What does 2021 hold for private equity and venture capital?

December 21, 2020

Going into 2020, most analysts were predicting a healthy year for private equity (PE) and venture capital (VC). Then the pandemic hit, making observers wonder how well PE and VC would hold up in deal making and fundraising.

Now that we’re entering an end to the year, it appears that most PE and VC funds did fairly well over 2020.

What does this mean for 2021? Will 2021 be a booming year for private equity and venture capital? Let’s take a look at the view provided by private equity data provider Pitchbook.

The Biggest Moves in 2021 Might Be?

Of all the industries that could see big moves in the coming year, which one would you guess would outperform others? According to Pitchbook’s 2021 outlook, biotechnology and pharmaceutical deal activity may be the industry. The sector has had a good 2020, and with pandemic-related demand booming, it would not be surprising to see biotech and pharma experience an enormous year.

Overall, the trend for biotech and pharma over the past decade has been healthy, going from $4.8 billion (507 deals) in 2010 to $23.2 billion (865) deals in 2020 through November 18, 2020. The coming year may be even more impressive.

Source: Pitchbook

An even more positive picture for biotech and pharma is painted by the following picture. Capital raised by biotech and pharma through IPOs is at an all-time high in 2020, going from its previous all-time high of $5.1 billion in 2018 to $9.7 billion in 2020. The number of IPO deals so far in 2020 has reached 57, also close to its all-time high of 66 in 2014.

Source: Pitchbook

What About the Number of Funds Raised by Established and Emerging Firms?

Interestingly, although 2021 appears to have a bright outlook, the 2020 figures for the number of funds raised by established and emerging firms are somewhat weak. Through November 23, 2020, the number of emerging firm funds was at 144, down significantly from 316 in 2019. The figures for established firm funds was down by less, from 165 in 2019 to 140 in 2020.

Source: Pitchbook

Net Venture Capital Cash Flow

The Pitchbook report provides many other interesting views, including the following, which shows venture capital cash flows from 2010 to 2020. According to the figures, when annualizing the 2020 figures, the 2020 picture will probably show to have been quite bright. The trend has been up since 2010 and 2020 doesn’t appear that it will have provided a drop.

Source: Pitchbook

Summing up

Overall, the 2021 year may provide to be an enormously profitable year for private equity and venture capital firms making deals in a post-pandemic world. According to Pitchbook, early indications for a number of industries are quite positive.

Comments on this entry are closed.

Previous post:

Next post:

Real Time Web Analytics