Astonishing data for 2021 tell the story. U.S. start-ups raised $330 billion, nearly double 2020â€™s record haul of $167 billion, according to PitchBook, which tracks private financing. More tech start-ups crossed the $1 billion valuation threshold than in the previous five years combined. The median amount of money raised for very young start-ups taking on their first major round of funding grew 30 percent, according to Crunchbase. And the value of start-up exits â€” a sale or public offering â€” spiked to $774 billion, nearly tripling the prior yearâ€™s returns, according to PitchBook.
The big-money headlines have carried into this year. Over a few days this month, three private start-ups hit eye-popping valuations: Miro, a digital whiteboard company, was valued at $17.75 billion; Checkout.com, a payments company, was valued at $40 billion; and OpenSea, a 90-person start-up that lets people buy and sell nonfungible tokens, known as NFTs, was valued at $13.3 billion.
Investors announced big hauls, too. Andreessen Horowitz, a venture capital firm, said it had raised $9 billion in new funds. Khosla Ventures and Kleiner Perkins, two other venture firms, each raised nearly $2 billion.
The good times have been so good that warnings of a pullback inevitably bubble up. Rising interest rates, expected later this year, and uncertainty over the Omicron variant of the coronavirus have deflated tech stock prices. Shares of start-ups that went public through special purpose acquisition vehicles last year have slumped. One of the first start-up initial public offerings expected this year was postponed by Justworks, a provider of human resources software, which cited market conditions. The price of Bitcoin has sunk nearly 40 percent since its peak in November.
But start-up investors said that had not yet affected funding for private companies. â€œI donâ€™t know if Iâ€™ve ever seen a more competitive market,â€ said Ambar Bhattacharyya, an investor at Maverick Ventures.
Even if things slow down momentarily, investors said, the big picture looks the same. Past moments of outrageous deal making â€” from Facebookâ€™s acquisitions of Instagram and WhatsApp to the soaring private market valuations of start-ups like Uber and WeWork â€” have prompted heated debates about a tech bubble for the last decade. Each time, Mr. Bahat said, he thought the frenzy would eventually return to normal.
Instead, he said, â€œevery single time itâ€™s become the new normal.â€
Investors and founders have adopted a seize-the-day mentality, believing the pandemic created a once-in-a-lifetime opportunity to shake things up. Phil Libin, an entrepreneur and investor, said the pandemic had changed every aspect of society so much that start-ups were accomplishing five years of progress in one year.