Venture Capital investment set records in 2020. Early-stage investment hit a trough in Q2, but swift action by the angel community and tailwind opportunities created by COVID-19 fueled a rebound in Q3 and Q4. Locally, 2020 was a banner year for Keiretsu Forum's Mid-Atlantic (K4-MA) and South-East (K4-SE) Regions booking record growth.
US Venture Capital investing set records in 2020, surpassing surprising performance in 2018 (Source: PitchBook Venture Monitor). Investors deployed just over $156B and liquidated over $290B in exit value, with massive exits happening in Q3 and Q4. Early-stage investments in 2020 did not see the same bounce back but did see a healthy increase in the last two quarters of the year.
The performance within K4-MA & K4-SE is not consistent with the angel investment asset class on a national level. In 2020, the two East Coast Regions received 367 unsolicited applications for funding (a 17.6% YoY increase), screened 122 companies, and presented 80* high-quality opportunities to angel group members (a 27% YoY increase). "Our members really stepped up in 2020," said Howard Lubert, Area President of the two Keiretsu Forum Regions, "increasing their activity in due diligence and investing, placing $9.5m in 61 companies, an increase of almost $1.5m over 2019's record setting performance. Members ended up funding 76% of the companies that presented in Forum which is a testament to the rigorous Keiretsu process." Of note, 51% of those investments were made in Life Science companies.
Deal flow growth was primarily driven by Keiretsu Forum's swift transition to secure, online meetings and due diligence, as well as the tailwind provided to companies in the Life Science space related to resolving the global pandemic. New and existing portfolio companies were able to pivot to lead development in testing, treating, and vaccinating against COVID-19. Further fueling deal flow for Keiretsu Forum members, the first-ever multi-region, multi-day Keiretsu Forum Investor Capital Expo took place in Q4, led by Keiretsu Forum Mid-Atlantic, Northern California, and Pacific Northwest Regions.
Thirty-six companies presented at the Expo, representing the best-of-the-best deal flow in 2020. Upon speaking to the founders and collaborating with members, investor members felt confident in closing deals. Although work will continue to be distributed virtually in the first half of 2021, there is no reason to believe that opportunities will slow down. Keiretsu Forum Mid-Atlantic believes that opportunities will continue to increase specifically in Biotech and Pharma as interest in vaccines and anti-virals remain high.
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*Includes companies presenting at the expanded Investor Capital Expo.