Columbus, OH - According to Jason Rittenberg of SSTI, "While the overall U.S. venture capital market has drawn headlines for record-breaking total investment levels in 2021, the story has been far different for smaller deals. Data currently suggests a decline in deals under $1 million, and only modest growth for deals under $5 million. The final data may tell a slightly different story,[1] but the level of activity at the smaller end of the spectrum is clearly quite different than what is driving market coverage. Of the $335 billion in angel, seed and venture capital deals PitchBook has identified for 2021, more than 10 percent went to deals of $1 billion or more and almost 60 percent to deals worth at least $100 million."
Small investments are important for regional economies to track so that they can understand their pipeline of companies that can fuel innovation and job creation, beyond the handful (in most states) that attract headlines.
Understanding the local market for investments under $5 million is also critical for states that are interested in using the U.S. Department of the Treasury’s State Small Business Credit Initiative to support access to capital for new and young technology companies. Treasury’s rules require that states target investment programs to a deal size of under $5 million and prohibit states from participating in deals greater than $20 million.
Given the market trends, the SSBCI rules will drive states to concentrate their support on the sector of the venture capital market, investments under $5 million, that is receiving far less support from the private markets than the mega deals driving the topline growth trends.
The data provided are state totals by year and deal size for all angel, seed and venture capital investments into companies headquartered in the U.S. The data are from SSTI’s analysis of PitchBook as of Jan. 3, 2022.
A Flourish chartTotals by state and deal size by year are available for download (xlsx).
[1] Small investment rounds are less likely to leave a paper trail for platforms like PitchBook to identify, as reporting may not be required until numerous investors are involved and newer companies may be systematically less likely to publicize a deal than more-established firms. As of Jan. 3, 2022, PitchBook identified about 2,700 more deals in 2021 than in 2020 but about 160 fewer deals under $500,000 and about 50 fewer deals between $500,000 and $1 million. While the number of deals identified as closed in 2021 will increase over time, it is impossible to say, at this point, whether the decline will disappear — 2020’s figures remain below 2019’s figures (by about 170 and 160, respectively).
Understanding the local market for investments under $5 million is also critical for states that are interested in using the U.S. Department of the Treasury’s State Small Business Credit Initiative to support access to capital for new and young technology companies. Treasury’s rules require that states target investment programs to a deal size of under $5 million and prohibit states from participating in deals greater than $20 million.
Given the market trends, the SSBCI rules will drive states to concentrate their support on the sector of the venture capital market, investments under $5 million, that is receiving far less support from the private markets than the mega deals driving the topline growth trends.
The data provided are state totals by year and deal size for all angel, seed and venture capital investments into companies headquartered in the U.S. The data are from SSTI’s analysis of PitchBook as of Jan. 3, 2022.
A Flourish chartTotals by state and deal size by year are available for download (xlsx).
[1] Small investment rounds are less likely to leave a paper trail for platforms like PitchBook to identify, as reporting may not be required until numerous investors are involved and newer companies may be systematically less likely to publicize a deal than more-established firms. As of Jan. 3, 2022, PitchBook identified about 2,700 more deals in 2021 than in 2020 but about 160 fewer deals under $500,000 and about 50 fewer deals between $500,000 and $1 million. While the number of deals identified as closed in 2021 will increase over time, it is impossible to say, at this point, whether the decline will disappear — 2020’s figures remain below 2019’s figures (by about 170 and 160, respectively).
