There was a total of $8.9 billion raised in venture capital in Q3 2020 alone by European and North American fintech companies. Compared to the Q2 2020 figure of $7.6 billion, this was a 17% increase.
However, according to the research data analyzed and published by Comprar Acciones, there were only 414 deals closed during Q3 2020. This is the lowest number of deals on record since Q3 2017. It implies that more capital went into fewer funding rounds in the three-month period.
Based on CB Insights data, in Q3 2020, 54% of the venture capital money that flowed in fintech companies and all types of US companies went into rounds valued at $100 million or more. There was a total of 88 mega-rounds, receiving a total of $19.8 billion. The 1,373 remaining deals numbered shared the remaining 46% of venture capital money.
The number of mega-rounds in Q3 2020 was a new historical record, up from the previous one of 72 rounds set in Q2 2020. On the other hand, the investment value was the second highest on record, the highest being $25.5 billion set in Q4 2018.
Pitchbook data, on the other hand, shows that more mature rounds took the day during the quarter. It highlights that 69% of the total deal value in the US in 2020 came from late-stage deals. Notably, these deals account for less than 22% of completed rounds. As of September 30, 2020, a total of $78.2 billion had gone into 2,535 late-stage companies.
Stripe Gains $13.5 Billion in Post-Money Valuation Following $850 Million Series G Round
Among the deals generating the highest gains in post-money valuations were financing rounds for fintech companies. These include trading site operator Robinhood, payment processing platform Stripe and Chime, an online bank.
With consumers continuing to shop, trade and bank online, these companies have had a great year. However, their success extends beyond pandemic-related booms. The increases seen in their valuations had to do with the fact that they are big entities and relatively mature.
Based on PitchBook data, Stripe is the top company by valuation gain in 2020. Following its Series G round that raised $850 million, its post-money valuation shot up from $22.5 billion to $36.0 billion, which is an increase of $13.5 billion.
SpaceX is second on the list, with a gain of $10.15 billion. The gain came about following a $1.9 billion late-stage round that took its post-money valuation from $35.85 billion to $46.0 billion.
Chime came in third with an increase of $8.55 billion. During the year 2020, Chime secured two deals valued at more than $1.2 billion cumulatively. The first one was a $700 Series E round in March sending its valuation from $1.3 billion to $6.0 billion. In October, it secured a further $533.8 million in a Series F round. Its post-money valuation surged from $6.0 billion to $14.55 billion following the second round.
Courtesy of these rounds and the new valuation, Chime overtook Robinhood to become the highest value VC-backed consumer fintech in the US.
Instacart, which had the fourth highest valuation gain in 2020, became the most valuable VC-backed food provider in the US in October. Following a $325 million Series G round in July and a $200 million Series H round in October, its valuation shot up to $17.7 billion. It is among the companies believed to be seeking an IPO in 2021.
VC Funding to US Companies Hits 7-Quarter High at $36.5 Billion
The aforementioned CB Insights report pointed out that VC funding to companies in the US reached $36.5 billion during Q3 2020. This was an increase of 22% year-over-year (YoY), 30% quarter-over-quarter (QoQ) and marked a 7-quarter high.
Deal value has been growing each quarter in 2020, albeit by a small percentage. From a total of $25.1 billion in Q4 2019, the figure rose to $27.7 billion in Q1 2020. It rose further to $28.1 billion in Q2 2020 before shooting up to the Q3 2020 total.
The figure reported in Q3 2020 is the second highest on record, second to the Q4 2018 total of $40.5 billion.
On the other hand, deal activity dropped from 1,471 in Q4 2019 to 1,416 in Q1 2020 and then rose slightly to 1,440 in Q2 2020. Comparing the Q3 2020 total of 1,461 transactions to Q3 2019 (1,647), there was a decline of 11% YoY.
Beyond the US, the total amount of funding going into Asia, Europe and North America during Q3 2020 reached $71.9 billion. This figure set a new historical record.
Globally, there was an increase of 40% QoQ in VC funding. Asia had the highest growth in the three-month period, surging by 74% QoQ. In both Europe and North America, the figure shot up by 29% QoQ.