As the first quarter of 2020 came to a close in March, a global pandemic grew and its impact was felt across the world. Almost overnight, the tech industry was hit with a wave of challenges and many companies had no choice but to let staff go and shift to remote-only working environments.
Yet, despite doubts by some financial critics that venture capital funding would slow down for startups across the world, investors adapted and deals continued. Some regions have even shown signs of growth during these difficult times, namely the Bay Area.
According to a recent report released by PricewaterhouseCoopers (PwC) in partnership with CBInsights, over 1,300 VC financing deals were closed in the United States in the second quarter of 2020, reversing three consecutive quarters of declining activity. Bay Area startups, specifically, have seen a surge of activity.
Three of the top five highest financing rounds in the U.S. last quarter were landed by companies based in San Francisco or Palo Alto: tech giants Stripe, Palantir Technologies and DoorDash. The three companies raised a combined total of $1.5 billion across the three rounds.
In addition, Menlo Park-headquartered Robinhood also contributed to a strong fundraising quarter in the Silicon Valley with its $280 million Series E+ financing rounding out the top four for the region. The fintech company is likely to factor heavily into Q3’s VC leaderboard, too, thanks to an additional $320 million financing round it closed last week.
Overall, Q2 funding for Silicon Valley companies dipped by a slight 7 percent compared to Q1 numbers, but deal activity rose by 11 percent, with 432 rounds closed in Q2 compared to the previous quarter’s 388. Only two other tech hubs — Washington, D.C., and San Diego — also saw an increase in deal activity in the quarter.
All told, it was far from the disaster some anticipated, Tom Ciccolella, venture capital leader at PwC, said in a statement.
“Financing exceeded expectations given the potential impact of the pandemic,” Ciccolella said. “Venture investing doesn’t seem to be impacted, at least in the short run.”
In another promising sign, the number of quarterly “mega-rounds” exceeding $200 million in the U.S. also hit a new record, according to the report. Nearly every mega-round took place in San Francisco, despite growing speculation about the future of the tech scene in the city by the bay.
“U.S. venture capital had a somewhat surprisingly strong second quarter with almost $27 billion raised, in part due to a record 69 companies raising rounds of $100 million or more,” Ciccolella said.
