There has been intense activity in recent months worldwide in the venture capital market both in value and number of transactions. Analysts estimate that this trend will continue due to the favorable investment climate as shaped by the implementation of strong government programs for the recovery from the Covid-19 pandemic, by the excess in financial liquidity and the growing private consumption.
In the first quarter of 2021, global VC investments grew dramatically, setting a record in Europe and the US and boosting overall global VC funding. The above results from the Venture Pulse first quarter of 2021, the quarterly report of KPMG Private Enterprise.
More specifically, global high-risk venture capital (VC) investments reached $ 126.6 billion in the first quarter of 2021, breaking the record of $ 98.2 in the fourth quarter of 2020 and exceeding the limit of 100 billion dollars. Average trading volume increased in all rounds of financing in the first quarter of 2021, with the average trading volume of Series D + rounds of financing increasing from $ 60 million in 2020 to $ 100 million in the first quarter of 2021.
During the first quarter, 6.508 transactions were made out of 7.329 transactions achieved in the fourth quarter of 2020. At the same time, a record value of $ 147.6 billion was observed in disinvestment transactions in Asia, while globally the amount of these transactions reached a record $ 283.8 billion. Finally, an unprecedented number of new unicorn companies were recorded in the first quarter, with 64 registered in the US. Funding to unicorn companies increased significantly in the first quarter of 2021, with $ 49.7 billion raised through 182 rounds of financing, compared to $ 101 billion raised in 403 rounds of financing in 2020.
The rise in global investment was driven by nine major deals worth more than $ 1 billion from companies in the US, Asia and Europe, contributing more than $ 16 billion to total global investment in the quarter – including transactions amounting $ 3.4 billion from the American Robinhood, $ 3 billion from the Chinese Xingsheng Selected and $ 1.29 billion from the Swedish Klarna.
In addition, after a strong fourth quarter of 2020 with 649 disinvestment transactions of $ 209.5 billion, these transactions increased even more in number (667 transactions) and value ($ 283.8 billion) in the first quarter of 2021.
It is worth mentioning that the interest for SPAC companies was also very high in the first quarter of 2021, with these companies around the world seeing them as an opportunity for faster listing. Given the number of SPACs that are constantly being created, they will probably continue to be a sought-after alternative throughout 2021 until 2022.
A total number of $ 74.4 billion was invested in the American continent through 3.310 transactions in the first quarter of 2021 – up from $ 47.6 billion through 3.399 transactions in the fourth quarter of 2020. A total of $ 69 billion through 3.042 transactions came from the US, up from $ 45 billion in the fourth quarter of 2020. Venture capital investment in Europe reached a new record of $ 21 billion through 1.430 transactions in the first quarter of 2021 – up from the previous record of $ 15.8 billion through 1.937 transactions in the fourth quarter of 2020. The Asia-Pacific region recorded $ 31 billion in investments through 1.615 transactions in the first quarter of 2021 – up from $ 34.5 billion through 1.840 transactions in the fourth quarter of 2020.