The US Venture capital funds have hit an all-time high in 2020 by raising $69.1 billion during the year. The amount has surpassed the 2018 record in spite of the pandemic situation. This record breaking VC funding mark was set when Andreessen Horowitz announced mega funds of $4.5 billion this Friday. Andreessen Horowitz is a VC firm based in California and it invests in seed to late-stage firms that operate in various sectors including cryptocurrency, biotechnology, Fintech, enterprise, consumer, and healthcare.
Though the funds were totaled to 287 this year as compared to the 589 funds in 2018, the total fundraising was higher than 2018. According to the PitchBook NVCA Venture monitor, there were around 15% of US VC funds raised as of Sep 30th which amounted to $1 billion of mega-funds. Though the first-time funds were low in terms of funds and the dollars raised, but the $3.2 billion growth fund in A16z’s is the largest one till date. The growth fund passed the $2 billion late stage Venture Fund 1 that was raised in 2019.
The above chart shows a clear comparison of the capital raised and the fund count during the years 2017 to 2020. The capital raised in 2017 was only $41.4 billion, but in 2018 the VC industry saw a boom when the deal counts reached 589 count and the capital raised was $67.8 billion. However, this amount dropped again to $56.1 billion in 2019 with a fund count of 482. The fund count this year is 287 but the capital raised is very high. Seems like the big investors are getting bigger while the smaller ones are still struggling.
The A16z’s $1.3 billion fund VII will target fintech startups as well as early-stage consumer and enterprise tech. This fund surpasses the Fund VI of $750 million that was launched in 2019. The a16z’s portfolio companies Airbnb, Instacart, Roblox, Accolade, Robinhood, Asana, and Affirm have gone public too or are expected to do so soon.
Andreessen Horowitz is also going to benefit from $5.3 acquisition of Plaid but that is not confirmed as the Justice Department has decided to block it due to antitrust issues. The firm has been making efforts to enhance the diversity in the startup ecosystem and it launched Talent x Opportunity too. Talent x Opportunity announced its first cohort in October; it is basically a series of not-for-profit initiatives that facilitates funding of underrepresented founders.
PitchBook-NVCA Venture Monitor
Throughout the pandemic, the Q3 2020 revealed the strength of the VC market and it surpassed Q2’s deal count at a very early stage. During this quarter, around $38 billion was invested which raised the total deal value of the year to more than $112 billion. The VC mega-deals exceeded $100 million+ which alone were greater than the total of 2019 deals. The exits were also high with a value of $103.9 billion which made it the second-highest total of a quarter. The year’s fundraising total is high enough to make sure there is a huge amount of Venture Capital in the US industry to reach its full growth potential.
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