
2023: U.S. venture capital market falls to 5-year low to $170.6 billion
In 2023, the venture capital market USA amounted to approximately $170.6 billion, which is 30% less than the result for the previous year. In addition, this is the lowest figure since 2019, as stated in a study by the analytical company PitchBook, published in early January 2024.
It is noted that in 2023, approximately 15 thousand transactions were made. However, investors invested primarily in startups in the field of artificial intelligence, while other segments of the industry experienced serious negative dynamics. This situation, as stated in the report, reflects market trends in general: against the background of the AI segment showing rapid growth, many other areas of the IT industry were in a difficult position. In general, the volume of the American venture capital market has sharply declined after the boom observed during the COVID-19 pandemic.
Kyle Stanford, an analyst at PitchBook, emphasizes that venture capital deals are usually held with those companies that have great potential to become one of the most successful in the foreseeable future. At the same time, by the end of 2023, there were about 54 thousand companies with venture capital financing in the United States. And that number, Stanford said, is "too much." The volume of funds raised by venture funds in 2023 decreased in the United States by almost two-thirds compared to the previous year and amounted to approximately $66.9 billion.
Analysts are also singling out Latin American venture capital firms separately. In this region, the total value of transactions in 2023 more than halved compared to 2022, amounting to about $4 billion. At the same time, the amount of funds raised by venture funds rose on an annualized basis by more than 40% and reached $2 billion.[1]
2022: US venture capital market collapses 90% in a year
Output activity in the venture capital market USA by the end of 2022 almost halved - by 90%. This is stated in a study by TrueBridge Capital Partners, the results of which were released at the end of March 2023.
It is reported that in 2022, IPO processes (initial public offering of securities), direct listings, mergers, acquisitions and buybacks brought in approximately $71.4 billion. This is the minimum figure since 2016. In total, 1208 exits were carried out, but not a single company raised more than $1 billion during the IPO, while in 2021 15 such transactions were concluded.
In 2022, investment in startups decreased by 35% compared to 2021. At the same time, US venture capital companies raised $162 billion, which is 6% more than in 2021: this is a record figure. Growth from 2020 to 2021 amounted to 65%. Despite the increase in the amount of capital raised, 769 funds were closed in 2022, which is 39% less than in 2021, when the figure was 1270.
Compared to 2021, the number of concluded transactions in 2022 decreased by 15%. At the same time, the invested capital decreased by about 31% - to $238 billion. The study says there is a year-on-year decline in the number and value of deals - both early and late.
While in 2021 there were 595 unicorns worldwide (startup companies that received a market valuation of more than $1 billion), in 2022 this number fell to 359 (a decrease of 40%).
 | While venture capital investment activity across the board has largely shrunk from 2021, sustained growth is expected over the long term. The increase in the number of megarounds ($100 million or more) still has a huge impact on the amount of invested capital in the early and late stages, the report says. |  |
STATE OF THE VENTURE CAPITAL INDUSTRY
2021: US start-ups raise $329.8 billion in venture capital investment
In 2021, American startups raised $329.8 billion in venture capital investments against $166.6 billion a year earlier. This is evidenced by PitchBook data released in early January 2022.
At the end of 2021, a record amount of funds was invested in startups from the United States, which is four times higher than a year ago. More than half of the investments in 2021 fell on funding rounds ranging from $100 million. This suggests that investors have shown a willingness to invest large sums in relatively young companies, the Financial Times notes.
Startups engaged in creation were in the greatest demand among investors. software This is due to high demand software for business, vendor solutions in the field e-commerce and other COVID-19 companies that have benefited from the coronavirus pandemic.
So, in November 2021, investors estimated at $1 billion the two-year startup Stytch, which develops software ON for, authentications despite the fact that its annual income was less than $1 million. Shares of listed business software companies are trading about 16.4 times higher than revenue by early 2022, according to the BVP Nasdaq Emerging Cloud Index.
Another trend has become cryptocurrency startups, successfully attracting billions of dollars in investments. In particular, the trading platform for interchangeable tokens OpenSea raised funding in the amount of $300 million, and the company's valuation increased from $1.5 billion to $13.3 billion.
Greg Bohlen, co-founder of Union Grove Venture Partners, which mostly invests in venture capital funds, said the company has "taken a pause" on some funds that have recently sought to raise new capital quickly.
| | What we see is irrational, "he explained.[2] | |
2020
US venture capital investment hits record $130 billion
Venture investments in the United States in 2020 reached a record $130 billion, which is 14% more than a year earlier. A tangible rise occurred despite the COVID-19 coronavirus pandemic. This is stated in a study conducted jointly by analysts PwC and CB Insights.
The previous record of the venture capital market dates back to 2018, when American startups received a total of $122 billion from investors. Then 7052 transactions were registered, and in 2019 and 2022. - 6599 and 6022, respectively.
Thus, it can be seen that the number of funding rounds is decreasing, but their size on average, on the contrary, is growing. In 2020, 318 giant transactions were concluded (volume - from $100 million), while in 2019 there were 220, and in 2018 - 200. In total, such rounds at the end of 2020 accounted for $63 billion of the American venture capital market, or almost half of the total. For comparison: in 2020, total investments within the framework of megarounds amounted to $50.2 billion, and a year earlier - $58.2 billion.
| | We're seeing a phenomenon called "the rich get richer" where successful tech companies suck up most of the funding, CB Insights CEO Anand Sanwal told Reuters. | |
Bio- and medical technologies were among the most promising areas for development and investment. This trend can be traced not only in the United States, but throughout the world. According to experts, the coronavirus has become a trigger that launched those global problems that have been accumulating for some time. Therefore, those tectonic shifts that occur are more long-term in nature than a pandemic. In 2020, there was a "golden age" for Life Science segments: it became more important to have products that provide health than to finance another gaming campaign, venture investors say.[3]
What Russian business and American venture investors think about the relationship between innovation and the real economy
The annual December conference of the company "I-Teco," which this year took place in an online format, was held under the sign of understanding events and trends. At the same time, as I-Teco President Shamil Shakirov noted, the online format made it easy to collect people separated by thousands of kilometers on one virtual platform. The result was a serious and thorough conversation on the topic "Who will be the winner in the battle of technology? Classic companies, new tech giants, rapidly growing startups. " Read more here.
2014
American venture capital funds are more interested in IT enterprises, while in Europe the demand for technology investment is much weaker. According to Ernst & Young, in 2013, European companies raised $7.4 billion in venture capital investments, American - $33.1 billion. The global value was $48.5 billion. According to Thomson Reuters, in the second quarter of 2014, US venture capital firms closed 1,114 transactions totaling $13 billion.
2011
According to data cited by Thomson Reuters in a report by The MoneyTree prepared by PricewaterhouseCoopers and the US National Venture Capital Association (NVCA), in the first quarter of 2011, equipment start-ups received only $111 million in venture capital investments, while in the first quarter of the last - $138 million, and in the fourth - $114 million. Telecommunications startups received $142 million - almost half as much as in the first quarter of last year ($254 million).[4]
At the same time, $1.1 billion was invested in software companies, while in the first quarter of last year - $809 million. Some venture capital firms, including Accel Partners and Bessemer Venture Partners, which have traditionally worked with American startups, are creating billion-dollar new funds to invest in India and China.
In total, 736 companies received venture capital investments totaling $5.9 billion for the quarter.
2009
In the first quarter of 2009, U.S. venture capital investment contracted 61%, reaching its lowest in 12 years, according to a new report by PriceWaterhouseCoopers, National Venture Capital Association and Thomson Reuters. During the first three months of 2009, the total amount of venture capital amounted to $3 billion. This is the lowest level since the first quarter of 1997, when figures of $2.96 billion were observed. In the same quarter of 2008, the amount of investment was $7.74 billion.
According to the report, 2009 companies in the United States received investments in 549, while in 2008 they were 997. This is the smallest number since the first quarter of 1995.
Almost all industries have faced a reduction in venture capital investment. The largest funding was received by companies operating in the software market - $614 million was spent on 138 companies, which is 56% lower than in 2008, in terms of funds, and 45% - in terms of the number of transactions concluded.
The total investment in Internet companies amounted to $556 million - 58% lower than in 2008.
One of the few industries in which, despite the crisis, there is an increase in investment is the health sector, where investments grew by 6% and amounted to $46.7 million.
The level of investments of the first round of financing of companies was especially low - 132 companies received $596 million, which is the lowest figure since the third quarter of 1994. For comparison, in 2008 the first round of financing was carried out for 324 companies that received funds in the amount of $1.7 billion.
The most notable deals of the first quarter of 2009 were investments in the pharmaceutical company Anacor Pharmaceuticals ($50 million), the mobile payment service Obopay ($35 million), the microblogging service Twitter ($35 million).
The number of venture capital companies that sold during the first quarter fell by nearly half to 56.
Notes
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