Global VC funding reaches record $157bn in second quarter of 2021

FinTech was the most popular sector among investors and will remain so, KPMG report shows

An aerial view of the City of San José CA located at the southern end of the San Francisco Bay. It is the cultural, financial, and political center of Silicon Valley and the largest city in Northern California, by both population and area. Getty Images

Venture capital investments touched a record high of $157.1 billion raised across 7,687 deals in the second quarter of this year, driven by high valuations and an appetite among investors to channel funds to fast-growing companies, according to a new report.

This compares to $147.2bn that was raised across 8,557 deals in the first quarter of this year, KPMG said in its latest Venture Pulse report.

Funding rounds in excess of $1bn in eight countries were responsible for the surge in VC investment during the period.

“Diversity was really the defining characteristic of the VC market globally in Q2 – from the countries where deals occurred to the different sectors that attracted investment. We even saw an increase in the percentage of funding coming from other types of investors making VC investments – including corporates and family offices,” said Conor Moore, KPMG's head of private enterprise for the Americas region.

“This diversity will likely keep VC investment quite strong heading into Q3, with FinTech likely to be a hot area of investment across all regions of the world.”

The coronavirus pandemic has fuelled a tech boom, spurring demand for products by FinTechs, education technology, food technology and e-commerce start-ups as users turn to digital channels following movement restrictions to combat the spread of the virus.

FinTech was the popular sector among investors, while health technology, biotech, EdTech, gaming and food delivery continued to attract significant investment activity, KPMG's report said.

The Americas region attracted more than half, or $84.1bn, of the total, with US companies receiving $75.8bn of this. VC investments in Europe rose for the sixth quarter in a row to $34bn, but in Asia-Pacific there was a quarter-on-quarter decline in funding to $42.8bn. However, India was a bright spot, with companies raising a record $7.8bn during the period, the report said.

Median deal sizes were also up across most funding stages, averaging $2 million for seed stage rounds, $10m for Series A, $25m for Series B, $53m for Series C and $105m for Series D+ deals.

VC-backed exit values reached $221bn in the second quarter of 2021 – second only to the record $314bn reported in first quarter this year, KPMG said.

While the health crisis has accelerated digitisation, many of these trends are forecast to continue.

“Some countries are beginning to emerge into the post-pandemic world,” said Kevin Smith, KPMG's head of private enterprise for Europe, the Middle East and Africa.

“Even as they do, there will be trends, both in the [business-to-consumer] and [business-to-business] spaces, that will stick – from people getting their groceries delivered to businesses recognising the importance of optimising their digital transformation. These areas will be likely to continue to attract VC investment in Q3 and beyond – and that in turn can spark new waves of investment in areas like cyber security and fraud protection.”

Updated: July 22nd 2021, 3:30 AM