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Number of Venture Capital deals falls for fourth consecutive quarter: KPMG and CB Insights

KPMG and CB Insights

According to Venture Pulse, the quarterly global report on VC trends published jointly by KPMG International and CB Insights

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Venkatesh Krishnaswamy

Continued investor concerns over startup valuations, macroeconomic upheavals, the ramifications of Brexit, and an uncertain exit environment for portfolio companies translated into another down quarter for investment deals in venture capital (VC)-backed companies. According to Venture Pulse, the quarterly global report on VC trends published jointly by KPMG International and CB Insights, Q2 2016 saw USD$27.4 billion invested across 1,886 deals globally, representing a slight increase in total funding over Q1 2016 but a fourth-straight quarter of investor pull-back in activity. The total number of deals declined an additional 6 percent from Q1 2016, after reaching a high in Q2 2015.

The trends visible across major venture hubs were decidedly mixed. North America and Asia saw funding climb slightly across fewer deals, while Europe saw total investment drop 20 percent as deal count rose. Europe continued to show robust early and seed stage activity.

“It’s a challenging time for VC investors,” said Brian Hughes National Co-Lead Partner, KPMG Venture Capital Practice, and a partner for KPMG in the US. “There’s a lot going on, with uncertainty dominant in every market. Many investors are holding back to see how these uncertainties shake out, while others are focusing on companies they see as having a solid foundation and growth plan – like Uber, Snapchat and Didi Chuxing.”

According to Venkatesh Krishnaswamy, Partner and Head of Deal Advisory at KPMG Qatar, “there are a number of emerging opportunities in the GCC, where fund sizes are lower in comparison to those in the US and Europe. Push towards economic diversification, ‘Smart City’ initiatives and continued infrastructure build-up are some of the key drivers for new technology solutions. Home-grown or adapted technology solutions that will be implemented in the development and operation of the assets being built could be a driver for investments. However, in order to attract serious VC funding the market and the enabling legislative environment must be put in place to ensure long term attractiveness can sustained.”

In addition to presenting key global findings for Q2 2016, the Venture Pulse quarterly report series examines the state of venture capital investment on a regional basis, including key trends and analyses for Asia, North America and Europe. To download and read the report, please visit the link attached here.
 

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