The final numbers for 2021 venture capital investments are in—and it was a whopper of a year. Crunchbase reported today that global venture funding nearly doubled last year to $643 billion compared to 2020. In tech, an industry that loves superlatives, that’s a truly astounding increase. Total venture funding had hovered around $300 billion for each of the previous three years, according to Crunchbase’s data. In other words, venture capitalists are pushing wheelbarrows of cash around, pouring it into startups wherever they can.
The growth raises a couple of questions, including whether the elevated levels of investment in 2021 can be maintained in 2022 as interest rates start to rise. The near-zero interest rate environment we’ve been in has forced any investors looking for a decent return to take more risks. With the Fed increasingly likely to raise rates in the next couple of months, the environment is going to change. Venture firms may not find it as easy to raise enormous funds as they did last year.