There are signs of optimism in the US venture capital (VC) market as total investment in the first quarter of 2017 reached $17.3B across 1,809 deals.
Caution tempered investor activity throughout Q1, continuing the trend from Q4’16. The first quarter saw a continued focus on safer bets, resulting in longer decision cycles and increased attention on late-stage deals in most markets worldwide. Despite continued lows, there are positive signs for a turnaround in coming quarters.
In this latest edition of Venture Pulse, we take a closer look at global and regional Q1'17 VC trends including:
>>Download the full report: Venture Pulse Q1 2017
Globally, venture capital activity slid for the fourth consecutive quarter, from 3,201 completed financings in the final quarter of 2016 to 2,716 in Q1'17, representing a decrease of 15.2%. Across the same timeframe, however, total capital invested resurged, as $23.8 billion was invested in Q4 2016 and close to $27 billion in the first quarter of 2017. As the median transaction size worldwide has eithersteadily ramped up or stayed flat over those same two quarters, it is clear that investors’ appetite forcutting deals did not wane, nor did the supply of capital available to deploy but, rather, they grew more cautious.
Despite a further decline in VC deal activity in the US during Q1’17, there are indications that the tide is turning. With the new US administration in place, US economic indicators are looking relatively stable, and the IPO market is beginning to open, there seems to be significant optimism that VC interest and activity will rebound. It may take some time for VC activity to recover fully, as investors are likely to remain cautious in the near term. Any significant issue, from a poor IPO exit to an unexpected regulatory change or a national incident, could prompt an immediate pullback in activity.
For further analysis of global and regional venture capital activity and trends, contact our professionals in the Venture Capital practice. Visit www.kpmg.com/us/venturecapital
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