Saturday, June 25

Venture capital flows through the market: three quarters topping $ 100 billion in 2021

Specifically, 135,000 million. Route that has been accentuated throughout the year: 159,000 million in spring, a jump of 78% compared to the second quarter of 2020, and another 160,000 million between July and September. Venture Capital (VC) consolidates its position in the market.

In the last five decades, the VC industry has founded entrepreneurial ideas that have transformed international business and the economy. Seven of the ten firms with the highest value and market capitalization on the planet received DNA from venture capital, a financing vehicle that is behind mobile companies, electric cars, space engines or messenger RNA vaccines. The paralysis of the Great Pandemic of 2020 has led to an investor revival of the VC. With data that certify its full recovery. In the three quarters of 2021, the volume of capital mobilized has comfortably surpassed the barrier of 100 billion dollars; at a rate of 135,000, 159,000 and 160,000 million, respectively. With year-on-year increases of 78%. And a clear dominator among its recipients of funds: companies that are in the last phase of entrepreneurship. Ahead of those found in early stages and those of early periods of seed investor or angel funder. And almost all, with a technological seal.

Large private equity funds were also the main financial providers, with $ 103 billion, or 64%, earmarked for just over 400 companies worldwide, increasing their combined value by $ 100 million in the third quarter of 2021. VC investment portfolios with more than 100 million grew by more than 97% in annualized quarter-on-quarter terms, while those with a lower amount appreciated between July and September 2021 by 51% compared to the same period of the previous year, according to the study by CrunchBase, a platform with the rank of unicorn or firms in which their accounts of Results jump of 1,000 million dollars annually.

Between January and September, 26 private equity firms backed companies that exceeded 10 billion in market value. Half that of 2020. With Robinhood leading the ranking, going from a valuation of 1,900 to 32,000 million in its IPO.

The turbocharging of markets through the VC could exceed, says The Economist in a recent information, half a trillion dollars. Despite the risk that this capital formula carries with the surname. Egocentric dreams of founders or proposal of overvalued companies or startups. But the long history of this industry reveals the importance of its credit lines and its increasingly easy access to ordinary investors. For its extraordinary and wide panel of capital subscriptions in a competitive universe that is growing exponentially. And in a world that constantly demands more innovation and strategies with more dynamism and flexibility to achieve its revenue, profit and sales objectives.

Since their introduction in the sixties, VCs have been efficient formulas for business financing that have capitalized on sophisticated operations, although without renouncing their cottage industry origin – based on simple business ideas. Until they become veritable seedbeds of capital for companies that currently exceed 18 trillion dollars in market value. As much as the US GDP. Yes OK, recently, they have come to finance private startups with a fleeting trajectory towards considering unicorns, in the heat of the massive IPOs of companies like Rivian or Slack. In the past golden decade the index of American VC farms achieved a compound rate of return of 17%.

At present, and with interest rates close to zero, these investment vehicles have entered pension and sovereign funds. Also in the business restructuring that has emerged in the post-Covid business cycle, as nearly $ 600 billion has been placed in business integration agreements, ten times more than the annual levels of a decade ago. And not just on American soil, where they flourish more intensely. To put a sample button, 51% of M&A deals in the world occur outside the US with China as the emerging focus and incubator of unicorns and the technology sector as the spearhead. Behind companies like Airbnb or Deliveroo is the VC.

But in the immediate future, the focus of venture capital is focused on clean energy, aerospace business and biotechnology, which are heading for CV figures that double those of 2019. Within industries that are more open and prone to closing investment agreements with venture capital firms that, in addition, constantly raise their competitive levels, with new kinds of investment strategies or financing formulas in the markets. Obviously, it’s not all praise. The abundance of venture capital companies has led to more than half (54) of the 100 with the greatest depth in 2021 being in the red, with some $ 71 billion of accumulated losses. Because the long-term profit returns may not be as profitable as expected from the bonanza of the first few years. Conflicts of interest also often arise, such as SoftBank’s Vision Fund, worth more than $ 100 billion, a pioneer in financing fast-growing startups.

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