Despite the turmoil of an ongoing pandemic, global venture funding for the second quarter of 2020 was not as dire as we expected, but it was down from previous years.
Overall, total global venture dollars for 2020 track at $129 billion for the first half of the year. This includes all funding stages, from seed, venture, corporate venture and private equity rounds in venture-backed companies.
That $129 billion is down from the peak in 2018, and down 7 percent from the first half of 2019.
In our first-quarter venture funding report we reported on varying trends across regions with China demonstrating the largest decrease quarter over quarter and year over year. The pandemic hit China earlier than most other parts of the world. We predicted the reckoning would come in the second quarter with founders negotiating funding in a changed market.
Toward the end of the first quarter and into the second quarter of 2020, the pandemic’s impact was felt across large sections of the globe, resulting in high counts of layoffs by technology startups, shifts to remote work seemingly overnight, and markets shutting down. Industries hit hard were travel, last-mile mobility, restaurants, events and more.
In NFX’s most recent VC and founder sentiment survey, 60 percent of VCs report that early-stage valuations have dropped by 20 percent to 30 percent. Of the founders surveyed, 30 percent experienced a reduction in revenue. But this is not the full picture, as 23.5 percent of founders reported an increase in revenue.
Despite the turmoil and revised funding plans for many startups, funding held up. We saw increased funding to biotech specifically, and decreased funding to transportation, and real estate.
Diving into the second quarter
Of that $129 billion, Crunchbase recorded $69.5 billion invested across all funding stages for the second quarter specifically. This is up 17 percent quarter over quarter and down 2 percent year over year with one notable caveat–a sizable raise by one company that somewhat skews the data.
For this quarter, 138 funding rounds were raised at above $100 million, which represents 61 percent of all funding raised at $42.1 billion. Rounds below $100 million at $27.3 is the lowest amount recorded since early 2017.
The largest funding to a single company went to Reliance Jio, the largest mobile network operator in India. Reliance Jio has amassed a user base of 400 million in a short time, and has raised multiple billion-dollar rounds this quarter. Led first by Facebook at $5.7 billion, the company raised another $9 billion from a range of growth investors and sovereign wealth funds from the U.S. and Asia in the second quarter.
Should you remove Reliance Jio from the second quarter–given the voluminous amount of funding to one company–the numbers would look vastly different. Funding would be down by 9 percent quarter over quarter and 23 percent year over year.