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Global VC investment rose to a record high in Q1’21 as investors in most regions of the world continued to focus on late-stage deals. With a significant amount of dry powder in the market, competition for VC deals was red hot, driving valuations up – particularly in the US, but also in other jurisdictions.

Record number of $1 billion+ deals

Q1’21 saw a record nine $1 billion+ VC deals, which accounted for nearly $17 billion in global VC investment. The US accounted for the majority of these large funding rounds, including raises by Robinhood, Rivian Automotive, VillageMD, GoPuff, and Databricks. China-based Xingsheng Selected, Hong-Kong based Lalamove, and Sweden-based Klarna raised the others. The companies that raised these funding rounds represent an impressive diversity of sectors, including wealthtech, e-commerce, automotive, delivery, logistics, challenger banking, and healthcare.

Deal speeds accelerate, helping drive valuations

The global VC market saw an explosion of activity in Q1’21 as investors across the globe competed for the biggest and best deals. With numerous companies appearing to raise pre-IPO rounds, there appeared to be a significant amount of FOMO – the fear of missing out – in the market as investors looked to make deals. The strong competition and numerous oversubscribed rounds helped accelerate deal activity quite significantly, at least for late-stage deals. in addition to driving valuations upwards. While deal speeds primarily accelerated in the US, Europe also saw a quickened pace of deal making.

Global venture financing 2013-Q1'21

Globally, so much is happening in terms of VC investments, VCs raising funds, valuations skyrocketing. The range of companies attracting investments is phenomenal – fintech, ecommerce, AI, robotics, health, delivery – and the geographic diversity continues to expand. The exit space is also on fire, even outside of the US, with IPOs and an impressive number of SPACs. There’s no sign anything that we’re seeing now will slow down as we head into Q2’21.

Jonathan Lavender
Global Head
KPMG Private Enterprise

Exit value reaches record high for second-straight quarter

Exit activity globally continued to surge, with exit value reaching a record $284 billion across 667 deals in Q1’21 compared to $472 billion across 2,219 deals during all of 2020. During Q1’21, South Korea e-commerce giant Coupang saw the most valuable IPO – raising $4.5 billion on the NYSE. In Europe, Germany-based Auto1 and Denmark-based Trustpilot held successful IPOs. UK-based Deliveroo, however, had a rocky IPO; its sub-par performance could drive investors to take a deeper look at companies in the red-hot delivery sector – enhancing their focus on profitability.

Direct listings continued to be a viable exit option, as evidenced by US-based video game platform Roblox. Cryptoexchange Coinbase also announced plans to go public using a direct listing, with its shares scheduled to start trading early in Q2’211.

Trends to watch for globally

VC investment is expected to remain robust globally heading into Q2’21, particularly in sectors like fintech and B2B services. Artificial intelligence, robotics, and blockchain related solutions - including non-fungible tokens, are also expected to be priorities for VC investors. Exit activity is expected to remain very strong. SPAC mergers will likely continue to gain steam as an option for companies to go public in key regions during Q2’21, although whether they will be a hot trend long term will likely depend on the performance of announced SPAC mergers over the next few quarters.

  • VC investment achieves record high – reaching $126.9 billion

  • Global median deal size for late-stage VC hits $15 million

  • Series D+ approaches stratospheric mark of $1 billion

  • Fundraising off to strong start

  • US brings in 7 or largest 10 deals globally