Venture capital activity continued its stunning run in 2021, both locally and nationally.
According to the PitchBook-NVCA Venture Monitor fourth quarter report for 2021, U.S. venture capital deals totaled $329.9 billion last year across 17,054 deals, up from $166.6 billion and 12,173 deals in 2020. The report, produced by the Seattle-based financial data firm PitchBook and the National Venture Capital Association, noted there were 494 deals in the Seattle area for a total of $9.2 billion last year, increases of 134.2% and 196.6%, respectively, from 2020.
The Seattle area, although still a rung below top-tier markets like the Bay Area and New York City, is separating itself from second-tier markets like Denver and Austin, Texas, said Kyle Stanford, senior analyst at PitchBook. To continue solidifying itself, he added, the area could use more "unicorns," or companies with a value of at least $1 billion.
"Unicorn is a relatively arbitrary figure, but it does show that as an ecosystem if you're getting more of these deals, you're not only growing great companies, but you're also attracting capital from outside ecosystems," Stanford said. "To really solidify yourself as a premier destination, you either have to have a large number of huge funds to support mega rounds and unicorn deals, or you have to be able to extract that capital from the Bay Area, Boston and New York."
Multiple local companies have pushed their values to at least $1 billion recently. Bellevue-based recruiting startup SeekOut, for example, raised $115 million on Wednesday and hit a value of over $1.2 billion. Seattle-based interviewing startup Karat, meanwhile, raised $110 million in October, hitting a value of $1.1 billion.
Given the big year many startups had in 2021, it seems likely that other Seattle-area companies will achieve unicorn status in 2022. Seattle-based pay equity startup Syndio, for example, raised more than $57 million in 2021 and hit the 200 client mark. Seattle-based real estate tech startup Flyhomes, meanwhile, raised $150 million in June and now has about 820 employees.
Next unicorns in Puget Sound area
If 2022 is anything like 2021, there will be no shortage of major venture capital deals. According to the PitchBook-NVCA report, there were 820 "mega deals," or deals worth at least $100 million, for a total of $190.8 billion last year. In 2020, which had been a record year, there were 335 such deals worth a total of $76.5 billion.
Stanford sees the momentum from venture capital activity continuing into 2022. Even if there is a slight dip from 2021, he added, this year would still be the second-most active venture capital year on record in many categories.
"We're looking at interest rate hikes, and there's been some public market volatility, which could trickle down into some late-stage valuations, but shifts in either of those areas likely wouldn't have a major impact on VC for at least six months, if at all," Stanford said. "For 2022 especially, we're looking at a very strong year ahead."
