Venture Pulse Q2 2016

Venture Pulse Q2 2016

Q2 report explores the top of mind issues for investors and reflects on a number of questions which will affect the VC market going forward

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The second quarter of 2016 saw venture capital market activity rise slightly following two quarters of declines. Large rounds by companies like Uber, Snapchat and Didi Chuxing helped buoy investment despite the ongoing decline in the number of deals.

While the Brexit referendum in the UK caused many investors to hold back from making significant investments, over the quarter, specifically in the UK, the upcoming US presidential election, the potential increase in US interest rates, and an economic slowdown in China also added to investor caution.

Despite the further drop in the number of VC deals, there are strong indications that market activity will rebound heading into the second half of 2016 and into 2017. Many investors appear to be taking a wait-and-see approach to the VC market rather than switching their investment focus entirely, ending the days of FOMO (fear of missing out).

In fact, many VC investors are using the current market climate as an impetus to raise additional funds, rethink their portfolio of investments and focus more diligently on identifying companies that have strong business models and plans to achieve profitability. As market uncertainties resolve, these investors are expected to be looking to deploy the significant amount of dry powder they have accumulated over the past 6 months.

In this quarters Venture Pulse Report a collaboration between KPMG Enterprise and CB Insights we explore the top-of-mind issues for investors in key regions of the world and reflect on a number of questions that will affect the VC market going forward, including:

  • What factors are driving the declining number of deals in the VC market?
  • How will the results of the UK's Brexit referendum affect VC investment?
  • Are VC-backed unicorns starting to die off?
  • How are artificial intelligence technologies poised to reshape business?

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