Investors have ploughed almost as much money into spinouts in the first six months of the year as they did for all of 2020.
Let us start with some historical context: the first half of 2020 accounted for $11.3bn invested in spinouts. This was a welcome, upward trajectory from the $8.4bn in H1 2019, despite the disruptions caused by the pandemic. The total invested in spinouts globally for all of 2020 was just shy of $21.7bn. It had been $17.4bn in 2019.
The total for the first half of this year is nearly $18.4bn.
It is an almost 120% increase year-on-year and makes it the most active period since GUV began tracking the sector.
Partially, this can be ascribed to June 2021 – itself a record-breaking month with more than $4.5bn invested – but also to the fact that the lowest total for a month was still close to $2.3bn, more than was raised during 10 months in 2020.
Every year thus far has had months where less than $1bn was invested in spinouts and although we are only half-way through 2021, the fact that so far the total has not even dropped below $2bn is extraordinary.
Intriguingly, the number of spinouts that raised capital was 564. This too was an increase on the 501 in the first half of last year, but nowhere near as many transactions as the dollar value would suggest.
An analysis by deals database Crunchbase found that a record $288bn of overall venture capital was ploughed into companies, an almost unbelievable increase of just shy of $110bn on the previous record – the second half of 2020. It also found that the number of deals increased across all categories apart from angel rounds.
It is a reality that also applies for corporate venture capital, as our sister publication Global Corporate Venturing found in its own H1 review. Here, corporates invested close to $132bn across 2,288 deals, up from $53.8bn and 1,702 deals in the first half of last year.
So, what is going on with spinouts? Where did all of that money go, if not into more companies? Crunchbase counted 17 companies that secured more than $1bn in the first half of this year. Our own analysis shows that two of those were spinouts – Celonis and Databricks – as can be seen in the top 10 table.
The top 10 largest investments did, in fact, account for around 30% of the total funding received by spinouts – more than $5.5bn. That still leaves a lot of money for everyone else, of course, but late-stage funding was clearly a popular choice for investors.
Top 10 deals in H1 2021
| Company | Institution | Sector | Type | Size |
| Celonis | TU Munich | IT | D | $1bn |
| Databricks | University of California, Berkeley | IT | Undisclosed | $1bn |
| SambaNova Systems | Stanford University | IT | D | $676m |
| FlixMobility | TU Munich | Transport | Undisclosed | $650m |
| CMR Surgical | Health | D | $600m | |
| Sila Nanotechnologies | Georgia Institute of Technology | Energy | F | $590m |
| Hinge Health | Health | D | $300m | |
| Oxford Nanopore Technologies | University of Oxford | Health | Undisclosed | $270m |
| Centessa Pharmaceuticals | University of Cambridge, University of Toronto Mississauga, University of Cologne, TU Dortmund |
Health | A | $250m |
| Motif FoodWorks | Massachusetts Institute of Technology | Consumer | B | $226m |
Deals in 2020 and H1 2021
And who could blame them? If we look at exits, there were 40 in the first half of 2021 compared to 30 during the same period last year. The 40 exits generated at least nearly $6bn in returns – as always, many acquisitions did not disclose financial terms so the real amount is higher – compared to the significantly lower sum of $2.1bn for the same period last year.
Here, too, the top 10 largest transactions accounted for a large portion of the overall returns. In fact, they made up the majority, with more than $4.1bn generated.
Notably, several exits followed the overall pattern in the market of reverse mergers, including the largest: Lilium, a Germany-headquartered aircraft developer spun out of Technical University of Munich, agreed to take over special purpose acquisition company Qell Acquisition Corp in a transaction ascribing the merged business a $3.3bn pro forma valuation.
With initial public offerings dominating the list of top 10 exits – even if just – it meant only one acquisition made it into the league table. That it was worth a respectable $295m – before potential milestone payments of up to $92m and undisclosed revenue-based payments – is good news too. Interestingly, the acquisition of Farapulse, a US-based medical device developer spun out of University of Iowa, was by a long-time, existing shareholder that had secured such an option: Boston Scientific.
Top 10 exits in H1 2021
| Company | Institution | Sector | Type | Size |
| Lilium Aviation | TU Munich | Transport | Reverse merger | $780m |
| IonQ | University of Maryland | IT | Reverse merger | $625m |
| Sana Biotechnology | Harvard University | Health | IPO | $588m |
| Solid Power | University of Colorado, Boulder | Energy | Reverse merger | $515m |
| Centessa Pharmaceuticals | University of Cambridge, University of Toronto Mississauga, University of Cologne, TU Dortmund |
Health | IPO | $330m |
| Farapulse | University of Iowa | Health | Acquisition | $295m |
| Verve Therapeutics | Harvard University | Health | IPO | $267m |
| Immunocore | University of Oxford | Health | IPO | $258m |
| Graphite Bio | Stanford University | Health | IPO | $238m |
| Effector Therapeutics | University of California, San Francisco | Health | Reverse merger | $235m |
Exits in 2020 and H1 2021
And here is some more good news: more than $11bn were raised for university-focused funds in the first half of 2021. That should give investors firing power for a while yet, even at the rate that spinouts are collecting money at the moment.
How much higher can all the numbers go? If H1 is anything to go by, all bets are off.
