PitchBook: Venture capital dealmaking, exits and fundraising all hit record highs in 2021

2021 started with a bang in venture capital activity and continued to boom, producing another record-setting year, according to the latest quarterly report out early Friday from the PitchBook-NVCA Venture Monitor.

Reflecting similar results reported by CB Insights Wednesday, the report notes that venture capital dealmaking, exits and fundraising values all broke records by “stunning amounts,” with no sign of the boom ending, at least for the time being.

Venture capital in the fourth quarter came in at $88.2 billion across 4,591 deals. For the full year 2021, VC deals totaled $329.9 billion across 17,054 deals, double the previous annual record set in 2020.

Nontraditional investors participated in 6,483 deals valued at more than $253 billion, representing 64% year-over-year growth in participation.

Megadeal activity, meaning deals of $100 million or more, rose to $190.8 billion in the year. The growth in megadeals outpaced the broader market and nearly equaled the roughly $200 billion of capital invested in megadeals over the previous three years.

Megadeals may dominate headlines, but at the same time, a record number of startups received their first funding in 2021, collectively raising $23.8 billion in more than 4,000 deals for the first time.

Exit activity, meaning initial public offerings or acquisitions, came in at $774.1 billion in 2021, up 168.0% over 2020. The fourth quarter alone delivered $152.6 billion in liquid value to investors across more than 500 exits. IPOs accounted for 88% of the total VC exit value in the year at $681.5 billion.

Although Rivian Automotive Inc., Aurora Innovation Inc. and GitLab Inc. led the way in the fourth quarter in terms of highest-valued public listings, the report notes that the breadth of exit activity is notable, with 296 VC-backed public listings representing a 114.5% increase year-over-year.

With solid returns and increasing exits, interest in venture capital funds strongly increased in 2021. VC funds raised $128.3 billion across 730 funds, up 47.5% year-over-year and the first time VC funds have raised above $100 billion in a year.

“By all metrics, 2021 was a banner year for the U.S. VC ecosystem,” John Gabbert, founder and chief executive officer of PitchBook, said in a statement. “A fair portion of the new investment records can be attributed to the record levels of capital washing through the system.”

“Gabbert added that “VC dry powder” is at an all-time high and a rapidly growing number of crossover investors are participating in, or even leading, VC deals. “With VC returns outpacing every other private capital asset class, we expect LPs to continue to allocate capital toward venture at unprecedented rates in the coming year,” he said.

Photo: Coolceaser/Wikimedia Commons