Why 2021 is the year that's poised to 'shatter all records' in Boston VC deal activity

Boston VC deal activity is poised to break all records this year, says a local expert.

Almost $19 billion was invested through early August, beating 2020’s full-year record of $17.1 billion, according to the recently released "Markets to watch: Boston" report from Bridge Bank and Seattle-based PitchBook Data.

Average VC deal sizes are also ballooning in Boston, with a late-stage average of $54.8 million—up from 2020’s $35.4 million. The same is true in the early stage, which rose from an average of $26.3 million in 2020 to $38.5 million so far in 2021, according to the report.

See the above gallery for the local tech companies based in the Bay State that reached a valuation of $1 billion or more in 2021, including their total funding.

Dave Dailey, a senior managing director for technology banking at Bridge Bank, who worked on the report, said in a recent interview he expected these numbers to be flat or down, as he expected the pandemic to make due diligence much harder for investors.

"In talking to folks from the venture capital community, they all adjusted to the Covid protocols and have been able to get comfortable with their investments, in many cases without having face-to-face meetings," he said. "2021 is going to shatter all records in VC deal activity in Boston. That's an easy prediction to make."

Dailey added that the prospects for future unicorns in the Boston market remain great: "The more success there is in a market, the more talent is in that market that can start that next unicorn."

Dailey brought up the case of Toast Inc. (NYSE: TOST), the provider of restaurant point-of-sale and management systems that raised $870 million in an upsized IPO earlier this year. Co-founders Steve Fredette, Aman Narang and Jonathan Grimm started Toast in 2011 after meeting at their previous employer Endeca, sold to Oracle Corp. (NYSE: ORCL) for $1 billion. Toast became a unicorn in 2018.

"The likelihood of people spinning out of Toast and starting something new is pretty high," Dailey said.

The class of 2021 Bay State tech unicorns includes three cybersecurity companies — Transmit Security, Aura and Aqua Security Software Ltd. — as well as Wilmington warehouse-robotics company Locus Robotics Corp., seed gene editing startup Inari Agriculture Inc. and analytics startup Starburst Data Inc. Among these unicorn companies, Solo.io, led by Idit Levine, and Inari Agriculture, led by Ponsi Trivisvavet, are the only ones led by a female CEO.

In addition to Toast, other tech unicorns from the Bay State that have gone public or announced plans to do so are Flywire Corp. (Nasdaq: FLYW) and Circle Internet Financial Ltd.