May 2021 marked the third-highest funding month for global venture funding in the past decade, with venture investors spending $43.7 billion last month, up 50 percent year over year.
That ranks May behind only two other months that saw greater amounts of venture funding: April 2021, and March 2021, which holds the high-water mark with $54 billion spent by venture investors around the world in a single month.
This year’s growth in funding to private companies follows an uptick in the value of leading tech stocks since June 2020 alongside an increase in exit valuations in 2021.
In the IPO markets, 13 companies went public above $10 billion so far this year, compared with 12 companies for the whole of 2020. (In prior years from 2017 to 2019, debuts at or above $10 billion were in the single digits with none in 2016.)
M&A for venture-backed companies in 2021 is also up at $62 billion, almost twice the amount of the first five months of 2020.
Southern California companies dominated new public debuts valued above $1 billion in May 2021, while there was a noticeable absence of companies from Silicon Valley.
The three most notable public debuts in May were companies founded back in the 1990s through to early 2000s — more than 17 years ago. They include Sweden-based nutrition company Oatly, Southern California-based construction tech Procore and New York-based website and e-commerce platform Squarespace.
Leading investors from these IPOs include China Resources and Blackstone Group in Oatly, ICONIQ and Bessemer Venture Partners for Procore and General Atlantic, Index Ventures and Accel for Squarespace.
In total, 137 unique institutional investors had invested in companies that went public above $1 billion in May 2021. Of those investors, 105 are U.S.-based.
Tiger Global Management was the most active investor last month, with 21 new portfolio companies, or on average one new portfolio company per working day in May. Of these fundings, the New York-based firm led or co-led 16 of these funding rounds. Tiger Global is the most prolific investor in unicorn startups and has only picked up its already brisk investing pace this year.
Andreessen Horowitz and SoftBank Vision Fund followed Tiger last month, each with 12 new portfolio companies in May, an increase in investing pace for both firms compared with earlier months in 2021. Growth equity firm Insight Partners invested in 11 new portfolio companies last month.
May saw newly valued billion-dollar companies created at a fast clip, with 44 new unicorns this past month, or on average more than two per working day. These include the U.S.-based healthy eating app Noom, vocation video company MasterClass, and college recruiting service Handshake. Commission-free broker Trade Republic from Germany, cryptocurrency exchange platform Bitso from Mexico, and online customer behavior tracker Contentsquare from France also joined the unicorn ranks in May 2021.
Tiger Global Management, Accel, Softbank Vision Fund, Sequoia Capital, Fidelity Management and Coatue have the highest portfolio count in these new unicorns, each with six to seven portfolio companies in this new batch.
Venture and PE returns
There’s a widely held belief in the investment community that only the top sliver of funds generate decent returns. “There has been this narrative about investing in VC funds that you have to get into the top quartile (25%) or possibly the top decile (10%) in order to generate good returns,” Fred Wilson of Union Square Ventures wrote earlier this past month.
But new research seems to dispel that notion. A recent post on venture returns by Dan Malven, a managing director at 4490 Ventures, looked at research from the National Bureau of Economic Research. The study measured returns for funds launched from 2009 to 2017 with exits up until June 2020. The research suggests that closer to 50 percent of funds beat the stock market.
With the build-up in exits since the third quarter of 2020, these findings (if accurate) suggest even better returns for venture and growth equity investors should the analysis be extended.
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Funding & Exits
- Global funding in 2021
- Companies that recently went public
- Recent acquisitions (venture-backed)
- Tiger Global Management fundings in 2021
- Unicorn leaderboard (853)
- Unicorns in Asia (312)
- Unicorns from India (40)
- European unicorns (93)
- Emerging unicorn leaderboard (229)
- Exited unicorns (265)
- 2021 unicorn IPOs (39)
- Unicorn fundings in 2021 ($97 billion)
Funding rounds included in this report are seed, angel, venture, corporate-venture and private-equity rounds in venture-backed companies. This reflects data in Crunchbase as of June 5, 2021.
Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.