The Pandemic’s Impact On The Venture Capital Industry

Entrepreneurship is about identifying opportunities in the market and creating valuable products or services to address those needs. Opportunities don’t stop presenting themselves during a pandemic. 

On the contrary, extreme situations often expose the need for innovative products and new categories because consumers’ needs evolve quickly during times of stress.

In parallel, the venture capital (VC) industry follows suit and funds innovative founders and ideas to propel and profit off businesses striving to become the next big thing. While some people would expect VC, like countless other areas, to struggle over the last eight months, recent data shows the downturn’s impact wasn’t as devastating as it could have been.

According to a recent report from Crunchbase, a leading research firm for the VC and startup ecosystem, the first half of 2020 (January - June) represented a modest decline in venture funding. Furthermore, it also detailed how some emerging markets could be cementing their place in the startup landscape.

Here are some of the key takeaways from the report:

  • If you remove the largest outlier funding deal ($15.2 billion received by Reliance Jio), the total amount of global venture funding was down 17% during the first half of this year compared to the same period last year. If you include the Reliance Jio investment, total funding is only down 6 percent.

  • The following regions and countries were considered to be ‘hotspots’ of venture funding during the first half of this year: Massachusetts (U.S.), India, Indonesia, Israel, New Zealand, France, Belgium, Australia, and Brazil.

  • California and Silicon Valley brought in $35 billion in venture funding in H1 of 2020, coming up just short from its record high funding in 2019. Massachusetts experienced a big increase in year-over-year funding while states like Florida, Colorado, and Pennsylvania understandably fell short from last year.

  • Compared to the same January-June period in 2019, Australia and New Zealand experienced a 50 percent growth (collectively) in venture funding.

  • Brazil accounted for an estimated 90 percent of all South American venture capital funding, despite facing one of the largest numbers of COVID-19 cases globally.

  • India, thanks to the Reliance Jio funding, experienced massive growth of $19.4 billion in the first half of this year, up from  $5.6 billion in the same period last year.

If any of this is interesting, I suggest diving into the report. Also, I would be happy to send over additional data that I’ve gathered on this topic.