Stunning data for 2021 tells the story. U.S. startups raised $330 billion, nearly double the 2020 record of $167 billion, according to PitchBook, which tracks private funding. More tech start-ups have crossed the $1 billion valuation threshold than in the previous five years combined. According to Crunchbase, the median amount of funds raised for very young start-ups making their first major funding round has increased by 30%. And the value of startup exits — either a sale or a public offering — reached $774 billion, nearly tripling the previous year’s returns, according to PitchBook.
The headlines carried this year. Within days this month, three private start-ups reached eye-popping valuations: Miro, a digital whiteboard company, was valued at $17.75 billion; Checkout.com, a payment company, was valued at $40 billion; and OpenSea, a 90-person startup that allows people to buy and sell non-fungible tokens, known as NFTs, was valued at $13.3 billion.
Investors also reported big gains. Andreessen Horowitz, a venture capital firm, said it raised $9 billion in new funding. Khosla Ventures and Kleiner Perkins, two other venture capital firms, each raised nearly $2 billion.
The good times have been so good that warnings of a pullback inevitably bubble up. Rising interest rates, expected later this year, and uncertainty surrounding the Omicron variant of the coronavirus have deflated tech stock prices. Shares of start-ups that went public through special purpose acquisition vehicles last year fell. One of the first start-up IPOs expected this year was postponed by HR software provider Justworks, citing market conditions. The Bitcoin price has fallen almost 40% since its peak in November.
But start-up investors said it has yet to affect funding for private companies. “I don’t know if I’ve ever seen a more competitive market,” said Ambar Bhattacharyya, investor at Maverick Ventures.
Even if things momentarily slow down, investors said, the big picture is the same. Past moments of outrageous deals — from Facebook’s acquisitions of Instagram and WhatsApp to skyrocketing private market valuations of start-ups like Uber and WeWork — have sparked heated debates about a tech bubble over the past decade. last decade. Each time, Mr. Bahat said, he thought the frenzy would eventually return to normal.
Instead, he said, “every time it became the new normal.”
Investors and founders adopted a seize the day mentality, believing that the pandemic has created a unique opportunity to shake things up. Phil Libin, entrepreneur and investor, said the pandemic has changed every aspect of society so much that start-ups are making five years of progress in one year.