- Large money management firms such as hedge funds and mutual funds becoming more dominant in tech startup financing
- Companies are winning appeal among entrepreneurs due to factors such as a quick turnaround and minimal requests for tradeoffs
- $150 billion has been invested in tech startups in the first half of 2021
Summary by Dirk Langeveld
Large money management firms have gained in edge over traditional venture capital in tech company financing as investors ramp up their funding of startups in this field.
The Wall Street Journal, citing information from PitchBook Data Inc., found that non-traditional investors such as hedge funds and mutual funds participated in 42 percent of tech startup financing deals in the second quarter of 2021. They also accounted for more than three-quarters of the money invested in these businesses.
- $150 billion has been invested in tech startups in the first half of 2021, more than the annual spending in every year before 2020; investments in 2021 are on pace to nearly double 2020 investments of tech startups
- Large money management firms have been winning appeal among entrepreneurs due to their quick turnaround in financing, their access to a considerable amount of capital, and because they are less likely to demand a tradeoff such as a seat on the board of directors
- Tech startup financing deals of $100 million or more have increased by more than 800 percent since 2016