Here’s a chart of financings that happened inside the Techstars portfolio during 2020 vs 2019. 2020, of course, will likely be known as the year of the pandemic.
There were 623 discrete financings totaling approximately $3.1B in our existing portfolio of 1,751 active companies in 2020. By contrast in 2019, there were 619 financings totaling approximately $2.2B and the portfolio size was closer to 1,484 active companies at the end of that year. It would be difficult to identify this as pandemic year if the year wasn’t labeled! It’s important to understand that this chart is showing when the transaction began, not when it closed. This helps us see “starts” of financings, which is helpful for a view like this. From our perspective, the pandemic didn’t slow down the interest in or the pace of startup investing at all.
It’s a slightly different story when it comes to mergers and acquisitions. The pandemic first hit our consciousness near the end of Q1. Again, what you’re looking at here is “starts” of new M&A transactions. Overall in 2020, we had 76 of our companies acquired while in 2019 there were 63. Normalized by portfolio size, this is about 4.2% of the portfolio in both years – no change overall. Clearly interest in new M&A activity went away (except for one brave acquirer) in April, but the implication is that it quickly rebounded to typical levels and ended up statistically similar to 2019.
From a financing and M&A perspective, looking at this global data, the startup financing and M&A market appears to have been somewhat surprisingly immune (!) to the pandemic.
