Ernst & Young reports A record 64b in venture funding in Q1 says Levy from CNBC
“Venture is the name for a reason,” Grabow said. “These are high-risk, high-return situations.”
• There are four key points to remember.
Investors invested heavily in food delivery businesses, online brokerages, and Elon Musk’s SpaceX in early 2021. This led to a record level of venture funding in the United States.
According to Crunchbase data analyzed by Ernst & Young, venture-backed firms raised $64b in the first quarter. That was a record year.
Despite technically still being in a pandemic, we are trying to emerge from it, according to Ernst & Young venture capital leader Jeff Grabow. Everyone thought a year ago that we were sliding into the abyss. This record quarter is pretty impressive.”
Will we see a $200 billion venture capital funding year in 2019? That’s what Grabow wants to know.
The late-stage market has continued its rapid pace of late following a historic second half of IPOs. Covid-19 altered company plans, resulting in two quiet quarters. However the market rebounded hugely and has continued to thrive since then.
According to Grabow, venture capital financing of at least $100 million in the first quarter was up over half the amount last year. In January, Cruise’s $2 billion funding round, led by Microsoft in partnership with General Motors.
Ernst Young US 64b Q1levycnbc
Gopuff, a digital convenience store, raised $1.15 billion in March for the second-biggest deal of the quarter. Cloud data analytics software provider Databricks collected $1 billion in the period, as well as Robinhood investing app, which required cash after GameStop’s wild trading left the company in a cash pinch.
SpaceX, a private space company, raised $850 million in February at a valuation of $74 billion. Payment software firm Stripe’s $600 million funding round was also among the top deals, with a valuation of $95 billion.
According to Grabow, the earlier-stage market is just as hot as the mega-round market in the first quarter, which saw record Series A and Series B funding.
The surge in venture investing is parallel with the rise of blank-check companies (SPACs), which buy up private firms and later distribute them to the public. SPACs, in other words, may function as an alternative to late-stage financing.
According to SPACInsider, 306 SPACs raised $98.9 billion by the end of 2021, beating the record $83.4 billion raised in all of 2020. Grabow acknowledges that venture investors will probably take on extra risk, in addition to traditional financings.
“ Ventures are risky, but they offer excellent returns,” Grabow said.