Late-Stage VC Thermometer

A leading indicator is defined as “any measurable or observable variable of interest that predicts a change or movement in another data series, process, trend, or other phenomenon of interest before it occurs”.

I can give several examples of leading indicators:

* Money supply is a leading indicator of price inflation (even though central bankers and politicians deny it)

* Durable goods sales are a leading indicator of GDP

* Sales pipeline for a company is a leading indicator of sales, and so on

A leading indicator for the Late-Stage VC health is the Series B funding, which ends up being a mere pipeline perspective, since Series C funding and beyond are classified as Late-Stage.

(All data from Crunchbase)

Well, Series B funding in the US reached a record in 2021 with $55.9 billion invested across 1,242 rounds vs. $25.4 billion invested across 835 rounds in 2020 (more and better capitalized rounds).

Moreover, even though global venture funding announcements have slowed down in the wake of Russia-Ukraine war, the US Series B round announcements haven’t shown any freeze. In the two weeks following the war, which started on February 23, US startups announced $1.4 billion in Series B investments, on par with the $1.48 billion announced in the prior two weeks.

Conclusion

In a world where natural resources are being rapidly depleted, it is vital to do more with less. Improvements in productivity come from technology innovations, and so tech VCs will play an ever-increasing role for the sustainability and development of humankind. And, because of this, Silicon Valley, the Florence of the 21st century, should shine even more.

By the Series B funding thermometer, Late-Stage activity promises to continue quite strong for the next few years. Fabrica Ventures Fund 2 should then face a breathtaking new class of unicorns.