The first quarter of 2021 marked a record-setting time for startup funding, with investors pumping $72.7 billion into North American tech startups’ growth-stage rounds. As Crunchbase reported on Thursday (April 8), that total is the highest in the history of the dataset. Q1 funding was close to double the total from a year ago, with investments rising 57 percent from the previous quarter.
“Funding totals were juiced by massive individual rounds for hot unicorns,” noted the report. “There were 194 rounds of $100 million or more in Q1, per Crunchbase data. While rounds of that size were once rare, it’s now routine to see several in a single day. Investors also scored some big exits, topped by public offerings for gaming platform Roblox and point-of-sale lender Affirm.”
Among the most popular trends in the first quarter was late-stage funding, with investors pumping $51 billion into North American late-stage and technology growth deals, the highest quarterly total in the history of Crunchbase’s dataset. It was also a good quarter for early-stage funding, with a projected $19.7 billion going to Series A and B deals in the first quarter, a 56 percent increase from the previous year and a 36 percent jump from 2020’s Q4.
The number of round counts was also on the rise: 432 reported deals, the most since 2019. “Average round size rose as well, totaling $122 million,” stated the report, although many deals were for much larger figures, including Robinhood’s $2.4 billion pre-IPO round.
Of course, no discussion of Q1 is complete without mentioning special purpose acquisition companies, or SPACs. The process involves raising cash through an initial public offering (IPO). From there, the shell company, which has no actual operations, goes searching for a company or companies to buy. The use of these companies boomed in 2020, and they’re poised to be even bigger in 2021, based on first-quarter activity. In the first 10 weeks of 2021, SPACs raised more than the $83.4 billion they took in during all of 2020.
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