Monday , October 18 2021

Venture capital is going to need a record-breaking run of IPOs to clear its own decks

The Exchange is digging into the Chinese venture capital market this week, but getting folks to chat about business and China on the record is turning out to be slightly harder than we anticipated. More on that later this week.

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While our dives into the Chinese and Indian startup markets are underway, let’s talk about indigestion, namely venture capital indigestion. TechCrunch executed its initial look into the Q3 venture capital market, but it’s still a struggle to get our minds around just how much capital has poured into startups this year.

Global venture capital fundraising is at an all-time high, with many countries seeing record results. Q3 2021 saw more than double the dollars that were invested Q3 2020 across thousands of more deals, per corporate data provider CB Insights.

All that capital is leading to more and more unicorns around the world. Which, in turn, boosts the scale of unexited private-market value that will eventually need to exit. And with some U.S. tech giants limiting acquisitions as a way of playing defense against antitrust concerns, there is an implicit expectation that the IPO market will eventually have to make room for a stampede of unicorn debuts.

That impending debit grows larger every quarter, and at an increasingly rapid clip; the second derivative is positive, in other words.

The Exchange has noted the rising unicorn backlog from time to time, but new data makes it clearer than ever that the venture capital world is investing as if there is a future exit wave coming that will put prior IPO cycles to shame in its intensity and length.

Turning back to CB Insights’ Q3 data set, which we’ll mine over the next few weeks, observe the following chart detailing the pace at which capital is being disbursed into the global startup market:

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