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Venture Capital Activity Skyrockets in the First Half of 2021

Companies and Markets

By Haley Bryan  |  July 8, 2021

Earlier this year, I wrote about venture capital’s (VC’s) rebound in Q4 after the initial slowdown at the beginning of 2020. Total VC deals globally reached just under $90 billion in Q4, indicating that the consistent uptick in private markets investments over the last few years was back on track. In this post, we’ll look at the first two quarters of VC investments in 2021, which have now reached over $280 billion raised—surpassing the record high total in 2020 ($275 billion) in half the time.

Global Venture Capital (VC) in 2021

The total amount raised from venture capital investments grew 149.9% in the first two quarters of 2021 compared to the same period last year. All regions have seen significant surges, but Europe has seen astonishing growth. European-based portfolio companies picked up their Q2 activity by 78.4% compared to Q1 and activity is up 229.6% from the same quarter in the previous year.

Global Venture Capital Investment Activity

Rapid Growth in Europe

In the first six months of 2021, portfolio companies based in Europe raised nearly $50 billion; this surpasses the $38 billion raised in all of 2020. Of the $50 billion raised, 71.4% was split across five countries: UK, Italy, Germany, France, and Sweden. While these major markets are not new players in VC, smaller emerging markets like Romania, Croatia, and Greece have also benefitted from this capital investment growth. Europe is increasingly attracting investor capital as several technology firms continue to emerge in the region.

VC Investments in Europe

Two of the largest investments in Europe this year were for Swedish-based firms. Klarna—a “buy now pay later” firm and the most valuable private Fintech in Europe—raised $1.64 billion in the last six months, valuing the firm at $45.6 billion. The other, NorthVolt, a lithium-ion battery maker, raised $2.75 billion in equity, reportedly valuing it at $11.75 billion.

Technology has continued to be the dominant sector receiving VC funding in 2021. Seven sectors have already outperformed their 2020 VC totals in the first six months of 2021. They are Commercial Services, Consumer Durables, Consumer Non-Durables, Industrial Services, Producer Manufacturing, Retail Trade, Technology Services, Transportation, and Utilities.

Top Global Sectors in 2021

Investors Behind the Dollars

Looking at the leading investors into these increasingly large investment rounds, Tiger Global leads with participation in 143 investment rounds, totaling $26 billion in VC investment activity.

Top Global Investors by Number of Investment Rounds

Investor

Americas

EMEA

APAC

Total Investment Round Value

Total Rounds Participated

Tiger Global Management LLC (Private Equity)

17,035

3,919

5,212

26,166

143

Sequoia Capital China Advisors (Hong Kong) Ltd.

313

75

14,569

14,957

98

SB Investment Advisers (UK) Ltd.

8,413

3,196

3,165

14,774

72

Sequoia Capital

10,057

3,523

117

13,698

77

Coatue Management LLC (Private Equity)

8,720

2,849

1,418

12,987

68

Source: FactSet

Looking at investors contributing to the rising VC levels in Europe, four out of the top five investors are based in the United States, with Goldman Sachs Capital Partners, Accel Partners, and Tiger Global in the top three and participating in $11.6 billion worth of VC rounds collectively.

Top Investors in Europe by Investment Round Participation

Investor

Total (Mil. $)

Total Rounds

Goldman Sachs Capital Partners

3,928

8

Accel Partners LLC

3,876

29

Tiger Global Management LLC (Private Equity)

3,869

19

Sequoia Capital

3,513

12

SB Investment Advisers (UK) Ltd.

3,196

10

Source: FactSet

Turning to limited partner (LP) commitments in 2021, LPs have been committing significant capital investments into funds that have disclosed Europe as a geographical target. Many large U.S.-based pension fund managers have made multi-million-dollar investments in the last six months, ranging from buyout funds to real estate and infrastructure funds.

Limited Partner Commitments

Limited Partner

Commitment Amount (Mil. $)

Fund Name

California State Teachers Retirement System

350

Clayton Dubilier & Rice Fund XI

New York State Common Retirement Fund

350

ISQ Global Infrastructure Fund III

State of Wisconsin Investment Board

350

Hellman & Friedman X Fund

Pension Reserves Investment Management Board

350

TA XIV Fund

State Retirement & Pension System of Maryland

345

Lexington Co-Investment Partners V Fund

New York State Common Retirement Fund

300

EQT Infrastructure V Fund

Pennsylvania Public School Employees Retirement System

300

Brookfield Strategic Real Estate Partners IV Fund

New York State Teachers Retirement System

300

Hellman & Friedman X Fund

Minnesota State Board of Investment

300

Adams Street Global Secondary Fund 7

Minnesota State Board of Investment

300

Hellman & Friedman X Fund

Source: FactSet

Pension funds and foundations/endowments have begun to make direct investments into portfolio companies themselves. In 2021, pension funds and foundations/endowments have already participated in 35 venture capital rounds (compared to 58 in 2020), totaling $4.76 billion in investment round value. This indicates a significant uptick in direct investment participation from firms who typically invest as LPs.

Direct Investments by Pension Funds Foundations Endowments

Northvolt’s $2.75 billion equity funding round accounts for nearly half of the Q2 investment amount total. Northvolt’s investors on the round included three Swedish pension fund managers and Compagnia di San Paolo, an Italian-based foundation promoting sustainable development goals. With environmental, social, and governance (ESG) investing coming into the forefront of some investors’ minds, many have taken the opportunity to support company’s aligning with their missions directly.

Investments by Pension Funds and Foundations/Endowments

LP Investor

Type

Portfolio Company

Portfolio Company Country

Round of Financing

Round Amount (Mil. $)

Compagnia di San Paolo

Foundation/ Endowment

Northvolt AB

Sweden

Series H

2,750

Fjarde AP-fonden

Pension Fund

Northvolt AB

Sweden

Series H

2,750

Andra AP-fonden

Pension Fund

Northvolt AB

Sweden

Series H

2,750

Forsta AP-fonden

Pension Fund

Northvolt AB

Sweden

Series H

2,750

Novo Nordisk Fonden

Foundation/ Endowment

Noom, Inc.

United States

Series F

540

Robert Bosch Stiftung Gesellschaft mit beschrankter Haftung

Foundation/ Endowment

Beijing Chusudu Technology Co. Ltd.

China

Series C2

500

Robert Bosch Stiftung Gesellschaft mit beschrankter Haftung

Foundation/ Endowment

Hesai Technology Co., Ltd.

China

Series D

300

Novo Nordisk Fonden

Foundation/ Endowment

Esco Lifesciences Group Ltd.

Singapore

Series A

200

Grantham Foundation for the Protection of the Environment

Foundation/ Endowment

Hazel Technologies, Inc.

United States

Series C

70

Richard King Mellon Foundation

Foundation/ Endowment

SetPoint Medical Corp.

United States

Series F

64

Source: FactSet

Disclaimer: 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.

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Haley Bryan

Private Markets Specialist

Ms. Haley Bryan is a Private Markets Specialist at FactSet. In this role, she supports FactSet’s private markets strategy by developing private markets content, influencing product offerings, and managing third-party relationships. Ms. Bryan earned a bachelor’s degree in Business Economics from Providence College.

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