VC investment in startups hits USD230 million | KPMG | AU

VC investment in Australian startups hits US$230 million in Q2’17

VC investment in startups hits USD230 million

Australian venture capital (VC) invested in Australia hit a near-record $230 million, according to Venture Pulse Q2 2017 — the quarterly global VC trends report published by KPMG.

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  • Largest amount invested of in Australia since 2014, when Campaign Monitor closed *$250 million round
  • investment up significantly on Q1 2017 ($90.66 million) and corresponding quarter in 2016 ($181 million)
  • Corporate venture financing hit record $109.1 millon across seven deals.

Australian venture capital (VC) invested in Australia hit a near-record $230 million, according to Venture Pulse Q2 2017 — the quarterly global VC trends report published by KPMG. The number of deals, at 36, was marginally up on the last quarter (25), when $90.66 million of VC investment was recorded. Corporate venture financing in the quarter exceeded $100 million.

Amanda Price, Head of KPMG Australia High Growth Ventures commented: “This quarter’s data shows that investment in Australian startups is growing significantly – with fewer but larger deals. This indicated a maturation in our startup ecosystem, with more early-stage ventures achieving success and seeking funds to super charge their growth, often in international markets.”

“Founders are seeing increasing interest from corporates, media and government in Australia and this reflects the fact that VC funds raised over AU$1bn for the first time last year, almost double the $568 million raised in the 2015-16. With more capital available and deal flow up strongly on previous years, I expect investment to continue to be strong over the year”

The quarter saw Australian startups close a number of Series A, B and C rounds with significant deals such as Culture Amp, Unlockd, and ROKT. The quarter also saw a surge in corporate financing with $109.1 million invested in Australian startups by corporate venture funds.

Australia mirrors global trend

Globally, venture capital deal value increased by 55.3 percent to $40.07 billion in Q2’17, propelled by an uptick in mega-deals around the world, The United States led VC investment, accounting for $21.8 billion, followed by Asia ($12.7 billion) and Europe ($4.1 billion).

The increase in funding was strongly affected by a continued resurgence in mega-deals, including Didi Chuxing’s record-breaking $5.5 billion round and Toutiao’s $1 billion Series D round. Globally, there were nine deals at or over $500 million in value during the quarter including Mobike ($600 million) from Asia and Outcome Health ($600 million) from the United States. Europe also saw one of its largest funding rounds ever with Improbable’s $502 million Series B raise.

While deal value increased, the total number of deals fell for the fifth straight quarter in Q2’17. The ongoing decline has affected the earliest deal stages the most, with angel and seed-stage deal count down for the ninth straight quarter – from a high of 2,674 in Q1 2015 to just 1,310 this quarter.

In spite of the decline in transaction volume, the venture environment remains healthy and vibrant, with median valuations increasing at all stages of investment on a global level. Late stage valuations, in particular, demonstrated exceptional strength this quarter, leaping from $175 million in 2016 to $260 million in 2017, year to date, the largest median increase observed this decade.

Key Q2’17 Global highlights

  • Global VC investment rose from $25.8 billion in Q1’17 to $40.1 billion in Q2’17, a strong increase buoyed by a number of $500 million+ mega deals.
  • Global median deal size at every stage remained high. Median Series D+ deal size jumped from $29.5 million in Q1’17 to $40 million in Q2’17.
  • Corporate venture capital investment as a percentage of deal count spiked to 17.6 percent —representing the highest percentage this decade and almost $20 billion in associated deal value globally.
    Global venture fundraising jumped from $11.5 billion in Q1 to over $17 billion in Q2’17. Dry powder continued to drive high prices and competitive markets.
  • Unicorn rounds spiked in Q2, with 33 rounds representing a total of $15 billion invested.
  • Globally, there were nine VC deals at or over $500 million in value during Q2’17. Leading the way were Chinese companies Didi Chuxing ($5.5 billion), Toutiao ($1 billion) and Mobike ($600 million).

*Note: all figures cited are in USD except where stated; data for the report provided by PitchBook.

For more information

Ashford Pritchard
T: 0411 020 680
E: apritchard1@kpmg.com.au

About Venture Pulse

The Q2 2017 edition of the Venture Pulse report produced by KPMG Enterprise’s Global Network for Innovative Startup, analyses the latest global trends in venture capital investment data and provides insights from both a global and regional perspective. KPMG Enterprise has expanded the scope of Venture Pulse; this edition of the quarterly series provides in-depth analysis on the lifecycle of venture capital investments across the Americas, EMA and ASPAC, including a look at investment activity such as valuations, financing, deal sizes, mergers & acquisitions, exits, corporate investment and industry highlights.

 

About KPMG International

KPMG is a global network of professional services firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 189,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such

Venture Pulse Report – Q2 2017

Australian venture capital invested in Australia hit a near-record $230 million in Q2'17, according to KPMG's global analysis of venture funding.

 
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