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Alternative Market Briefing

3,525 venture capital funds in market as of August 2021, up 40% since January

Thursday, October 21, 2021

Laxman Pai, Opalesque Asia:

As of August 2021, 3,525 venture capital (VC) funds are in the market, a near 40% increase since January of this year, said a study.

According to the Q3 2021 Venture Capital Quarterly Report published by Preqin, although Q3 fundraising data paled in comparison to earlier quarters of the year, aggregate capital raised ($29bn) still surpassed the $27bn raised in Q3 2019, before the pandemic.

Fundraising momentum remains strong across 2021 overall, with near-record capital raised in the first half of the year, it said.

"The bright spot for the asset class is North America, where 199 funds closed with $17bn, indicating that institutional investors increasingly target early-stage and venture debt vehicles, while also showing a growing interest in emerging markets," said the report.

The aggregate value of VC deals also hit a record high in Q3 2021 at $172bn. Despite record deal-making, the number and aggregate value of exits declined in Q3, in part due to fewer IPOs for venture-backed companies.

Yet, venture capital performance continues to improve; even the lowest quartile of VC funds surpassed 10% IRRs, while top-quartile funds reached 42% net IRR, exceeding private equity's top-quartile fund IRR of 34%.

Meanwhile, VC with $1,683bn in AUM, has established itself as a mature asset class and legitimate source of returns in institutional portfolios.

"Institutional investors also indicated a greater preference for early-stag......................

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