W H A T E X A C T LY I S G O I N G O N ?
By all accounts, 2020 was marked by large fundraising initiatives for tech, as people communicated almost exclusively online at home. Then, 2021 was expected to witness a sector-wide slowdown, but the rise of what PitchBook calls “tourist investors” contributed to nearly 77 percent of all venture flow. Unlike venture capital funds, which exclusively focus on high-risk/high-reward startup investments, these non-traditional tourists are institutional investment firms, such as private equity, hedge funds, corporate venture arms or pension funds. Traditionally, they have a more diversified risk portfolio and have either stayed away from tech or allocated it into the high-risk section.
The impact of these tourist investors, who tend to invest in later-stage companies in higher sums, is reflected in deal count comparisons versus dollars raised: while deal count increased by 40 percent, jumping from 12,173 deals in 2020 to 17,054 deals in 2021, there was a 98 percent surge in dollars raised. It is estimated that non-traditional funds collectively have $350 billion to invest in tech, while venture-only firms have $221 billion. In 2021, two of the largest non-traditional players in early stage were Tiger Global and SoftBank. The latter historically invests in tech companies and does so particularly at later stages.
THE PROSPERITY REPORT | VOL 4
IPO Performance Index S&P 500
VC- B AC K E D I P O P E R F O R M A N C E
14X 12X
I N D E X VA L U E
10X 8X 6X 4X 2X 0X
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
This Index compares the performance of U.S. VC-backed IPOs to the S&P 500, starting January 1, 2010 at an index value of 1. Source: PitchBook
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