Venture Funding Spikes in Q3 as IPO Market Explodes

Private money has been flowing into late-stage companies amid the pandemic.

  • Venture funding hits $76.4 billion in Q3 2020, up 9% YOY
  • Late-stage investing soars after IPO markets open up
  • Acquisitions worth $40.4 billion of venture-backed firms in Q3

Global venture funding reached $76.4 in the third quarter of 2020, according to Crunchbase. This is up 1% from last quarter and up 9% year over year, proving investment has stayed resilient despite, or in some cases because of, the pandemic. For 2020 so far, areas like health care, apps, payments, education and gaming have seen increased investment versus last year.

VC funding
Source: Crunchbase.

Some of the trends observed for Q3: Seed and early-stage funding were down from last quarter and last year. Meanwhile, late-stage funding was up 24% year over year and up 26% quarter over quarter "as investors look toward a strong exit market as the IPO markets opened up in June." Private equity rounds in venture-backed companies (also known as technology growth rounds) was $6.3 billion, up 76% year over year but down 48% quarter over quarter. 

Acquisitions of venture-backed companies soared in dollar-value from the second quarter and Q3 2019 to $40.4 billion. Nine firms were acquired for more than $1 billion, the highest count per quarter since early 2019. Apple(AAPL) was the most active acquirer in the quarter, with three purchases including Canada-based contactless payment startup Mobeewave, San Francisco-based podcast streaming service Scout FM, and Spaces, a Santa Monica-headquartered company that develops VR, AR and MR for theme parks.

"Ant Group, Airbnb, Wish, Root Insurance, ChargePoint and Affirm have all recently filed to go public, while Opendoor and AppHarvest are planning debuts via SPACs," said Crunchbase. "And with a record 631 companies listed on our unicorn board, with 33 new unicorns joining in this third quarter, we are in for a busy final quarter of 2020."

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