Q1 2021 saw all-time global high for early-stage #VC funding with $39 BILLION invested in #startups

Q1 saw a marked increase in early-stage funding, with $39 billion invested in nascent startups, up from $25 billion in the fourth quarter and $22 billion in the first quarter of 2020. The Q1 figure marks an all-time global high for early-stage funding, per Crunchbase data.

Is Early-Stage Venture Becoming A Growth Investor's Game?

Global venture funding hit an all-time high in the first quarter of 2021, per Crunchbase data. That sort of increase in venture funding is typically attributable to growth in late-stage funding. 

But, along with a surge in late-stage funding, we also saw a marked increase in early-stage funding last quarter, with $39 billion invested in nascent startups, up from $25 billion in the fourth quarter and $22 billion in the first quarter of 2021. 

The Q1 figure marks an all-time global high for early-stage funding.

Growth equity leads early stage

The most active investor leading at the Series A and B stages was, surprisingly enough, a growth-stage investor: Insight Partners, which led six Series A fundings. 

Crunchbase spoke earlier this year with Insight Partners' Hilary Gosher on scaling startups during a pandemic. She said that the New York-based firm invests from Series B onwards, but will at times invest at Series A. Its definition of a "scaleup" company has a wide range: A startup that has $10 million to $1 billion in revenue, 50 to 1,000 employees, and growing revenue and headcount at 20 percent to 50 percent or more over three years. 

As outlined in the charts below, New York-based Tiger Global Management, another private equity investor, also makes the top 14 list of investors with a greater count of Series A- versus Series B-led rounds, along with New York-based Addition, founded by ex-Tiger Global partner Lee Fixel, with an equal count of leading Series A and B in the first quarter.

Shanghai-based Qiming Venture Partners was the second-most active early-stage investor in the first quarter, leading rounds at the early stages. Andreessen Horowitz was the third-most active, with fellow Silicon Valley venture firms Accel, General Catalyst and Lightspeed Venture Partners all tying for fourth place right behind it. 

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It is also worth noting that not every company raising early-stage funding is a newer startup. Our analysis shows that a little less than one-third of Series A and B investments are raised by companies founded prior to 2016.

Competition among investors

Aydin Senkut, founder of Felicis Ventures, said there's tremendous competitive pressure among investors on seed and Series A rounds. 

…

PE over a decade

…We found that traditional venture firms still dominated relative to PE and micro-VC, but have started to trend down by proportion over time — from 77 percent in 2011 to 71 percent of deals led in the first quarter of 2021. Micro venture firms also shifted down, from 8 percent in 2010 to 5 percent in 2021. That contrasts with private equity firms, which trended up from 15 percent to 24 percent of early-stage deals during that time. 

Early growth across all leading continents

The early-stage investment increase was spread across the three leading continents for VC funding: North America, Asia and Europe. Early-stage funding showed an increase quarter over quarter with North America at $20 billion, Asia at $12 billion, and Europe at $6 billion. 

This past quarter also represents an all-time high for both the North American and European markets, per Crunchbase data. 

Parsing funding amounts

Looking only at funding rounds of $50 million and above, $21.3 billion was invested in 166 companies (11 percent of funding counts) in the quarter. The prior quarter recorded $10 billion invested in 96 companies (7 percent of funding counts). 

For funding rounds of less than $50 million, $17.8 billion was invested in more than 1,300 companies, an increase of more than 100 companies compared to the fourth quarter with $14.5 billion invested. 

A larger proportion of dollars were invested in rounds above $50 million at 54 percent of dollars, compared to 41 percent in the previous quarter. 

Rounds below $50 million grow as well

Despite the fact that large rounds grew as a proportion of dollars, rounds below $50 million grew quarter over quarter as well, demonstrating an increase in average and median amounts over the past two years. 

In the first quarter of 2021, more than 400 companies raised a Series A at or above $8 million, led by 377 institutional investors. Of those investors, 76 led two or more fundings at Series A. 

Illustration: Dom Guzman

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1. Felicis Ventures is an investor in Crunchbase. It has no say in our editorial process. For more, head here.↩
   

 

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