Global Venture Capital Funding Scales New Heights

Global VC investment nearly doubled in value to $671 billion, according to the latest quarterly report from KPMG Enterprise.

For the global venture capital industry, 2021 will go down as a vintage year with record valuations and levels of investment at nearly every startup stage, while the exit values of VC-backed enterprises tripled over the previous year.

Global VC investment nearly doubled in value to $671 billion, according to the latest quarterly report from KPMG Enterprise. This was on the back of a dramatic increase in valuations and deal sizes across all jurisdictions and stages of investment, rather than in the number of deals completed.

New tech companies that stand to gain most from post-pandemic social and spending trends were darlings, along with fintech, healthcare, telecoms and enterprise software. Corporate investment in VC-backed enterprises during 2021 reached a record $315 billion worldwide. With the momentum currently toward larger and later-stage deals, it is the more established ecosystems that draw in the big money.

VC investment in the Americas more than doubled, to $361 billion across 17,450 deals. The US, home to the world’s top three VC-tech ecosystems (The Bay Area, New York and Boston) accounted for nearly half the value of all deals done globally. But other regions, including Europe, South and Southeast Asia, and Africa saw equal or faster growth. 

In Europe, the UK consolidated its leading position by more than doubling new VC investment (a large chunk from the US) to nearly $40 billion, which is more than France and Germany combined, according to a Dealroom-London & Partners report.

At the payout end, London handled exit deals with an enterprise value of $88 billion (up from $4 billion in 2020), with SPACs weighing in with $42 billion—almost as much as the combined payouts from IPOs and M&A or trade sales.

Conor Moore, head of KPMG Private Enterprise in the Americas, expects the trend to remain strong: “The wealth of dry powder, along with the continued involvement of non-traditional investors and powerful surge in exit activity, have combined to propel VC investment in companies across all sectors to new heights.”

In 2022, less-developed VC markets such as the Middle East and Africa are expected to attract closer attention.  Fintech is likely to remain hot, along with healthtech, B2B services, cybersecurity and AI solutions, with big deals ruling the roost.