Global innovation economy proving to be resilient
2020 saw strong corporate fundraising dynamics around the world and a resilient innovation ecosystem, a trend that is expected to continue this year, according to a quarterly market report by SPD Silicon Valley Bank and Silicon Valley Bank.
Despite a rocky beginning in 2020, corporate fundraising activity accelerated in the second half of the year as public markets rebounded and companies adapted to employees working remotely.
Strong fundraising pushed cash reserves to unprecedented levels, contributing to a record high in global venture capital assets under management, which topped US$1.3 trillion last June.
After coming to terms with the new normal, investors picked up the investment pace and shifted their preferences to companies focusing on strong revenue growth over profitability.
Valuations for some companies continued to expand, bolstered by larger and quicker rounds of funding, widening the divide between those with easy access to capital and those without.
For the venture ecosystem in China, corporate fundraising in yuan continued to fall in 2020, on pace for its lowest year in six years as the government focused on COVID-19 relief efforts and banks faced tougher restrictions.
However, foreign currency fundraising is on pace to match 2018’s record, with firms with a strong track record receiving continued support from limited partners.
Also, venture capital investment increased last year, especially in the final months of the year, as investors poured money into companies prior to their initial public offerings (IPO).
This investment uptick was due in large part to financial market reform in China, as government officials implemented registration-based IPO criteria in the ChiNext board following its successful use in the STAR Market.
Enhanced investment propelled China to the top of the IPO leaderboard, as Chinese IPOs accounted for about 40 percent of global IPOs by deal volume.
For 2021, entrepreneurship is forecast to continue growing in non-traditional areas like advertising technology, and consumer lending may increase for new business applications.