VC-backed Companies Raise $32bn Globally in Q2

VC-backed Companies Raise $32bn Globally in Q2

VC-focused investment capital is thriving and more available than ever before due to a number of factors.

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VC-backed Companies Raise $32bn Globally in Q2

Due to Mega Financing and Rise of Non-Traditional Investors

  • Ireland: €120m deployed by VCs in Ireland in Q1 – significant given market size 
  • One-third of all funding and deals in Europe took place in UK 
  • Tech companies dominate Europe VC-backed companies 
  • Larger deals and ‘mega-round financing’ driving growth

Venture capital (VC)-backed companies raised more than $32 billion globally in Q2 2015 across over 1,800 deals, bringing the total raised by VC-backed companies globally to $59.8 billion for the first half of 2015, according to a new report from KPMG and CB Insights (PDF, 1.89MB). The surge in funding in Q2 represents a 49 percent increase over the first two quarters of 2014. During the first quarter of 2015, €120 million was deployed by VCs in Ireland, a significant amount given its market size.

In Europe, funding rose dramatically during the first half of 2015, with European venture capital investment reaching $6.6 billion. The second quarter also saw a significant rise in late-stage mega-deals, with the average deal size increasing from $26.3 million in Q1 2015 to $52.2 million in Q2 2015.

Commenting on the results, Anna Scally, tax Partner at KPMG in Ireland, said: ‘Venture capital investment is thriving around the world and Ireland is punching well above its weight. A number of factors are driving this activity, including numerous disruptive technologies and applications which are spurring interest and investment from the VC community.’

Large deals are playing a major role in driving funding trends driven primarily by late-stage deals whose sizes are soaring worldwide. $100 million plus mega-round financings to VC backed companies are also on the rise. In the first two quarters of 2015, there were more than 100 mega-rounds, including 61 in Q2 that cumulatively raised more than $16 billion in investment.

‘Low interest rates combined with increasing participation by hedge funds, mutual funds and venture capital arms of large corporations means there is a tremendous availability of capital,’ explained Brian Hughes, Partner with KPMG Venture Capital Practice in the US.

Other findings from the report include:

Increase in corporate investing

Corporates participated in 22% of European deals to VC backed financings during Q2 2015, an increase over Q1 2015 where participation was just 17%. Overall we continue to see strong participation by VC arms of large corporations, who are investing in technology companies with the aim of expanding their own innovation and staying ahead of the curve.

Focus on strengthening ecosystems

Over the past year, there has been greater effort in Europe to foster ecosystems that create the conditions for technology companies to thrive. ‘Many of these communities are working to duplicate the model they have seen on the west coast of the US, including in Ireland and in particular, in Dublin,’ adds Anna Scally.

Growing US VC activity in Europe

Valuations of technology companies in Europe are on the rise, however they remain considerably lower than valuations of companies in the US and Asia. However, the lower valuations have had a positive outcome: companies are becoming increasingly attractive to foreign investors. US VC firms in particular are becoming more active players in the European VC market. The success of some of these US VC firms has created a ripple effect, encouraging other foreign VC firms to consider making their own investments.

North America leads but all regions show strong gains

Regionally, North America, unsurprisingly, continues to lead global venture capital activity. With $37.5 billion invested in the first half of the year, funding is on pace to surpass 2014’s high by more than 25 percent. In Asia, a mix of traditional venture capital sources mixed with hedge funds, private equity and corporates led to $15 billion invested into VC-backed companies in the first two quarters of 2015, putting Asia on track for 45 percent growth year-over-year.

‘Unicorn’ Investment Grows

Q2-2015 was a banner quarter for ‘Unicorns’ – venture capital backed companies with valuations in excess of $1 billion. Q2 saw the number of new Unicorns more than double to 24 over Q1’s 11 new Unicorns. This included 12 new Unicorns in the United States and nine in Asia. Among the quarter’s new Unicorns were Zenefits, Oscar Health Insurance and MarkLogic.

Corporate investing remains strong

Globally, corporate investors continue to play a prominent role in having participated in almost 25 percent of total deals in the past four quarters. In Asia, corporate investors participated in 32 percent of financing deals to Asian VC-backed companies during Q2-2015. North America and Europe also saw meaningful contributions from corporate investors with 23 percent and 22 percent of VC-backed company financings, respectively, involving corporates.

*Note: all figures cited are in USD

ENDS

For more information, contact:
Paul Gray
Communications Manager, KPMG Ireland
paul.gray@kpmg.ie; (01)700 4728

Notes for Editors

About KPMG in Ireland

KPMG in Ireland employs 2,200 people across its audit, tax and advisory services from offices in Dublin, Belfast, Cork and Galway. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services.

About KPMG International

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have more than 162,000 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.

About CB Insights

CB Insights is a National Science Foundation backed software-as-a-service company that uses data science, machine learning and predictive analytics to help our customers predict what’s next—their next investment, the next market they should attack, the next move of their competitor, their next customer, or the next company they should acquire.

The world’s leading global corporations including the likes of Cisco, Salesforce, Castrol and Gartner as well as top tier VCs including NEA, Upfront Ventures, RRE, and FirstMark Capital rely on CB Insights to make decisions based on data, not decibels.

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