Looking back on 2020, it surprised some to see that VC funding remained strong despite economic, social, and political uncertainty.
This post is part of ZoomInfo’s 2020 Annual Report series.
For many venture capitalists, 2020 was an opportunity to invest in the tools and technology that accelerated due to the pandemic.
Year over year from April 2019 to April 2020, angel, series A, and Series B funding saw increases. Angel grew by 27%, Series A by 5%, and Series B by 8%. There appears to have been a shift from Series A & B funding to more angel investing.
“Venture capital firms that focused on Series A funding before the pandemic are now joining seed investors in backing early startups, some of New York’s top seed investors said in a virtual panel hosted by Eniac Ventures,” reported Karma, a site that covers sustainable business news.
Three trends appear to help drive the increased funding in 2020:
- Digitization of the back office
- New products released
- Selling online
Companies Digitize, Investors See Opportunity in B2B Tech
2020 forced businesses to digitize quickly. Maybe your favorite mom and pop restaurant set up online ordering & delivery, a local retailer started shipping products to combat declining foot traffic, or an equipment manufacturer that relied on trade shows needed to go digital.
The pandemic pushed companies to install a massive amount of back-office tech for collaboration, payroll, esignatures, and of course web conferencing.
This adoption of new tools spurred early-stage funding in favored B2B companies. From April 2019 to April 2020 86% of investments went to B2B startups.
ZoomInfo analyzed what types of events drive a company to get funding. One of the most important factors was releasing a product. Companies are far more likely to raise money if they have recently released a product–and 2020 saw a surge of product releases.
New Tools Needed to Sell New Products
In addition to the large amount of back office tools, companies in 2020 needed to shift their go-to-market strategies to sell the new products they had just released. They then adopted a whole host of tools that let them sell to more customers more effectively. For example, online shopping carts were added consistently throughout 2020.
All of this is to say companies were buying tons of new products to work remotely and investors were keen to invest in the technology that will support the future businesses.
As the number of cases of Covid-19 continue to fall and more people are vaccinated, it feels like the end is in sight–not necessarily soon but we’re on a pathway to it. Investors realize the potential for a stronger economy in the not-too-distant future, and, with that, are more likely to accelerate their efforts, especially for emerging tech startups.
ZoomInfo’s 2020 Annual Report Series
- Companies Navigate Through a Storm in 2021
- Corporate Diversity & Inclusion Trends of 2020
- A New Employee Landscape & Future Work Environment
- Customers Await Recharged Sellers
- The New Work From Home Norm is Driven by Tech Adoption
- A Speck of Promise for Women in the Workforce
- Three Forces Drove Venture Capital Trends in 2020
- Size Affects How Companies Fare During and After The Pandemic
- Success During the Pandemic – Customer Retention Is Key
- Finding New Customers in a Pandemic: Zoom’s Success Story
To browse through more go-to-market trends and 2021 business predictions, continue on to ZoomInfo’s latest Annual Report: Going to Market Smarter in the New Economy.