Venture Capital Firms Investing Again

By Thomas Price Monday, November 16, 2020

As the COVID-19 pandemic continues through the end of 2020, it has brought with it a year of major economic contractions. As a result, it has also put a halt on a lot of major investments as well, with venture capital firms not knowing exactly what the future holds and knowing how risky large scale investing can be. However, that fear is not to last, as third-quarter reports show that investing is up once again. With Q2 feeling less like a sign of the oncoming times and instead like a momentary time frame of frugality, what exactly are the numbers for venture capital investment as of late, and what can be expected from them in the future?

Venture Capital Investing’s Booming Q3

After absolutely dismal second-quarter investing numbers, venture capital firms came out with a crackling response and blank checks to match it. In fact, US-based startups alone raised $36.5 billion in funding over the quarter. This translates to an incline of dollars invested by 22% compared to the same quarter last year and a 30% increase in comparison to Q2 of this year. These investments were spread between 1,461 different venture capital firms, with estimates increasing to 2,990 different firms once more as information comes in. When expanding the scope of investment globally, numbers remain strong and improved from Q2. Global investments clocked in at $73.2 billion, which is an improvement of $3.2 billion, a noteworthy amount. In Europe, that meant a quality $12.1 billion invested, up from $11.5 billion in the prior quarter. Asia invested $21.1 billion into new startups, pushing a solid rebound quarter around the world.

The largest investments of funding were funneled into a diverse group of different companies both large and small, including SpaceX, WM Motors, Klarna, and Revolut. The categories of major investment were focused mostly on startups that dealt directly with COVID-19 response in one way or another. Of course, the highlight of this would be startups that focused on helping companies transition into remote work and schools move toward remote learning. Other major places of investment also addressed the pandemic response through startups working to streamline online shopping or bolster digital storefronts. Additionally, other companies, as well as startups, focused on healthtech or other medical fronts. A section that saw promise was investments in alternative energy or other green technology. What is equally as exciting is the amount of money being poured into new venture capital firms as well, looking for investments.

New Venture Capital Firms and Investment Pools

Many different venture capital firms are cropping up across the globe, and in nearly equal numbers, existing venture capital firms are creating new investment funds for specific startup types. For instance, Holtzbrinck Ventures, a German firm, has put aside €535 million ($623 million) specifically to invest in new German and European digital startups and, for those that were missed, to fund Series B and C funding rounds. In the meantime, PayPal has invested $50 million into Black and Latinx led venture capital funds to promote minority businesses and close the gap in disproportionate funding dispersal. Elsewhere, Harvard has joined an MIT-led venture investing firm adding $25 million to a pot of $230 million set specifically for funding what they consider to be “tough tech.” These categories include startups focusing on climate change reversal, agriculture, and space exploration. New money and firms are popping up to invest in a diverse group of businesses and startups, even as the pandemic continues to stifle many industries.

Final Conclusions

Venture Capital firms were affected as all other industries were affected by the COVID-19 pandemic, with Q2 showing the tightening up of wallets across the board for new investments. However, what the most recent quarter showed was money is flowing once again into a great variety of different types of businesses. With money invested up in every major region of investment, there is clear optimism alluding to the growth of certain industries, especially those built to combat the issues cropped up by the pandemic. Additionally, the stockpiling of new funds for future endeavors continues with category-specific funds itching to invest as well.

About the Author

Headshot for author Thomas Price

Tom Price is a writer focusing on Entertainment and Sports Features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.

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