Analyses Made Easy
*All figures and graphics are taken directly from the report itself.
VC investors bet $35.7B on North American companies at the seed- through growth-stage in the third quarter of 2020. This marked a 9% increase QoQ, and 2% growth YoY. The robust investment landscape put paid to fears of a slowdown, which would have required at least one of the following to occur: liquidity and fundraising for startup investors drying up; private investors backing down from massive valuations; or public investors and buyers refusing to uphold those lofty private valuations. Instead, dry powder is abundant, private rounds have continued boosting valuations, and the public market is outbidding the private market.
If one includes technology growth in the total funding metric, then Q3’20’s QoQ and YoY increase growth to 16% and 9% respectively (see graph above). The majority of the total investment went into late-stage rounds, which were driven by 56 (up from 42 QoQ and 45 YoY) mega-rounds of $100M or more. Late-stage funding brought in a total of $23.3B over 231 deals. The latter figure grew QoQ but is still down by 34 rounds YoY. The former figure jumped almost $6B QoQ, and just under $3B YoY (see graph below).
Even greater gains were seen at the technology growth stage, which brought in $4.1B over 28 deals (see graph). Dollar volume increased $2.1B QoQ and $2.2B YoY. Granted, over half of the Q3’20 sum came from a single, $2.5B round for EV manufacturer Rivian led by T. Rowe Price.
Early-stage funding brought in $9.4B based on Crunchbase data, down QoQ from $11.9B and YoY from $10.8B. Furthermore, the round count continued to contract, falling to 547 in Q3’20 from 671 in Q2’20, and 789 in Q3’19 (see graph). Life sciences pulled in 40% of the funding total, while several massive rounds buoyed the numbers. The analysts note that a substantial portion of such rounds are reported after the quarter is over, which means that Q3’20’s numbers should go up somewhat.
Finally, seed and angel funding rounds dipped to 1,048, down 200 QoQ, and about 950 YoY. The total funding volume at this stage was $1.4B in Q3’20, on par with the previous quarter but about $500M below its level a year ago. The median seed round was $760K. Of course, the caveat about reporting applies even more at this stage.
In terms of exits, IPOs dominated, as I noted in this week’s Deep Dive feature, and more than 10 North American companies joined public markets last quarter with billions of dollars in combined market cap. M&A was active as well, with at least five companies being acquired for over $1B, and two deals valuing companies at over $7B.
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