2021 was a watershed year for global venture capital, with record-breaking deals and dollars streaming in as startup investment skyrocketed across various industries and regions.
In particular, global venture capital financing set a new high of $621 billion in 2021, more than doubling the previous high of $294 billion in 2020 with a 111% increase year-over-year (YoY) from $294 billion in 2020 to $621 billion in 2021, according to a report by CB Insights.
The fourth quarter of 2021 brought the year to a conclusion with an all-time high of $176 billion in funding, marking the sixth consecutive quarterly increase.
All areas witnessed record funding, indicating that innovation capital is becoming more widely available throughout the world. Furthermore, the United States was by far the most valuable area in terms of total money, followed by Asia, Europe, and Latin America.
US venture funding accounted for half of global total
Indeed, annual venture capital investment in the United States more than doubled to reach a record high of $311 billion in 2021, growing 106% YoY, accounting for half of all worldwide venture capital funding.
In addition, the number of annual deals in the United States reached a record high of 12,281. In particular, early-stage agreements accounted for 55% of all deals, indicating signs of an even stronger US venture market in 2022.
Unicorns are up 69% YoY
It’s also worth mentioning that the total number of unicorns reached 959 in 2021, an increase of 69% over the previous year, with 2021 witnessing a record-breaking 517 unicorn births.
The rise was mostly fueled by fast-growing values at late-stage deals, which contributed to the overall increase—currently, there are 44 companies with ‘decacorn’ ($10 billion or more) valuations.
Fintech and mega-rounds
Elsewhere, fintech startups received $132 billion in investment in 2021, accounting for 21% of all venture capital funds, with $1 out of every $5 going to fintech. Interestingly, fintech financing increased by 169% from 2020, when it was $49 billion. Furthermore, one out of every four unicorns is found in fintech, which is by far the highest proportion of any industry.
Fintech acquisitions also accounted for the largest share of early-stage deals of any sector, suggesting that the industry is poised for explosive growth in 2022 and beyond as companies develop.
Finally, the number of $100 million-plus mega-rounds broke through the 1,000 mark for the first time in 2021, breaking the previous record of 630, which was set the previous year.
Mega-rounds accounted for just under 5% of all worldwide deals, but they accounted for 59% of total fundraising dollars. Due to intense competition among VCs, private equity companies (PE firms), and other investors are pushing up the round sums.