Venture capitalists invested a record $675 billion last year

Venture capitalists invested a record $675 billion last year

Hopin founder and CEO Johnny Boufarhat.

Venture capitalists invested more than $675 billion in start-ups worldwide in 2021, doubling 2020’s previous all-time high, according to data published Thursday by VC analysis firm Dealroom and British promo agency London & Partners.

Despite the pandemic, the number of so-called “unicorns” continued to rise at a clip last year, with some 133 start-ups in the San Francisco Bay Area seeing their valuations climb to over $1 billion, followed by 69 in New York, 21 in Greater Boston, 20 in London, 16 in Bengaluru and 15 in Berlin.

The surge in the number of unicorns was complimented by the number of megarounds — start-up funding rounds over $100 million.

These shot up dramatically in some cities, with London seeing a 3.4-times increase. There were 64 of these megarounds in London alone last year, up from 19 in 2020, according to Dealroom. Fintech app Revolut raised an $800 million series E round, while rival Monzo raised over $600 million across two deals. Elsewhere, online events platform Hopin raised $850 million across two deals in 2021.

In total, start-ups in the U.K. capital raised $25.5 billion from VCs last year, up from $11.2 billion in 2020, and there are now 75 unicorns in London, with recent additions including mobile banking app Starling Bank and insuretech start-up Marshmallow.

Laura Citron, CEO of London & Partners, said in a statement that London is now a truly mature global technology capital.

“We have big pools of later stage funding, nearly two new unicorn companies every month, and massive funding rounds and exits,” she said. “This data shows that London is not only a brilliant place for entrepreneurs to start businesses, but also to grow them to a global scale.”

VC firms in London raised $9.9 billion in new funds in 2021, accounting for 35% of all European VC funds. Index Ventures, Balderton Capital and 83North all closed big new funds, while well-known U.S. VC firms including Lightspeed and General Catalyst set up offices in the city.

Europe vs. the U.S. and China

But London, and the rest of Europe, have not yet produced any tech firms that can match the size of Alphabet, Apple, Amazon, Meta or Microsoft in the U.S., or Alibaba and Tencent in China.

Europe’s biggest tech firm by market cap is chip manufacturing machine maker ASML, which is valued at over $300 billion. Meanwhile, in the U.S., several companies are valued at over $1 trillion and Apple briefly saw its market cap climb to over $3 trillion earlier this month. Indeed, the U.S. and Asian tech giants have acquired many of Europe’s most promising companies, including artificial intelligence lab DeepMind and chip designer Arm.

Venture capitalists pumped $328.8 billion into U.S. start-ups and $61.8 billion into Chinese start-ups in 2021, while they only invested $39.8 billion in U.K. start-ups. But VC investment in the U.K. and Europe is growing faster than it is in the U.S. and China.

Several of the London’s best-known start-ups, including food delivery firm Deliveroo and cybersecurity start-up Darktrace, went public on the London Stock Exchange in 2021. They received a mixed reception from investors, however, and many of Europe’s biggest start-ups including Spotify still choose to list in New York.

Nazim Salur, co-founder and CEO of rapid grocery delivery app Getir, told CNBC in December that Europe doesn’t treat tech companies as well as the U.S. does.

“There’s too much skepticism [in Europe],” he said, adding that this comes from investors and policymakers. He said Getir, which was most recently valued at $7.5 billion, would mostly likely list in the U.S. if it did go public. It is in talks with investors about a new round of private funding that would value it at over $12 billion, according to Bloomberg.

While Europe has a “very strong economy overall” and is a powerful player in car manufacturing, pharmaceuticals, fashion and other industries, it’s not as powerful when it comes to start-ups, Salur said.

“There are several good start-ups. But when you look at the sheer volume of the unicorn list for example, about 800 companies, half are from U.S. and a third are from China. And all the rest is all the rest of the world. Europe unfortunately is not represented as it should be. “

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