Tech Insights: U.S. Venture Capital Funding Sets Record in 2021

A record annual total of $276 billion in venture capital funding across 9,700 deals in 2021—more than double 2020’s total of $132 billion—has fueled robust job creation and real estate activity by technology and life sciences companies. Mega-deals sized $100 million or more accounted for 59% of total volume in 2021 and had the largest year-over-year increase of 167%. Medium to large deals ($10 million to $100 million) and small deals (<$10 million) accounted for 36% and 5% of 2021 volume and had year-over-year growth of 63% and 17%, respectively.

The San Francisco Bay Area was once again the largest recipient of venture capital, accounting for 38% of 2021’s total volume. New York (17%), Boston (11%), Los Angeles (6%) and San Diego (3%) rounded out the top five metros for market share. New York led for year-over-year growth among the top five markets, increasing its total funding by 171% or $29 billion in 2021. Several metros saw funding levels more than triple in 2021, including Philadelphia, Columbus, Raleigh-Durham, Dallas and Phoenix.

Figure 1: U.S. Venture Capital Funding by Metro Area, 2020-2021

Source: CB Insights and CBRE Research, March 2022.
Note: Includes Seed/Angel, Series A-E+ and Other Venture Capital deals.

By industry sector, technology maintained its dominance and accounted for 77% of total venture capital funding in 2021, with software, e-commerce and cloud companies receiving the most funding. Life sciences was second with a 14% market share. No other sectors exceeded 2%. Boston (35%) and the San Francisco Bay Area (22%) had the highest shares of life sciences venture capital funding in 2021 by far. Houston, Atlanta and Raleigh-Durham had the highest year-over-year increases in life sciences funding at 17, six and three times greater than in 2020, respectively.

Financial support for growing venture-backed companies is strongly correlated to business and headcount growth, which should translate into additional real estate demand in the years ahead.

Figure 2: U.S. Venture Capital Funding by Industry Sector, 2021

Source: CB Insights and CBRE Research, March 2022.
Note: Includes Seed/Angel, Series A-E+ and Other Venture Capital deals.

Figure 3: U.S. Venture Capital Funding by Technology Subsector, 2021

Source: CB Insights and CBRE Research, March 2022.
Note: Includes Seed/Angel, Series A-E+ and Other Venture Capital deals.

Additional CBRE Research showing related leasing activity trends can be found here for the technology and life sciences industries.