Venture capital is going to need a record-breaking run of IPOs to clear its own decks

This week, the Exchange is looking at the Chinese venture capital industry, but finding people to talk about business and China on the record is proving to be more difficult than we expected. Later this week, I will have more to say about it. Let us speak about indigestion, namely venture capital indigestion, as we are diving into the Chinese and Indian startup sectors. TechCrunch completed its initial investigation into the third-quarter venture capital market, but we are still trying to wrap our heads around how much money has been pumped into startups this year.

The Exchange delves into the worlds of startups, markets, and money. Every morning on Extra Crunch, or every Saturday in the Exchange newsletter, let’s speak about indigestion, namely venture capital indigestion, as we are diving into the Chinese and Indian startup sectors. TechCrunch completed its initial investigation into the third-quarter venture capital market, but we are still trying to wrap our heads around how much money has pumped into startups this year.

Venture capital is going to need a record-breaking run of IPOs to clear its own decks

The amount of money raised by venture capital firms around the world is at an all-time high, with many countries setting new records. According to corporate data source CB Insights, Q3 2021 saw more than double the sums invested in Q3 2020 across thousands of additional agreements.

All of this money is resulting in an increasing number of unicorns all over the world. As a result, the amount of untapped private-market wealth that will need to release grows. Moreover, with several U.S. tech behemoths restraining acquisitions in the face of antitrust concerns, there is an unspoken expectation that the IPO market will eventually have to make place for a unicorn stampede.

Every quarter, that coming debt grows larger, and at a faster rate; in other words, the second derivative is positive.

The Exchange has previously mentioned the growing unicorn backlog, but fresh data makes it clearer than ever that the venture capital world is investing as if there is a future exit wave on the way that will dwarf previous IPO cycles in terms of intensity and duration. Returning to CB Insights’ Q3 data collection, which we’ll dig into over the coming weeks, take a look at the graph below, which shows the rate at which money is being dispersed into the worldwide startup market.