As the world continues to shake off the Covid-19 pandemic and its economic impacts, venture capitalist dealmakers have been busy funding deals like never before.
During the third quarter, venture capitalists funded 41 deals in Arizona worth more than $566 million, according to the new Venture Monitor report from PitchBook and the National Venture Capital Association.
The strong third quarter figures have pushed Arizona to a combined investment total of $979.5 million this year, which is a record for the state just through the first three quarters of the year, according to the Venture Monitor data.
So far 110 funding deals have been struck in Arizona this year, which is on pace to break the record of 146 deals from 2015.
Note: PitchBook and the National Venture Capital Association track these figures on an ongoing basis by updating certain transaction details when they find them. As a result, some figures shift slightly between quarterly reports.
The Venture Monitor report aims to capture all investment data across the whole country, counting everything from smaller angel and seed investments to the mega rounds of funding that make international headlines.
Arizona’s biggest deal struck in the quarter came from Nextiva, which raised $200 million from Goldman Sachs last month in its first ever round of outside funding. Emerge’s $130 million raise in September was the second largest deal in the quarter, followed by eVisit’s $45 million raise.
VC across the country
The Covid-19 pandemic has killed more than 700,000 Americans and the economic fallout has continued even as nearly 80% of adults in the U.S. have received at least one dose of the vaccine.
Among the most remarkable economic trends during the pandemic is the fervor with which venture capitalists have been making investments: Venture Monitor has counted more than 12,000 deals so far this year worth more than $238 billion, which shatters the $166 billion record set last year.
In turn, VC-backed companies have gone public more this year than previous records, including Chandler-based Offerpad and Scottsdale-based SmartRent which both completed SPAC mergers and debuted on the NYSE earlier this year. All told, American startups have generated a combined $513 billion in exit value this year.
Investors have also proven to be indiscriminate in their dealmaking this year, investing in rounds of all sizes. Venture Monitor counted 597 megadeals (worth more than $100 million) so far this year, again smashing the record of 333 set last year.
Angel, seed and first financing activity has also picked up in 2021, with $8.6 billion going to seed deals and $2.7 billion in angel deals through September, again breaking previous records with a quarter of the year left to go.
John Gabbert, founder and CEO of PitchBook, said that VC activity this year has been astounding, but the pace may slow down in the coming months.
“It’s entirely possible that LPs (limited partners) are hitting the upper limits of their allocation to venture and could potentially slow or plateau in coming quarters,” he said in a statement. “That said, while the IPO market remains open, we anticipate distributions will continue to flow back to LPs at record rates encouraging re-allocation.”
Climbing the ladder
Boosters in and around Phoenix’s startup community maintain the past five to 10 years have been critical for the ecosystem’s growth, and while funding data proves that to be true, Phoenix is still working its way toward status as a major startup ecosystem.
A huge portion of the country’s VC funding - around 53% of the dollars so far this year - still go to companies in California’s Bay Area and in New York City. Behind them, Boston, Washington, D.C., Los Angeles and Chicago are the major recipients of VC money.
As a state, Arizona ranked No. 24 on the Venture Monitor in terms of VC money raised so far in 2021 with its record-setting $979.5 million. The closest in size were Oregon and Delaware, which have both closed more deals and pulled in just over $1 million each in aggregate funding this year.
Regional peers have outpaced Arizona so far in 2021; Utah has raked in nearly $2.9 billion in VC funding this year and Colorado has secured more than $3.8 billion. Nevada, which has historically been far behind Arizona, has brought in more than $1.4 billion in VC money this year, though much of that came from a single, $700 million round for Carson City-based Redwood Materials.
