In Q2’2021, VC investment reached yet another record high in terms of total deal value, slightly surpassing the previous quarter’s total in deal value.

Growing diversity of sectors attracting large funding rounds

A wide variety of US-based companies attracted $500 million+ funding rounds during Q2’21, including autonomous driving company Waymo ($2.5 billion), aerospace-focused SpaceX ($1.2 billion), gaming company Epic Games ($1 billion), and biotech firm Treeline Biosciences ($678 million). Three fintech companies also raised large rounds during the quarter, including Perch ($775 million), Better ($500 million), and Daily Pay ($500 million). These deals highlight the breadth of sectors attracting attention from investors in the US.

Fundraising poised to shatter previous high

Fundraising activity in the US continued to be red hot in the US during Q2’21, with the total raised to date just shy of the previous annual record high. The burst in fundraising activity highlights the wealth of dry powder in the market looking for a home, while also emphasizing the successes of a number of the well-established VC firms. These firms are delivering higher returns over the life of their funds, returns that are expected to grow further given the IPO and exit successes that have been seen over the last few quarters. This is driving some institutional investors and less traditional to invest in funds led by highly successful VC firms, thus boosting fundraising totals even further.

IPO market remains strong

The IPO market in the US continued to show strength in Q2’21, with no slow down in activity in terms of companies preparing to go public. The quarter saw a number of IPOs, including plant-based milk company Oatly, which raised $1.4 billion in its May debut, with shares rising as much as 34% in first day trading.1

The quarter also saw several direct listings, including cryptocurrency exchange Coinbase in April and website hosting company Squarespace. A number of SPAC mergers also occurred during Q2’21, including digital banking company SoFi with Social Capital Hedosophia Holdings Corp. V2 and subscription service Barkbox with Northern Star Acquisition.3

Electric vehicle ecosystem gaining traction

In recent quarters, VC investors have shown increasing interest in everything to do with electric vehicles. In addition to specific car technologies and charging platforms, there has been a growing focus on the ecosystem supporting electric vehicles. For example, the development of destination charging options that allow vehicles to be charged while owners are shopping or at work.

Trends to watch for in the US

VC investment is expected to remain strong heading into Q3’21, particularly in areas such as fintech, automotive, and AI. Given the supply chain issues identified as a result of the Evergreen ship blocking the Suez Canal and the ransomware attack on the Colonial Pipeline, there could also be increasing interest in logistics and supply chain solutions. Investment in agtech and foodtech is also expected to grow, particularly in areas such as alternative packaging and delivery, in addition to investment in touchless store related technologies.

IPO activity will likely remain strong well into Q3’21. SPAC transactions will be an area to watch over the next few quarters given that the multitude of SPACs that have been formed in recent months will need to find target companies.

Venture financing in the US

Here in the US, valuations continue to be high, and capital from numerous sources continues to be plentiful. This is providing significant optionality for companies as they mature, e.g., ability to do a later-stage round and delay a potential IPO. This optionality is excellent as companies wait to see what the post-pandemic outcomes are for consumer and corporate behaviors.

Conor Moore
Global Co-Leader — Emerging Giants
KPMG Private Enterprise, Partner, KPMG in the US

  • VC hits record $75 billion invested across 3296 deals

  • Median deal size for Series D+ leaps past $100 million

  • Corporate participation surpasses $30 billion for second consecutive quarter

  • Red-hot IPO market continues to achieve new highs

  • Experienced managers continue to dominate fundraising efforts