Venture Capital 2021 Recap—A Record Breaking Year

Six months ago, we analyzed the venture capital (VC) investment data from the first half of 2021. By the end of June, VC financing had already surpassed the total investment volume in 2020. This suggested that 2021 investments would double the amounts we saw invested in 2020. With end-of-year investments rolling in at the beginning of 2022, it appears that over $612 billion in venture capital activity was invested globally in 2021—a 108% increase from the year before.

Strong Growth Across All Major Regions

On a region-by-region basis, investments rose in every major region compared to 2020. North America and Europe saw investment activity more than double in 2021. In North America, every quarter in 2021 doubled levels in the previous year’s quarter; this resulted in a 131% increase in total VC investment value for the year. At the same time, Europe grew 135% over 2020.

While investments in Asia grew 61.5% compared to 2020, this growth was far below that seen in North America and Europe. This divergence comes down to timing. Asia was the first region to see rapid growth and exceed pre-pandemic levels in late 2020. Throughout 2021, Asia’s quarter-over-quarter investments remained at levels consistent with the fourth quarter of 2020, resulting in a lower annual growth rate. Globally, the number of investments did not increase at the same rate as the value; the increase in value is due to increasingly larger investments into portfolio companies.

Activity in Developing Markets

What about the rest of the world (ROW)? For countries in Africa, Latin America, the Middle East, and the Pacific, we saw the same strong growth trend. Investment value increased 165%, largely fueled by faster growth in Israel and Brazil. In December, Israeli firm Future Meat Technologies raised $347 million in a Series B round of financing, co-led by ADM Ventures, to expand its meat cultivating business to the U.S. Network. Security services provider Cato Networks, Israel’s highest valued VC-backed company, raised $200 million at a $2.5 billion valuation in October, led by Lightspeed Venture Partners. Brazil-based Nubank was valued at $30 billion in June after completing its $750 million extension to its $400 million Series G in January. The company went public in December and has a market capitalization of over $43 billion.

Increasing Valuations

Over 500 venture-backed companies became unicorns in 2021, reaching valuations over $1 billion; this was 2.85 times the 178 companies reaching unicorn status globally in 2020. Approximately 60% of 2021 unicorns were based in North America. North America had 84 portfolio companies become unicorns in 2020 and the number has more than tripled to 310 companies in 2021. In Europe there were nearly 60 companies, quadrupling the previous year’s total.

A select group of these companies are decacorns, startups with a valuation of over $10 billion—these include FTX Trading, a cryptocurrency exchange valued at $25 billion, and Genesys, a customer experience management software firm valued at $21 billion. Turkey welcomed its first decacorn in 2021 after Trendyol, an e-commerce marketplace, raised $1.5 billion at a $16.5 billion valuation.

The developing markets have also seen many startups experience rapid valuation growth and enter the unicorn club. Brazil’s Nuvemshop raised $500 million in Series E financing in August led by Insight Partners and Tiger Global. The round brought the e-commerce platform’s valuation to over $3.1 billion only five months after its Series D. In the Pacific, Australia-based SafetyCulture, a global operations platform, announced in May it had reached a $1.6 billion valuation following its $73 million funding round, nearly doubling its valuation from its previous round a year prior.

Israel-based StarkWare, which focuses on scaling the use of blockchain, raised a $50 million Series C in November, valuing the company at $2 billion, seven months after its Series B. There is even a unicorn in Africa. Opay, a mobile money and payments provider, raised $400 million in a round led by SoftBank Vision Fund 2, valuing the Nigeria-based company at $2 billion. The Series C round is the largest on record in the region.

Sector Breakdown

While Technology Services unsurprisingly dominated VC funding, the Finance sector was in the #2 spot, after landing in #5 in our first half recap thanks to a surge in financing for fintech companies.

Top Venture Capital Investors in 2021

Tiger Global led overall investment participation, investing in over 347 rounds with over $58 billion in investment activity. Tiger served as the lead or co-lead investor on 65% of their investments.

Source: FactSet

Conclusion

After astonishing investment totals in the first six months of the year, it’s no surprise that 2021 ended up being a record-breaking year for VC funding. Startups across the globe have benefited, as investors continue to look internationally for their next investments. The increase in financing has led to surging valuations and larger investment amounts, evident by the number of unicorns established in the market year over year.

The data used in this analysis is as of January 14, 2022.

The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.