North America Venture Capital Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

North America Venture Capital Market is Segmented by Investments in Countries (USA, Canada, Mexico), by Deal Size and Stage of Investment (Angel/Seed Investment, Early-stage Investment, and Late-Stage Investment), and by the Industry ( Fintech, Pharma, Consumer Goods, Industrial/Energy, IT Hardware & Services, and Other Industries)

Market Snapshot

NAVC 5.png
Study Period: 2018-2027
Base Year: 2021
CAGR: >6 %

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Market Overview

Although, the COVID-19 pandemic led to significant fluctuations in various industries, the North American venture capital deal values witnessed positive growth in 2020. The total deal value reached USD 182 billion by 2021’s end, up 29% from 2020, with an annual average growth rate of 14% since 2016. However, while total deal value increased compared with 2020, the number of transactions declined. About 6,564 venture capital deals were completed in North America during 2020, down 5% from 2019, and down further from 2014’s peak of nearly 9,000 deals.

The early part of the year played out as expected venture capitalists shied away from the riskier ends of the deal spectrum as the initial uncertainty of the COVID-19 pandemic took hold. There were fewer deals in the earlier seed and angel stages, with a shallower decline in later-stage capital injections.

As expected, COVID-19 did hit the VC investment landscape. Over the course of the past three months, only 541 VC deals were made in the seed to Series B stages, compared with 964 deals in the same period in 2019, 44 percent decrease in deals. The change varies across investment types, having the biggest impact on seed-stage deals, which dropped by 57 percent, down from 483 deals in 2019 within the three-month time period, to 209 deals in the March - June 2020 period.

North American venture funding went to the more ‘pandemic-friendly’ sectors. Biotechnology companies, for example, attracted USD 23 billion in funding last year, up 74%. Some of the more forward-looking industries also received significant shares of capital. As in the two years prior, software companies attracted the most venture capital last year, at USD 51 billion, primarily because of the sector’s diversified nature. Other large-ticket deals also related to self-driving cars, as well as secure payment processing and online gaming. On the surface, these deals may seem a response to the challenges that COVID-19 has created, but in reality they’re building on pre-pandemic trends, which will continue long after the virus is under control.

Scope of the Report

Venture capital is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth.

Funding for startups and growth-stage private companies in North America held up at historically high levels in 2021. In a year in which markets were characterized by their dramatic ups and downs, North American venture capital deal value held up.

North America Venture Capital Market is segmented by investments in countries ( USA, Canada, and Mexico), by deal size and stage of investment (angel/seed investment, early-stage investment, and late-stage investment), and by the industry (fintech, pharma, consumer goods, industrial/energy, IT hardware & services and other industries).

Investments - By Country
USA
Canada
Mexico
Deal Size - By Stage of Investment
Angel/Seed Investing
Early-stage Investing
Later-stage Investing
By Industry of Investment
Fintech
Pharma and Biotech
Consumer Goods
Industrial/Energy
IT Hardware and Services
Other Industries of Investment

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Key Market Trends

Canada VC Growing Market

Canada closed out 2021 with its second-highest level of venture capital investment ever. USD 3.8 billion was invested in Canada in 2021, a 22 per cent decline from the record-smashing USD 4.9 billion in 2020, but strikingly 15 per cent above USD 3.3 billion in 2019.

Business-to-business (B2B) solutions were suddenly in high demand to meet the needs of companies looking for ways to better connect their remote workforces and improve or provide online sales or digital service capabilities.

Fintechs, especially in payments and lending services, gained even more traction when consumers and businesses wanted to avoid handling cash and shifted to e-commerce. The sudden shift to remote teaching and online learning also sparked interest in Edtech firms. Funds poured into this previously underappreciated asset class. Financial services companies are striving to digitize their operations and implement new technologies to better collect and collate data on their customers, identify and monitor for fraud and money laundering, and make their operations more efficient.

Among the top exits in 2021, several other mid-cap Canadian companies in the biotech and pharmaceutical sectors went public in 2021, all on the Nasdaq. The trend points to Canadian companies bypassing the Canadian market and listing directly in US exchanges and highlights the need for participation from large banks and investment firms to finance and support growing Canadian deals.

Top Canadian Cities VC Investment

US Fintech Boost

U.S. fintech funding in 2021 outpaced 2020 in both amount raised and volume of transactions, despite the COVID-19 pandemic. Though the virus wreaked economic havoc in 2020, interest rates remained relatively low, consumers embraced digital channels and the routes for venture capital firms to exit their investments, be it public offerings or M&A, remained open. Each of these factors likely contributed to the USD 17.8 billion that investors poured into private U.S. fintech companies in 2021, via 681 transactions, up from USD 14.8 billion and 539 transactions in 2020. Investors likely sensed that the pandemic could end up benefiting fintech companies, as consumers suddenly needed to do financial transactions online.

By fintech sector, investment and capital markets companies garnered the most funding in 2021, with Robinhood contributing about 27% of the total. Insurtech companies and payments companies were also popular targets for VCs, with each sector raising upwards of USD 4 billion. The United States FinTech market is growing at an incredible pace. Digitally aware and active consumers are becoming more and more open to adopting FinTech into their daily lives.

Largest Fintech Companies

Competitive Landscape

North America venture capital market is highly competitive, with the presence of both international and domestic players. The market studied presents opportunities for growth during the period, which is expected to further drive the market competition. With multiple players holding significant shares, the market studied is competitive.

Recent Development

  • Nov 2021: Venture firms in the U.S. founded by women are on track to raise more than USD 7 billion in 2021 almost USD 1 billion more than the prior peak of 2019 and up 59 percent so far year over year. U.S. venture capital has raised record funds in 2021, at USD 96 billion through the third quarter. That compares with USD 86.8 billion in 2020, a prior record in the past decade.
  • Oct 2021: North American venture capital investment held up at near-record-setting levels in the third quarter, as both early- and late-stage dealmaking remained on fire and big exits accumulated. Overall, investors put USD 79.6 billion to work across all stages from seed through technology growth. That’s just a hair shy of the USD 80 billion total for the prior quarter, and the second-highest total on record.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Deliverables

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET DYNAMICS

    1. 4.1 Market Overview

      1. 4.1.1 Venture Capital 101, Insights on Typical VC Fund, Structure and How It Works

      2. 4.1.2 A Brief on Types of Venture Capital Financing

      3. 4.1.3 Regulatory Landscape of the Industry

    2. 4.2 Insights on Fund Raising of Venture Capital Firms in Europe

      1. 4.2.1 Insights on University Endowment Funds Investing in Venture Capital Funds

      2. 4.2.2 Insights on Venture Fund of Funds

    3. 4.3 Insights on VC Financing and Vertical Analysis in Europe

      1. 4.3.1 Deal Size of VC Financing by Series

      2. 4.3.2 Insights of Major Deals Across Industries and Top 10 - 20 Leading VCs Across Sectors

      3. 4.3.3 Key Trends in the Investment Patterns of VC Firms in the Recent

      4. 4.3.4 VC Funding on the Rise in Biotech/Pharma Sectors

      5. 4.3.5 Market Outlook on Current and Future Spending of VC Firms

      6. 4.3.6 Insights on Blockchain-related VC Financing

      7. 4.3.7 Brief on Rising ESG Investing by VC firms

    4. 4.4 Insights on the Exit Landscape of VC Funding in NA

    5. 4.5 Regulatory Landscape Governing the Venture Fund of Funds in Various Economies

    6. 4.6 Impact of COVID-19 on the Market

  5. 5. MARKET SEGMENTATION AND OUTLOOK?

    1. 5.1 Investments - By Country

      1. 5.1.1 USA

      2. 5.1.2 Canada

      3. 5.1.3 Mexico

    2. 5.2 Deal Size - By Stage of Investment

      1. 5.2.1 Angel/Seed Investing

      2. 5.2.2 Early-stage Investing

      3. 5.2.3 Later-stage Investing

    3. 5.3 By Industry of Investment

      1. 5.3.1 Fintech

      2. 5.3.2 Pharma and Biotech

      3. 5.3.3 Consumer Goods

      4. 5.3.4 Industrial/Energy

      5. 5.3.5 IT Hardware and Services

      6. 5.3.6 Other Industries of Investment

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Overview (Market Concentration and Major Players)

    2. 6.2 Company Profiles of VC firms

      1. 6.2.1 Sequoia Capital

      2. 6.2.2 Khosla Ventures

      3. 6.2.3 Accel

      4. 6.2.4 New Enterprise Associates

      5. 6.2.5 Real Ventures

      6. 6.2.6 iNovia Capital

      7. 6.2.7 OMERS Ventures

      8. 6.2.8 Georgian Partners

      9. 6.2.9 Kleiner Perkins

      10. 6.2.10 Bessemer Venture

      11. 6.2.11 Intel Capital*

  7. 7. RECOMMENDATIONS (STRATEGY, SELECTION CRITERIA, EMERGING MANAGERS, AND MARKETS TO LOOK OUT FOR FROM FUND OF FUNDS PERSPECTIVE)

  8. 8. DISCLAIMER

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Frequently Asked Questions

The North America Venture Capital Market market is studied from 2018 - 2027.

The North America Venture Capital Market is growing at a CAGR of >6% over the next 5 years.

Sequoia Capital , Khosla Ventures , Accel, New Enterprise Associates, Real Ventures are the major companies operating in North America Venture Capital Market.

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