2021 might be remembered as the year the world started to fully embrace the opportunity that the technology sector has to offer…
Start-up funding hit an all-time high as did fundraising for new VC funds (coincidentally, we also raised two new funds for a total of $100m in fresh capital). Round sizes increased significantly across all stages, as did valuations. Every company is now a tech company and multiple technology cycles are going on at the same time – from mobile and cloud to AR/VR, crypto and climate. Society’s newfound reliance on virtual interactions reduced the importance of location: geography is no longer a limiting factor for companies to access the best talent and raise capital from the best possible investors (and consequently, we officially announced that we are now investing globally). We have seen more and more interest from people working in tech to become founders and pursue their passion with their own start-ups. All in all, the amount and pace of innovation has never been more exciting and it feels that we are entering a golden decade for technology.
The incredible pace of the start-up market in 2021 is also reflected in the Version One portfolio:
- We made 15 investments in new portfolio companies in 2021, roughly twice our yearly average. One-third of those investments was in crypto, one-third in enterprise SaaS, with the last third divided almost equally across marketplaces, climate, and healthcare.
- Our portfolio companies raised well over $1b in follow-on capital this year, with about half of that number raised by Dapper Labs.
- We had our first IPO (Coinbase), quickly followed by a second one (Cazoo).
When markets are moving and changing at such a rapid pace, it becomes even more important to separate signal from noise. Our North Star remains to invest in mission-driven founders at the earliest stages. Raising capital may be easier than ever before, but building a generational company hasn’t gotten any simpler. Companies still need to evolve their narrative and vision over time, successfully shift from one to multiple products, build a high performing leadership team, retain their entrepreneurial culture while scaling, etc. We strongly believe that founders with the highest likelihood to succeed are the ones who have a clear vision of how the world/industry could be better, are obsessed with bringing that vision to life, and can translate that obsession into an inspiring mission.
Looking ahead, we believe that four investment themes will drive most of the change and growth over the next decade: the digitization of everything (SaaS & marketplaces), decentralized platforms (Web 3.0), the carbon-neutral economy (climate & energy) and the rise of the rest (start-up ecosystems outside of North America). And we’re excited that we will be investing aggressively against all four!