Seattle has long been a hotspot for growing tech companies and rare “unicorn” startups. As a result, our region is a national leader when it comes to venture capital funding. That pattern is very much in play this year, with record-breaking funding coming from investors who are hungry for profits after the slowdowns caused by the pandemic.
A recent reportfrom PitchBook revealed that the investment surge is mostly being driven by late-stage investment and “megadeals” worth over $100 million.
In Washington state, investment in startups for 2021 has already reached $3.4 billion, which is nearly 70% of the $5 billion investment achieved in all of 2020. In 2019, the state’s total was $4.1 billion. This year’s surge comes from more than 205 deals in the same period last year, the state had only completed 162 deals and was only at $1.8 billion in investment.
Major recipients of startup investment in Seattle include tech companies, specifically business-to-business enterprise tech companies, life sciences and a few security startups. Umoja Biopharma, which is developing immunotherapies for cancer, received $210 million in June; security startup Auth0 was acquired by Okta for $6.5 billion; Cap Hill Brands, a startup that acquires e-commerce businesses, received $150 million in January. These deals barely scratch the surface of the potential venture capital coming to the region’s many startups.
On average, deals in the state are getting bigger. Even “small” deals are rising, with the median early-stage investment rising from $6.1 million in 2020 t0 $7 million this year.
Nationally, venture funding has already raised $150 billion in the first half of 2021, rapidly approaching the $164 billion raised in all of 2020. A benefit of this influx of investments is that startups have the ability to stay private for longer. Founders no longer need to go public before they’re ready in order to raise cash — instead, startups can decide to go public on their own terms and when they’re ready.
Analysts predict that this frenzy of venture capital investment is likely to continue for the remainder of 2021. While some caution that we may be approaching the top of the market cycle, only time will tell if these “unicorn” investments are as magical as they seem.
This article was originally posted on the Seattle Times by Akash Pasricha.
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