Global Venture Financing Trends in 2021 Q2

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Mayer Brown Free Writings + Perspectives

[author: Nicole Veru]

According to CB Insights’ latest State of Venture Report, global startup financing in Q2’21 reached $156.2 billion, a 157% year-over-year increase and a record quarter high. U.S. startup funding accounted for the largest portion of the global quarter total, raising $70.4 billion, followed by Asia raising $42.2 billion. Meanwhile, funding to China-based companies continued to decline with an 18% drop from its peak in Q4’20.

As a result of increased funding, global unicorn births saw a record quarter high with 136 new unicorns, an increase of 491% year-over-year. In the first half of 2021, the average unicorn valuation rose to $1.6 billion, up from the 2016 average of $1.2 billion. Mega-round deals (capital raises over $100 million) almost tripled compared to Q2’20, totaling 390 deals. Global M&A exits rebounded from pandemic lows to reach new records with 2,613 M&A exits and 280 IPOs.

Source: CB Insights State of Venture Report Global: Q2 2021

Venture-backed fintech funding also reached a new high; it represented $33.7 billion or 22% of the global venture financing total. Other sectors that saw growth include e-commerce–funding was up 23% quarter-over-quarter, raising $16 billion. Following three quarters of funding growth, digital health saw another quarterly increase, raising $14 billion and AI funding reached a new half year record, raising more than $30 billion.

In line with global increases, to date, U.S. venture funding is close to 2020’s yearly total despite a dip in number of deals. Paralleling the global quarter record, the U.S. also reached a record quarter high of 76 unicorn births. Notable U.S. unicorns include Stripe valued at $95 billion, SpaceX valued at $74 billion, and Instacart valued at $39 billion. The U.S. also saw increases in valuations across all financing rounds. Especially noteworthy was the increase in series A valuations, rising to $42 million. In addition, U.S. exits are close to 2020’s full year level and IPOs reached a quarter high of 88.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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