Venture capital investment remained close to record levels with the swift pace of Q4’21, capping off what has been a banner year for the global venture capital market. According to the Q4’21 edition of Venture Pulse – a quarterly report published by KPMG Private Enterprise on VC trends in key jurisdictions around the world, the quarter witnessed near-record highs for total venture capital investment, corporate venture capital investment, exits and global fundraising.
The study shows, global quarterly venture capital investment surpassed the US$150 billion mark in consecutive quarters this year, reaching $171 billion across 8,710 deals during Q4’21 – only slightly below the previous high of $180 billion on 9,953 deals achieved in Q3’21. Nine $1 billion+ mega-deals by companies in the US and Asia helped drive the surge – contributing over $13.5 billion to the quarterly global investment total, said the study.
Global VC investment rose from $347 billion across 31,623 deals in 2020 to a record $671 billion across 38,644 deals in 2021. It was a record year for VC investment in all regions of the world. The Asia-Pacific region saw $181 billion in VC investment across 10,498 deals in 2021 –compared to $116 billion on 8,385 deals in 2020. First-time financings resurged in both count and aggregate VC invested, hitting $54.3 billion in 2021, up from $31.1 billion in 2020. Global corporate VC remained hot to close out the year, with $81 billion invested in Q4’21 – making it the second highest quarter ever and capping of a record annual total of $315 billion.
VC-backed exit value had another strong quarter and on an annual basis rose from $473 billion in 2020 to $1.378 billion in 2021. Total annual exit value passed the $1 trillion for the first time ever. The US led the way with $774 billion.
Global VC investment dropped very slightly from a record $180 billion across 9,953 deals in Q3’21 to $171 billion across 8,710 deals in Q4’21. The US alone accounted for $88.2 billion of that investment, a new quarterly record. The Americas led VC investment in Q4’21, with $95.2 billion, followed by Asia ($46.2 billion) and Europe ($28 billion).
Corporate VC remained strong, reaching $81 billion in Q4’21, slightly off the previous record of $90 billion set in Q3’21. The percentage of investment by corporates reached an all new high in Q4’21, with corporates participating in 29.4% of all VC deals globally.
VC investment in India dropped dramatically in Q4’21 compared to the record high set in Q3’21. Despite the optics, however, Q4’21 was India’s second-best quarter of VC investment ever. India saw a steep rise in both the number of CVC deals and the total of CVC investment compared to previous highs as IPO activity soars in Q4’21
From a sector perspective, Fintech was a very strong area of VC investment in India during Q4’21, in addition to healthtech, B2B services, and direct-to-consumer platforms.
India sees record year for unicorns in 2021 – During the year, India saw over fifty new unicorn companies – a major jump from previous years. The breadth of new unicorns in India highlights the growing breadth of India’s startup ecosystem and maturity of startups across a range of sectors.
Nitish Poddar, Partner and National Leader, Private Equity, KPMG in India says, “The number of Unicorns that India has seen in calendar year 21 has been higher than last 5 years put together. This coupled with the fact that public markets have embraced Indian tech company IPOs is just an indication of the fact that we are at the cusp of a revolution in the Indian market. 2022 in my view is going to be a landmark year for Indian start up industry and will set new benchmarks.”
VC investment is expected to remain robust in Q1’22 throughout most regions, with less developed VC markets, such as Africa and the Middle East, expected to attract more attention from VC investors. Fintech will likely remain one of the hottest areas of investment, in addition to B2B services, healthtech, cybersecurity, and AI solutions across sectors.
Amarjeet Singh, Partner, KPMG in India says, “Over the last two years, India has really stepped up in terms of its VC ecosystem. It’s a very favorable market right now – the macro economic indicators are positive. The stock markets have been booming. Investors have gained confidence about potential exits. All of these are driving VCs and LPs to take larger and wider bets – and one well positioned to continue as we head into 2022.”