Amid Record Year for VC, Results Underscore Resilience of Venture Industry and Opportunities for 2022
LISBON, Portugal, Nov. 2, 2021 — PitchBook, the premier data provider for the private and public equity markets, today released findings from a new survey conducted in partnership with Web Summit, the world’s largest technology conference which takes place November 2-4, 2021 at Altice Arena in Lisbon, Portugal. The survey was administered and completed by 100 venture capital (VC) investors attending the conference. This is the fourth survey PitchBook and Web Summit have collaborated on and offers a glimpse at how investment activity has fared compared to 2020, investor sentiment towards technology and focus areas for impact. PitchBook is sponsoring the Investor Lounge at Web Summit, where investors in attendance can work, take meetings and network.
Global VC dealmaking has been unrelenting in 2021, with notable activity in the U.S. and Europe. Capital investment in the U.S. shattered the prior annual record with $238.7 billion as of Q3 2021 and deal value in Europe achieved €73.7 billion during the same timeframe. As of September 30, 2021, Web Summit attendees accounted for 25.1% of U.S. deal value this year, 40.1% of European deal value and 24.3% of global deal value. Investors managing funds less than $250 million comprised 83% of survey respondents while 17% reported managing funds larger than $250 million.
“At the start of the year, given the uncertainty stemming from the pandemic, few foresaw the vast capital flows into global VC that already shattered annual records with two months of the year to go,” said Nalin Patel, Senior EMEA Private Capital analyst at PitchBook. “It has been really encouraging to see the resilience of the venture industry continue in 2021. Traditional VC funds along with nontraditional investors are eager to deploy the record dry powder into both existing portfolio companies and the healthy pipeline of new startups emerging.”
“We’re delighted to collaborate with PitchBook again and deliver a unique insight into the current state of the VC world,” said Chris Murphy, Advisor at Web Summit and Angel Investor. “There’s never been a better time to invest, and while the U.S. remains strong, the growth we’ve seen locally shows how much value there is in Europe.”
Key findings and comparisons with 2020’s survey include:
- 90% of respondents said they are making more investments now than before the coronavirus pandemic or haven’t changed their investment strategies. When asked this question in 2020, 51% said they were making investments at the same rate as before the pandemic, and only 3.9% claim to have significantly pulled back on investing.
- Two thirds of investors reported making at least six or more investments in the last twelve months, up from just over half of respondents (52%) in 2020.
- Nearly half of investors (45%) said at least 75% of their investments in the last twelve months were first financings, which is an indicator of new companies entering the VC lifecycle. PitchBook data has shown an uptick in first-time financings in the U.S., with Q3 2021 deal counts expected to reach 3,500 after lagged data collection, which has only been achieved in a handful of quarters since 2006.
- Looking at the top criterion used to evaluate investment opportunities, the company’s business model has taken over the top spot. This time around, 30% of respondents said the business model is most important followed by executive team pedigree (22%). In November 2020, executive team pedigree was ranked first (38.2%) followed by disruption potential (30.4%), which fell to 16% this year.
- When asked about whether increased deal sizes across financing stages are pushing up valuations and making it harder to find good value-for-money investments, 79% agreed or strongly agreed meanwhile only 6% disagreed.
- Considering nontraditional investment in VC, when asked if records levels of capital from these sources including corporate VCs and financial institutions is the main driving force behind increased deal sizes, half of all investors surveyed agreed or strongly agreed while 18% disagreed. This aligns with PitchBook data, where nontraditional investment has been driving both the emergence of unicorns and shattering records.
- Investor sentiment towards emerging tech has shifted from before and during the pandemic to now, with a notable change in the blockchain category. 24% of investors see this emerging technology as having the potential to be the most disruptive in the next 5-10 years, which is up from 8% in 2020’s survey.
- Climate technologies, which was a new category this year, came in second with 18% of investor’s indicating it will be the most disruptive technology in the next decade.
- When asked where VC investors should focus their attention to have the most impact, environmental and social concerns was the top choice followed by a tie between improved long-term investment results and employee engagement and recruitment.
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 Web Summit
In the words of Inc. Magazine, “Web Summit is the largest technology conference in the world”. Forbes says Web Summit is “the best tech conference on the planet”, Bloomberg calls it “Davos for geeks”, Politico “the Olympics of tech”, and the Guardian “Glastonbury for geeks”.
Source: PR Newswire