U.S. Venture Exits Surpass $500 Billion For First Time, Doubling Previous Annual Record

SEATTLE – U.S. venture capital activity has already set annual records across deal, fundraising, and exit values in just the first three quarters of this year, according to the PitchBook-NVCA Venture Monitor. The authoritative quarterly report is jointly produced by PitchBook and the National Venture Capital Association with support from Silicon Valley Bank and Affinity.

Q3 dealmaking built on the exceptionally high activity from the first half of 2021 and shattered previous annual value records across all stages. Although deal counts remained high, pointing to a broadly healthy market, an explosion of mega-deals and record nontraditional investor participation helped drive investment totals and valuations to new highs. Capital from nontraditional investors, and the swiftness with which they can make investments, will likely continue to push yearly deal values higher.

Fundraising also remained extremely robust throughout Q3 as LPs saw record levels of distributions driven by outsized exits. VC fundraising activity for 2021 has already shattered last year’s record and will easily break the $100 billion mark by the end of the year at its current pace, an aggregate total that was unfathomable until now. Perhaps most strikingly, exit count has already notched a new annual record while exit values doubled the previous highwater mark set in 2020. Most of this total exit value has been dominated by public listings, with Q3 the most active period of the year so far.

“There is no denying that the startup ecosystem is powering America’s economic comeback,” said NVCA President and CEO Bobby Franklin. “Lawmakers in Washington who are looking for ways to enhance our economic future should check out these record shattering numbers. The VC industry is this country’s biggest job engine, and we have the numbers to back it up.”

“The pace of activity across all facets of the U.S. VC ecosystem in 2021 has been astounding, with many annual records already shattered before the fourth quarter even started. Existing companies and a healthy pipeline of new startups have found investors – especially nontraditional investors – are eager to deploy the record dry powder and write ever larger checks,” said John Gabbert, founder and CEO of PitchBook. “However, it’s entirely possible that LPs are hitting the upper limits of their allocation to venture and could potentially slow or plateau in coming quarters. That said, while the IPO market remains open, we anticipate distributions will continue to flow back to LPs at record rates encouraging re-allocation.”

HIGHLIGHTS:

Investment Activity

• VC deal activity reached $82.8 billion invested across an estimated 3,518 deals in the third quarter, bringing year-to-date totals to $238.7 billion across 12,837 deals and surpassing the previous annual record set in 2020 of $166.4 billion.
• Nontraditional investors participated in deals responsible for 77% of total year-to-date investment value. Their involvement is even more pronounced when looking at mega-rounds, with 87.6% of deals receiving nontraditional investor backing.
• Mega-deal activity rose sharply in 2021, with 597 deals over $100 million closing year-to-date compared to only 333 in 2020. These outsized deals have begun to drive a significant majority of capital investment—57.2% in 2021.

Exit Activity

• Exits brought more than $582.5 billion in liquid value to market across 1,150 deals in just nine months —surpassing $500 billion for the first time and doubling 2020’s previous record.
• IPOs accounted for 88.2% of total exit value at $513.6 billion. An open IPO window and increase in SPAC business combinations pushed the Q3 public listing total to 93, with Robinhood’s $30 billion debut the largest.

Fundraising Activity

• With the 161 new venture funds closing in Q3, VC fundraising activity for 2021 has already shattered last year’s record, notching a year-to-date total of $96.0 billion across 526 funds.
• Impact VC funds have raised $5.3 billion across 15 funds year-to-date —a sharp increase over 2020’s $3.7 billion and 2019’s $1.6 billion.

Click HERE to download the full report.

Venture Monitor Q3 Webinar – November 3, 2021, from 10:00 – 11:00 am PDT

PitchBook and NVCA are hosting the webinar in partnership with Silicon Valley Bank and Affinity.

Click HERE to register.

Quote Sheet

Rob Freelen, Head of Venture Capital Relationship Management at Silicon Valley Bank

“With more investors chasing deal flow—and solo capitalists able to make investment decisions without the input of other partners—entrepreneurs can ink deals far more quickly than they have in the past. That said, entrepreneurs often choose their investors based on the skills, expertise, networks, and perspectives of the specific partner or firm.”

Byron Deeter, Partner at Bessemer Venture Partners

“2021 is on pace to set records on every key venture capital metric. We will likely set new all-time records for number and value of IPOS, acquisitions, new venture capital investments, and dollars raised in new venture funds for future investments.”

Ray Zhou, Co-founder & CEO at Affinity

“According to the report ‘through Q3, the most active investors in the US venture market have been nontraditional.’ The venture investing landscape has changed. In this competitive market, relationships have become the asset that separates the winners from the losers. Success in the relationship economy is not about who you know – it’s about how well you and your team know them.”

About PitchBook
PitchBook is a financial data and software company that provides transparency into the capital markets to help professionals discover and execute opportunities with confidence and efficiency. PitchBook collects and analyzes detailed data on the entire venture capital, private equity, and M&A landscape—including public and private companies, investors, funds, investments, exits and people. The company’s data and analysis are available through the PitchBook Platform, industry news and in-depth reports. Founded in 2007, PitchBook has offices in Seattle, San Francisco, New York, and London and serves more than 60,000 professionals around the world. In 2016, Morningstar acquired PitchBook, which now operates as an independent subsidiary.

About National Venture Capital Association
The National Venture Capital Association (NVCA) empowers the next generation of American companies that will fuel the economy of tomorrow. As the voice of the US venture capital and startup community, NVCA advocates for public policy that supports the American entrepreneurial ecosystem. Serving the venture community as the preeminent trade association, NVCA arms the venture community for success, serving as the leading resource for venture capital data, practical education, peer-led initiatives, and networking. For more information about NVCA, please visit www.nvca.org.