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2020: An Unlikely Year for Deals

Exits, Deals, and Surging Valuations in a Consequential Year 

As Covid-19 surged in the early months of 2020, bringing everyday economic activity to a halt, venture capital slowed as well….

But then, virtual communication networks united deal-makers who had not forgotten the promise of emerging technology. Q4 was one for the record books. 

According to Factset, Q4 investments saw a 75.6% increase in the amount raised since Q1 and closed 52.0% higher than Q4 2019. The number of VC mega rounds, rounds greater than $100 million, have also reached new heights. Q4 alone had 223 mega VC rounds that totaled $54.1 billion in capital raised. Mega rounds reached their highest Q4 levels than any other in the past 10 years.

This was a comeback of monumental proportions, especially in the United States. Although the number of VC deals failed to surpass the record set in 2019, most of 2020’s $148 billion raised came after the hectic switch to virtual communication channels in late spring. 

2020 was also the year for the emergence of later stage venture-backed companies into the public markets. 120 venture-backed IPOs in the United States set a record for the most ever in a year. The combined exit value, or pre-money valuations at the time of IPO were worth a combined $259.8 billion as of Dec.15, according to PitchBook data.

Some notable 2020 IPOs included: AirBnB ($37.2B), Snowflake ($29.8B), and DoorDash ($29B).

This was a huge year for established companies with imminent IPOs, but Covid-19 did make its mark on companies in their early stages of development. 

Indeed, this was the case for 2020.

 A dropoff of exposure for early stage companies due to the virtual pitch  environment and uncertainty as a result led to a much slower year for this class of venture investments. For a record year in all other aspects of the private market, this trend highlights the desire to move capital to the name-brand players proven in the tech space positioned for public funding. With greater certainty hopefully coming for the rest of 2021, we hope that we see capital inflows in all spaces of the private market and value discovery at both ends of the pipeline.