Kentucky startups secure nearly $200M in venture capital in 2021

While U.S. venture capital activity shattered the records it set in 2020, investment into Kentucky companies noticeably fell last year.

The newly-released data from PitchBook and the National Venture Capital Association show that capital investment in U.S. startups nearly doubled from the record-breaking $166.6 billion in 2020 to a whopping $330 billion in 2021. Total deal count also jumped to an estimated 17,054 deals in 2021, about 5,000 more deals than in 2020.

Kentucky saw a moderate increase in deal count too, from 40 deals in 2020 to 51 in 2021. But the commonwealth's startups only raised $197.4 million in capital last year, roughly a 16% decrease from the $233.8 million secured in 2020. As I previously reported, Kentucky set a record for venture capital investment in 2019.

Much of that 2021 investment total is tied to the second quarter, when Louisville-based Climavision landed a $100 million "mega deal" investment from The Rise Fund. The fourth quarter only brought seven deals to Kentucky with investments totaling $9 million, which included four investments in Louisville-based companies: GoWild, Bert Thin Films, Whitecloud Technologies and eJOOV.

Related: These Kentucky startups got the most investment dollars in 2021

The data show Kentucky set a new record for exits though. The commonwealth had seven companies that went public or were acquired during the first three quarters of 2021.

One of those exits was Morehead, Kentucky-based AppHarvest, which went public in February 2021 via a special purpose acquisition company (SPAC) deal that gave the company unicorn status with a $1 billion-plus valuation. SPAC deals are increasing in popularity as an alternative to traditional initial public offerings, PitchBook reports.

Rubicon Technologies, based in Lexington, will go public via a SPAC deal in the coming weeks. The merger — creating a company with a combined valuation of $2 billion — will result in gross proceeds of approximately $432 million to Rubicon, which will list on the New York Stock Exchange under the ticker symbol "RBT."

Here are the amounts of VC dollars invested in Kentucky's neighboring states (in alphabetical order) in 2021:

PitchBook reports that while capital spread across the U.S. more than ever before, the top four markets — Bay Area, New York, Los Angeles and Boston — controlled more than half of the deal count. The Bay Area also saw more than one-third of all deal value in 2021.