For startups, 2020 feels like the dot-com boom
While everyone rushes to adopt new technology during the pandemic, the biggest movers and shakers in the startup world are partying (alone but together) like it’s 1999.
In March, it seemed many startups would be doomed: There was talk of pivots, thousands of layoffs and restructuring. The bad times didn’t last long. Demand for digital products started to rise as companies made technological leaps that would have normally taken years. At the same time, interest rates dropped, leading VCs to seek more action than usual.
The funding numbers are bananas: Third quarter investments for startups totaled $36.5 billion, according to CB Insights data from The New York Times. That’s 30% higher than last year. PitchBook reports there have been 223 rounds of mega funding ($100 million or more) in 2020. “I haven’t seen anything like this in over 20 years,” Eric Paley, an investor at the venture firm Founder Collective, told the NYT. “The party is as loud and the drinks are flowing as freely as the dot-com boom, despite that we’re all drinking at home and alone.”
The investment time period has even shortened
Typically, successful startups get funding every 18 months. High competition among VCs has reduced the period to 3 to 6 months. One investor said he has heard a pitch, researched the startup and sent it money for an investment in a single day.
The good times are not expected to end in 2020. If anything, analysts say, the year has illustrated that tech’s powerful grip will tighten.