Inside VC's 2021 recap

Check back tomorrow for our 2022 predictions

Inside.com Part of   Network December 30, 2021

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Our new Live Interview Series, Venturing In VC, premieres next week on Jan. 4, 2022. Venturing in VC is a live interview series where our host, Landon Campbell, interviews investors about how they broke into VC, their daily routines, views on the future, and lessons learned along the way. Who’s our first guest? None other than Turner Novak, Founder of Banana Capital — a founder-focused fund that invests anywhere from Pre-Seed to Pre-IPO with an average initial check size of $150,000-$300,000. Save your free seat to learn how Turner views the world and shares lessons he’s learned along his journey. Inside.com/vivc Venturing in VC is sponsored by SeedInvest — Fundraising isn’t easy, but it just got easier. Apply to start your raise on SeedInvest, or browse highly vetted startups to invest in. Trevor

In many ways, 2021 was the year that the artist formerly known as crypto (aka web3) cemented itself into the hearts and minds of venture capitalists everywhere. Global venture capital spend hit over $30B globally — more than the last 10 years combined. This trend was topped off by the birth of a few significant funds that can be counted on to finance the web3 revolution into 2022 and beyond. Top web3 funds from 2021: Andreessen Horowitz debuted its $2.2B Crypto Venture Fund III in June, led by partners Chris Dixon and Katie Haun. Haun left a16z earlier this month to launch her own crypto-focused VC fund. Paradigm ventures launched its $2.5B crypto megafund in November. Li Jin’s creator economy focused firm Atelier Ventures merged with Jesse Walden’s web3 focused firm Variant Ventures to launch a $110M “ownership economy” fund in October. Reddit co-founder Alexis Ohanian’s 776 Ventures launched two new web3 gaming and social media-focused funds totaling $300M. 776 partnered with Solana in November to launch a $100M fund. 776 partnered with Polygon in December to launch a $200M fund. More on Sequoia Capital’s crypto strategy here.

Tiger Global went warp speed with its capital deployment and became one of the world's most prolific unicorn investors. The venture capital firm ramped up its deal flow in the first half of 2021 by 10x YoY compared to 2020. More: The firm made 335 investments through 2021, compared to 69 in all of 2020. Throughout every week of 2021, Tiger Global led a funding round four out of every five working days on average.  Tiger Global increased its pace of funding rounds led by over 400%. The firm announced the close of its 14th fund at $6.65B in Jan. 2021, followed by its $8.8B Fund 15 in Oct. 2021. Tiger Global's stakes in mega-IPOs created $11.3B in value in 2021.

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New York City came back swinging to reestablish itself as one of the world’s premier tech cities. NYC’s startup ecosystem saw a 300% jump in funding from the first half of 2020 to the first half of 2021.  More: NYC-based venture firms collectively raised $1.6B. NYC competed with Miami to be the mecca of web3. NFT.NYC saw 5,000 attendees and made its claim to be the SXSW of crypto. Sandhill Road staples like a16z, Accel, Susa, and Lightspeed all established their own New York City outposts. NYC-grown brands Squarespace, Warby Parker, and Rent the Runway all IPO’d in 2021.

560 startups reached unicorn status in 2021. Of those 560 startups, 344 were headquartered in the U.S — compared to the 79 U.S.-based companies that became unicorns in 2019. More: As of today, there are over 1,000 new $1B+ private companies.  The world’s unicorns are now collectively valued at over $3T. 40% of all unicorns were created in 2021 Some new 2021 U.S. unicorns include Clubhouse, Cameo, and MoonPay.

IN MEMORIAM  Despite the capital-awash venture landscape, some VC-backed startups were still forced to close their doors in 2021.  HouseParty (2015-2021) HouseParty was sunset by Epic Games in October, two years after it acquired the company for $35M. HouseParty’s founder and CEO made the company’s closure seem to be more or less a strategy and resource shift by its acquirer. Abundant (2016-2021) The startup whose robots remotely picked apples closed during what was otherwise a strong year for robotics companies. Abundant raised a total of $12M in venture capital, including a $10M Series A led by Google Ventures. Loon (2015-2021) Loon was spun out of Alphabet’s X accelerator two years ago and looked to bring internet connectivity to underserved communities via a giant balloon. The company was shut down due to a lack of profitability. Katerra (2015-2021) The vertically integrated construction tech company focused on prefab homes raised $2B and at one time had a $4B valuation and 8,000 employees. The company burned through its runway due to rising labor and construction costs combined with COVID-19 concerns and budget overruns.

A look back at Inside VC’s favorite stories: In 2021, $100M post-money seed-stage valuations have become the new normal. This concerned longtime VC Fred Wilson. Of the 132 tech companies that have IPO’d in 2021, 85 are trading below their initial IPO price. Famous names like Bumble, Robinhood, and Poshmark are respectively down 11%, 40%, and 53% from their IPO price. Mortgage lending startup Better.com reportedly laid off over 900 employees via a Zoom call only days after it received a $750M cash infusion. Venture capital made over $10B in bets on the metaverse in 2021. Inside VC’s Halloween Graveyard edition. A Silicon Valley startup is looking to rewrite the rules of conception by turning blood into human eggs. The fantasy startup investing platform that shut down in 24 hours. University endowments were riding the VC wave big time in 2021. The S21 Y-combinator cohort became the accelerator’s largest ever. A decentralized autonomous organization is known as the Constitution DAO made a valiant attempt to buy a copy of the U.S. constitution for over $40M.

UPCOMING EVENTS January 04 - Venturing in VC Episode #1 - featuring Turner Novak (Register Here) January 05 - DAOs and the intersection of tech & media with Kinjal Shah (Blockchain Capital) (Register Here) January 06 - Augmented and Virtual Reality with Timoni West (VP of AR/VR at Unity) (Register Here) January 11 - The Business of Interactive Gambling with Jon Kaplowitz (Penn) (Register Here) January 11 - Venturing in VC Episode #2 (Register Here) January 13 - Education within the Metaverse with Steve Grubbs (VictoryXR) (Register Here) January 25 - Need To Know NoCoder - Leon Young (Cogniss) (Register Here) January 27 - Understanding the Metaverse (Register Here) February 03 - Blockchain Gaming & Play-to-Earn Economies (Register Here) February 10 - The Business of Wellness (Register Here) February 17 - Customer Acquisition in a post iOS 14 world (Register Here) February 23 - Need to Know NoCoder: Derya Sousa (Kianda Technologies) (Register Here) February 24 - Alternative Investments (Register Here) March 03 - The $12B Appetite for Amazon Aggregators (Register Here)

Trevor Grant is an entrepreneur, investor, and writer based out of Chicago, Illinois. His primary area of interest is web3 venture capital, social tokens, and infrastructure. Other pursuits include screenwriting, yoga, and traveling. He holds a BS in biomedical engineering.   Connect with him on Twitter @trevorisonline Editor Aaron Crutchfield is based in the high desert of California. Over the last two decades, he has spent time writing and editing at various local newspapers and defense contractors in California. When he's not working, he can often be found looking at the latest memes with his kids or working on his 1962 Ford.

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