Venture-backed startups experiencing huge growth in the last few years. They are
definitely something to keep an eye on for investment, as well as employment. Venture-backed
startups are companies that have proved promising enough to be funded by private investors.
There are benefits to investors such as equity in the company, and huge payoffs if they
succeed. Startups benefit from the funding by being able to get their company off the ground
and hire employees. Let’s look at some current trends in venture-backed startups.
Equity Crowdfunding
Venture-capital has been one of the top ways for startups to gain funding as long as
they’ve been around. Large VC firms that invest in startups like: Bessmer Venture Partners,
Greycroft, Bain Capital, Softbank, Canaan Partners. These VCs are funded by university
endowments, sovereign wealth funds, family offices and wealthy individuals. Traditional
investors in venture-backed startups are typically very wealthy and have large sums of money to
put into a company. This made it impossible for the average person to do any of this investing.
Recently, equity crowdfunding platforms have allowed investors with smaller amounts to
pool their assets together. This type of investor is referred to as a non-traditional investor. They
are usually non accredited, which is why investing in startups can prove difficult. Equity
crowdfunding platforms allow non-traditional investors access to private venture-backed
startups through Regulation Crowdfunding and Regulation A+.
With equity crowdfunding, pretty much anyone can invest in a venture-backed startup no
matter how much money they make. This opportunity will allow more funds to be put into
companies instead of only relying on large investors.
Say Goodbye to Silicon Valley
When you envision a startup, it’s usually located in Silicon Valley. While still home to
many venture-backed companies, startups are venturing out of the bubble of the valley.
Currently, Silicon Valley is home to the lowest number of startups it ever has been. With
everything that has been happening during the last two years, remote work is an option for
everyone, most engineer jobs have become fully remote.
One big reason for this trend is that founders don’t want to live there anymore. With the
pandemic continuing, more people are working from home. Founders have realized they can
conduct business outside of Silicon Valley with their employees all over the country. They are moving to cheaper areas, and some are doing away with offices altogether. It’s a great way to
save money and put funds into other parts of the startup.
Crypto Investment
Cryptocurrency investments have risen in popularity in the venture-back world.
According to Crunchbase, venture-back funding to crypto startups in 2021 was more than $21
billion. It’s predicted that investment into crypto companies will only continue to grow.
Mega-Deals Continue to Increase
Mega-deals primarily involve unicorn startups. Unicorns are private startups that have
reached a value of $1 billion or more. This used to be a very small part of the venture-back
world, but they are growing in numbers and becoming more common. As of now, there are
around 863 unicorn companies valued at $2.8 trillion. The reason for this trend is that venture
capital funding is growing in value. Investors have more to give, so companies are growing
larger.
Conclusion
The bottom line is venture-backed startups are continuing to grow. The trends being
seen are positive, and 2022 should continue to be a good year for them.