After a record second quarter, venture capital globally maintained that same level in the third quarter, investing astronomical sums in startups totaling $158 billion with the common characteristic of having a global business perspective.
Since the second half of 2020 began, the venture capital and startup worlds finding that COVID and its economic shocks were taking a bigger toll on traditional businesses, investors have been pumping ever-increasing amounts of cash into startups in everyone.
The acceleration in the application of capital has generated more unicorns, more massive rounds and, in short, more financial availability than has been seen before in the history of startups.
Historical record of venture capital activity
After 156 billion dollars in global startups in the second quarter, the third quarter managed to surpass the record by 2 billion and 158 billion dollars were invested. The numbers are almost a tie, which means that it has gone through two periods, the strongest in history, in investment.
This year as a whole is being the most significant. The funding that helped keep the startup pool alive and growing was enormous.
409 individual deals worth more than $100 million were announced in the third quarter, up from 390 in the second quarter. That's around 4.5 per day, one data point helps frame the incredible market activity. Keeping up with nine-figure rounds has been tough; if the rest of the smaller rounds are added and it is a total revolution.
Although the capital at stake has increased, the geography in which most of the operations are taking place continues to be the United States. This country maintains a dominant position, with an investment of 72 billion during the third quarter, a slight improvement on the 70 billion accumulated in the previous period.
Although the global market where deals can be developed with startups has expanded globally in recent years, boosting historically non-relevant geographies, the traditional core market has maintained its prominence.
Other markets also performed well, including India and China. The sectors have expanded, with the constant dominance of fintechs but with increases in health, artificial intelligence, education, automation, among others. The end result: more unicorns.
The rise of unicorns continues
Unsurprisingly, the number of companies valued at more than a billion dollars continues to rise. 127 new unicorns arrived at this valuation in the third quarter, bringing the total number to 848.
It is the third quarter in a row that unicorn births exceeded 100 startups.
Most of those new unicorns, 69, are in the United States. Asia was the second highest number with 30. Currently, the United States consists of 429 unicorns in total, while Asia has 271.
Interestingly, though, all three new unicorns are headquartered outside of the United States. And they are all fintechs.
FTX, based in Hong Kong, is a cryptocurrency exchange that offers derivatives services, options and other sophisticated financial products. collected in a Serie B 900 million in July at a staggering valuation of 18 billion. The site has over 1 million users, averaging over 10 billion in daily trading volume.
zepz UK (formerly WorldRemit), is a digital cross-border payments platform, raising $292 million in August at a $5 billion valuation. That company claims to have more than 11 million users in 150 countries.
In September, the French startup sorare announced that Vision Fund of SoftBank led its round Serie B of 680 million, which valued the company at 4,3 billion. sorare has built an online football platform based on NFT, or non-fungible tokens. Each digital card is registered as a unique token on the blockchain Ethereum. Players can buy and sell cards from other players. All transactions are recorded on the blockchain Ethereum.
In general, the average valuation of the agreements in advanced stage has reached a high of unicorn creation in all of 2021. So far (Q3): 1.1 billion compared to 523 million in 2020. The median valuation of deals in the intermediate stage is 286 million so far this year, compared to 150 million last year.
United States and Asia lead
In the third quarter, 46% of all capital went to startups in the United States. This total of 72,3 billion also generated a year-over-year increase of 90%. And not just measuring capital: the total number of deals (3210) also broke records.
The breakdown within the country. USA. it's more open than last quarter, with Silicon Valley, New York and Miami trending higher, while totals appear to be flattening or slowing in some other major metro areas.
Financing in Asia, particularly in China, has varied significantly thanks to the impact of regulatory changes.
Capital for investment in Asia increased by 95% year-on-year and not only thanks to India: also in China, both the volume of capital and the number of transactions reached new highs last quarter.
While funding figures are always somewhat lagged by the complexity of deals, the proportion of early-stage deals has risen to 58% this year to date.
Unlike the United States and Asia, funding was down in Europe, Latin America and Canada in the third quarter compared to the second quarter of this year. But looking at dollar volume in this year to date, all three regions are up compared to 2020, so it might just be a matter of deals not occurring evenly throughout the year.
Investment in fintech falls slightly but remains high
Fintech as a category continued to be a bright spot in the world of venture capital firms, with investment in fintech and services startups during the first three quarters of 2021 nearly doubling the amount forecast for all of 2020.
$91.500 billion has been invested in fintech and services startups through more than 3.514 deals as of Q2021 2020. The previous year, 47.200, was $3.404 billion invested in XNUMX deals.
In the third quarter, the number of transactions and the amount invested in fintech decreased slightly from the previous quarter, but not dramatically. $31 billion was invested in fintech startups at 1,178. This data, compared to the second quarter, appears as practically flat with 34,8 billion in 1,192 agreements.
Still, it is markedly higher than the third quarter of the previous year, when investors injected 11,9 billion in 830 deals in the fintech sector.
The United States remains the largest market for fintech investment, at $14.4 billion in the third quarter. They are followed with 6.0 billion in Asia, 5.4 billion in Europe and 2.6 billion in Latin America.
While it is clear that 2021 will end with a significant increase in the number of deals made, the big difference in funding totals comes from the average amount pledged by investors in each deal. The average amount of a deal with a fintech through 2021 was 31 million (with an average of 5 million), compared to an average amount of 18 million per deal (average of $4 million) in the previous year.
