This has been a year for the ages for many startups. New innovations continue to break through – offering an influx of opportunities all around the world. Whether it is in the financial services, fintech, cryptocurrency and Decentralized Finance industries, there is no shortage of venture capital investment opportunities.
As we wrap up 2021 in the coming months, let’s look at this year’s investment trends and take note of what could lie ahead.
Record Shattering Year
According to Crunchbase’s latest Global Venture Capital Report, Q3 of this year saw a peak of $160 billion in global funding. According to Crunchbase’s report, “Prior to 2021, global funding had not reached over $100 billion in a single quarter. Funding in 2021 has far superseded that amount, with the first quarter tracking at $135 billion and the second quarter reaching $159 billion.”
Let’s put this into perspective. Compared to Q3 2020 where society and businesses were at a standstill due to the glaring uncertainty around the state of the pandemic, the year-over-year increase in global funding is a substantial 78%.
Breaking down the especially hot third quarter, Crunchbase notes that larger funding announces were prominent, with $103 billion (64 percent) invested in 400 companies that raised rounds of $100 million or more this past quarter. A further $57 billion was invested in over 4,700 companies in rounds below $100 million.
On the opposite side of the scale, funding in early-stage startups rose the most – up 104% year-over-year with over 1,900 companies raising at this stage globally. There was an increase in seed funding rounds as these are up 47% since Q3 2020.
Fintech, Decentralized Finance, and Beyond
Reflecting on this year’s news in fintech and cryptocurrency – acquisitions, exits, and funding were all prominent themes. Robinhood going public, PayPal’s acquisition and entry into the Buy Now Pay Later phenomenon, and crypto company MoonPay expected to reach a multi-billion dollar valuation in its first VC funding round are just a few examples of the hot activity in these verticals.
As blockchain and DeFi gain widespread popularity, so will the opportunities with VC firms. For example, 2021 saw billions of dollars invested in cryptocurrency companies as more businesses and individuals become interested in exploring the world of digital assets.
Cryptocurrency exchange, FTX, raised over $900 million and is now valued at $18 billion. Similar to FTX, popular exchange Coinbase hit the stock market signaling the additional investment opportunities retail and institutional investors have if they wanted to diversify their portfolios with digital assets.
No Slowing Down
As we head into the new year, what can we expect from the venture capital community? With technology advancing in many industries like finance, healthcare, transportation, and the blockchain industry, there will still be plenty of funding rounds and new unicorns to arise.
Will the trend continue to be on the hyper-growth, upswing? That is to be determined; but what can be banked on, is the fact that there will be no shortage of startups trying to make their marks in their respective industries to get a piece of the funding action.