Venture Capital Market Q2 2018 | KPMG | CY
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Venture Capital Market Q2 2018

Venture Capital Market Q2 2018

Nearly US$ 70 billion invested in global venture capital market, according to KPMG Venture Pulse Q2, 2018

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PRESS RELEASE

[Nicosia, 6.9.2018]. Venture capital (VC) investment hit a new record high in Q2’18, reaching US$ 69,8 billion across 3.108 deals in Q2, according to Venture Pulse Q2 2018, a quarterly report on global VC trends published by KPMG. While VC deal volume continued to decline, the median deal size globally remained well above last year’s totals across all deal stages, reaching US$ 1,4 million (YTD) for angel and seed stage rounds, US$ 7 million (YTD) for early stage rounds, and US$ 13,5 million (YTD) for late-stage rounds.

Q2 ’18 Key Highlights          

  • Global VC investment rose from US$ 58 billion in Q1’18 to US$ 69,8 billion in Q2’18, a solid increase buoyed by five US$ 1 billion+ megadeals.  
  • Corporate participation in global VC deals continued to rise, reaching a record 22% in
    Q2’18 of overall volume, with associated deal value hitting nearly US$ 46 billion.
  • Global first-time venture financing volume remained subdued during Q2’18 and is on pace for its lowest annual total in a decade.    
  • Asia set a new record for VC investment in Q2’18, with US$ 35,9 billion raised
    across 466 deals.  Chinese companies represented eight of the top 10 deals globally, led by a massive US$ 14 billion deal by Ant Financial.
  • The US saw 9 deals valued at US$ 250+ million during the quarter. California continued to dominate as the US VC market leader, accounting for nine of the top 10 deals in the US.
  • While overall investment in Europe remained strong at US$ 5,6 billion – deal volume, in particular for angel/seed stage deals declined for the fifth straight quarter.

The US saw another massive quarter for VC investment in Q2’18, with US$ 27,3 billion invested across 1.859 deals. The largest deal of the quarter went to Faraday Future (US$ 2 billion), with other top deals includingfintech companies – Robinhood (US$ 363 million), and biotech companies – Allogene Therapeutics (US$ 411,8 million). The IPO market in the US continued to gain strength while first-time venture financings of companies remained slow. 

Europe continued to see strong levels of venture capital investment, with US$ 5,6 billion in VC invested across 631 deals in Q2’18.  The top deals for the quarter included London-based fintech Revolut (US$ 250 million), Estonian transportation company Taxify (US$ 175 million) and London-based Freeline Therapeutics (US$ 119 million). On a regional basis, the UK led the charge once again with over US$ 2 billion invested, followed by France with over US$ 800 million.

 Asia continued to see large deals in Q2’18, with Chinese companies accounting for eight of the top 10 deals globally. In addition to the record-setting US$ 14 billion investment in Ant Financial, Shanghai-based unicorns Weltmeister and Pinduoduo each raised US$ 3 billion + rounds thisquarter. Corporate participation in venture deals also hit a new record in Q2’18, participating in over 31% of all deals in Asia. 

Venture capital activity globally is expected to remain strong heading into Q3’18. The impact of tax reforms in the US and the continued flow of funding into the VC world are expected to keep the VC market strong.  Autonomous driving, healthtech and biotech are expected to be big winners over the next few quarters, in addition to blockchain. 

 “Late stage investment continues to grow in all regions of the world as unicorns pull in increasingly large amounts to fuel their growth. This quarter, the top 10 Q2 deals contributed over US$ 27 billion of VC investment –almost 40% of the global total,said Mr. Brian Hughes, National Co-Lead Partner, KPMG Venture Capital Practice, and a partner for KPMG in the US.

 “Corporate VC participation is increasing globally as corporates, as part of their own efforts to drive innovation and seek competitive advantage, are constantly investing in technology companies. This places them in a unique position in the global venture arena”, said Mr. Christophoros Anayiotos, Board Member and Head of Deal Advisory at KPMG in Cyprus.  

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