But
since then things haven’t just thawed, they are boiling over.
According to previously unreleased data from PitchBook, in the
first nine months of 2020, U.S. venture capital firms invested
$88.1 billion in tech startups, up from $82.3 billion in the
first nine months of 2019. Tech investments represented 78% of
venture capital investments last year and 74% in 2018.
Venture capitalists say $3 trillion in stimulus funding has
investors looking to put cash to work, and top venture capital
firms continue to launch massive funds. Greylock Partners, an
early investor in Airbnb, started raising money for its latest
fund during the pandemic and announced a billion-dollar fund in
September. Lightspeed Venture Partners, the first outside
investor in Snap, in April announced it raised more than $4
billion for three new funds to support early- and growth-stage
startups.
Investors say they are betting the pandemic will have the
lasting effect of pushing more economic activity online, making
up for the businesses boarding up on Main Street. And they are
investing in startups that aim to enable the further
digitization of sectors like banking, retail and healthcare.
In recent weeks, fintech startups Next Insurance and Greenlight
Financial Technology each raised well over $200 million, digital
health insurance firm Bright Health raised $500 million, and
Mirakl, which helps companies launch and scale e-commerce,
raised $300 million.
Startups that provide security, infrastructure and artificial
intelligence technology for the online world are also getting a
boost. Transcend, which helps companies easily erase consumer
data, raised $25 million over the summer in an early round
backed by Index Ventures and Accel Partners. And Beyond Limits,
an AI technology company for sectors including energy and
healthcare, raised $113 million in September with another $20
million committed.
The enthusiasm is also seen in the appetite for tech IPOs.
Sixteen went public in September alone, according to PitchBook,
including data warehouse company Snowflake Inc. <SNOW.N>, which
raised more than $3 billion in the largest U.S. listing so far
this year.
Shardul Shah, a partner at Index Ventures, said the positive
reception for tech IPOs is “encouraging people to swing for the
fences.”
For Split, which helps app developers test and measure the
impact of new features before wider rollouts, Bell said it
didn't take long to line up new investor meetings. Over the
summer it was able to raise $33 million from at least eight VC
firms including Accel Partners, an early investor in Facebook.
Accel's Steve Loughlin said that by May, data from its startups
made it clear that enterprise software and startups that could
profit from the work-from-home shift would prosper.
Mark Leahy, a partner at Silicon Valley law firm Fenwick & West
that crunches venture investment data, added that another sign
of strength in venture funding is the number of early-stage
investments. Earlier stage deals accounted for 59% of July
financings, higher than the 55% monthly average in 2019. “That’s
the beginning of growth and that's what's going to carry us into
2021.”
(Reporting by Jane Lanhee Lee; Editing by Greg Mitchell and
Leslie Adler)
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