With their pockets full, investors are looking to bet on a new generation of firms. Global venture investment—which ranges from early “seed” funding for firms that are only just getting going to funding for more mature startups—is on track to hit an all-time high of $580bn this year, according to PitchBook, a data provider. That is nearly 50% more than was invested in 2020, and about 20 times that in 2002.
The type of investor piling into venture activity has changed just as dramatically. It was once the preserve of niche venture-capital firms run in Silicon Valley. These raised funds from and invested on behalf of pension funds and other end-investors, often relying on their vast networks of connections with company founders. Now, however, only three of the ten biggest venture investors by assets under management are traditional VC firms.
I was only interested in knowing how the investments are being leveraged. The Economist delves deep into the “power dynamics” between investors and the VC firms – that’s not the focus here. Although eye popping in terms of valuations, most startups that have matured to companies remain B2C (business to consumer). I still have to see something in “manufacturing”, for instance – but the increased uptick and investments in pharma/biotech remains an interesting trend. There’s also a looming anti-trust enforcement (under Lina Khan) – even though she’s a political appointee, she’s done some phenomenal ground work against the monopolies. 2022 promises to be interesting to track the start-up activity.