Last year the pandemic may have cut funding for venture capital (VC), but as global economies heal, venture capital is starting to show signs of life again in North America. This presents an opportunity for ETFs that focus on Initial Public Offerings (IPOs).
So far, in the first quarter of 2021, North America has dominated the venture capital finance landscape, while Europe, the Middle East and Africa (EMEA) have collectively shown signs of growth.
“Global venture capital (VC) funding grew moderately in the first quarter (Q1) of 2021, with North America continuing to attract the most investment, while the Europe region and Middle East and Africa (EMEA) has seen significant growth in transaction volume. as well as the corresponding share, according to GlobalData, a leading data and analytics company, ”notes a press release from GlobalData.
“The number of venture capital finance deals that have been announced around the world edged up 0.7%, from 2,069 in January to 2,084 in February, and rose a further 10.6% to 2,305 agreements in March 2021 “, the press release said.
As the global vaccine rollout continues, investors are slowly regaining confidence. As such, venture capital could be on the rise if the trend continues to rise.
“Venture capital fundraising activity in 2021 has started off on a promising note, with March marking a significant increase in transaction volume,” said Aurojyoti Bose, senior analyst at GlobalData. “This could be attributed to a surge in investor sentiment over the ongoing vaccination programs. Additionally, investor sentiment also appears to be particularly strong in March, with markets like the UK nearing the end of foreclosure restrictions.
Obtain exposure to IPOs through ETFs
ETF investors looking to gain broad IPO exposure without the sole risk of a sole proprietorship may look toRenaissance IPO ETF (PAPE). IPO seeks to replicate the price and performance of the Renaissance IPO Index, which is a portfolio of companies that have recently completed an initial public offering (“IPO”) and are listed on a US stock exchange.
For investors looking for global IPO opportunities, there isRenaissance International IPO ETF (IPOS), which adds an international touch to the IPO market. IPOS tracks the rules-based Renaissance International IPO Index, which adds new size companies on a fast-entry basis with the rest on scheduled quarterly reviews. Current IPOS holdings include SoftBank Corp, Xiaomi, and China Tower Corp.
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