RESEARCH TRIANGLE PARK – Despite the pandemic, the United States saw exit values soar to a record $290 billion, and also set new highs in investments and fundraising in 2020, and tech was the enabler, according to Pitchbook NVCA Venture Monitor.

Pitchbook reports that “2020 top-line figures of the US VC industry are staggering: $156.2 billion invested, $290.1 billion exited, and $73.6 billion raised by VC funds. These record figures should set the industry up for continued strength moving into 2021.”

The quarterly report on venture capital activity in the entrepreneurial ecosystem is jointly produced by PitchBook and the National Venture Capital Association (NVCA), with support from Silicon Valley Bank and Velocity Global.

It said companies rode out pandemic headwinds and thrived via tech-enabled remote “unlocations.’

What a year: NC startup deals top $3.6B, 6th nationally, but Epic deal skews data

The first half of 2020 wasn’t kind to early-stage startups trying to raise funds, but early-stage activity rebounded over the second half of the year, as sourcing, diligencing, and investing in these companies went fully online after years of leaning on in-person connections to close deals, the report says.

Late deals and IPOs, however, accounted for the largest chunk of the venture ecosystem.

Exit value was propelled largely by the opening IPO window in the second half of the year, while exit counts were flat at 1,101.

Public listings last year include Airbnb, Snowflake, DoorDash, Unity, Root Insurance, Palantir, and Asana. SPACs, one of the main alternatives to the traditional IPO, had a remarkable year. Compared to 2019, the number of public listings of special purpose acquisition company (SPAC) vehicles, quintupled to 250, recording a 579.6% jump in the value raised at $75.1 billion.

Companies raised $156.2 billion last year, up from $138.1 billion in 2019 and topping $150 billion for the first time.

The angel and seed almost fully adjusted to the new market dynamics, with deal activity at these stages reaching their highest level since Q2 2015, with $41.8 billion invested.

investors deployed over $100 billion in a single year to late-stage companies for the first time ever. Late stage iinvestments represented 66.7% of the total US VC deal value in 2020, the highest proportion since 2007. Mega-deals ($100M+) also achieved a record 321 deals closed in 2020, accruing a total of $70.9 billion, which surpasses the previous record of $64.6 billion set in 2018.

Trends included a banner year for nontraditional investments and large corporate VC investments. The push for a Covid vaccine fueled a record year for healthcare fund-raising.

An estimated 3,976 deals with nontraditional investor participation closed in 2020, up 11.7% year-over-year. Nontraditional investors now lead or solely finance, deals. They led more than 1,500 deals in 2020 for the third consecutive year.

VC firms raised a record $73.6 billion in 2020 across 321 funds, eclipsing 2018’s previous record of $68.1 billion. Both the median and average VC fund sizes experienced notable jumps, rising to $76.0 million and $235.8 million.

In another trend, stablished firms were more successful than emerging firms and represented more than 70% of the total capital raised for the first time since 2014. The number of first-time funds closed in 2020 hit a seven-year low of only 50. They raised just $3.9 billion total, far below the $6.0 billion and $10.8 billion raised by first-time funds in 2019 and 2018,

“The unprecedented macro events of 2020 did not deter the overall VC industry, which reached another banner year across the venture cycle,” said Bobby Franklin, president and CEO of NVCA, said in a statement.

“The startup ecosystem played a critical role in the technology, services, and healthcare support the country has relied on over the past ten months, and the industry’s resilience and long-term investment eye will be pivotal to the country’s economic recovery in 2021 and beyond. While some segments of the ecosystem felt the brunt of the headwinds from the pandemic and economic uncertainty more than others, VC investors are starting the year in a strong position with ample dry powder to put to work.”

Patricia Nakache, general partner at Trinity Ventures summed up the year well.

In a statement, she said, “The record levels of total exit value, deal value, and capital raised this year demonstrate how the venture capital industry managed to pivot and adapt quickly and successfully to changes prompted by the pandemic. Early in 2020, managing reserves and ensuring there was enough dry powder were top of mind.  But a lot of sectors bounced back very quickly, and with a healthy IPO market and the rapid evolution of SPACs, the industry is primed to begin 2021 in a strong position.”