GIC and the world of tech investing
Despite the pandemic, the world of tech investing has become more competitive than ever. Silicon Valley is flooded with capital, driven by the growing appetite for higher return assets, against a backdrop of low interest rates and the acceleration of the digital transformation trend.
In the US, this year’s frenzied pace in venture capital (VC) transactions, fundraising and the competition for deals is already set to far surpass 2020’s levels. As seen in Figure 1, Q1 2021 saw US$69 billion in VC deal volume, representing 44% of 2020’s record-breaking US$156 billion in total deal volume. Mega-deals of at least US$100 million make up more than US$40 billion of the Q1 2021 deal activity, compared to the US$76.6 billion in VC deal activity for full year 2020. The average size of funds raised doubled to nearly US$194 million in 2020 and rose further to US$230 million by end Q1 2021, due to a large spike in the number of mega-funds, reflecting the immense amount of dry powder targeting the sector overall.
GIC has had a front row seat to this exciting and evolving investment landscape of Silicon Valley since the establishment of our San Francisco office in 1986. As a long-term investor with both private and public markets expertise, we have been able to invest in early fundraising rounds, and remain investors even post-IPO in tech businesses where we see enduring growth potential and value. Capitalizing on the global digital disruption trend, in recent years, GIC’s Technology Investment Group has been focused on opportunities in fintech, prop tech, enterprise IT and supply chain networks. Some notable examples of our long-term tech investments in these areas include Affirm, Checkout.com, DoorDash, Meituan and Snowflake.
Figure 1. US Venture Fund Raising Activity