Investor caution continued to dominate the venture capital market globally in Q3'16, extending a trend that began in Q4'15, keeping investor funds on the shelf or focused on deals with a significant degree of scrutiny or investor protections.
Unicorns - companies with a $1 billion+ valuation - so prominent in Q3'15, have lost their luster, with investors less interested in making sure they do not miss the boat on specific VC trends. Rather than reach for unicorn status as soon as possible, companies are instead getting more realistic valuations.
This trend toward more realistic valuations is positive. With Q4'16 set to bring closure to a number of issues driving market uncertainty, at least in the United States, the environment may be looking up for VC investment.
There has also been a renewed interest in IPO exits globally in the wake of Twilio's successful IPO in Q2'16. During the third quarter, a number of technology companies also initiated IPOs, including Apptio and Trade Desk. In Europe, a region that typically lags far behind North America in terms of IPO exits, Takeaway.com and Nets A/S both held successful IPOs. If others in the IPO pipeline globally are also successful in Q4'16, the number of IPO exits will be well positioned to rebound heading into 2017.
In our Q3'16 Venture Pulse Report, a collaboration between KPMG Enterprise and CB Insights - we explore these trends and other issues that matter to VC investors around the world and reflect on a number of questions that will affect the VC market heading into final quarter of 2016, including:
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