‘Unicorn’ Investment Remains High

‘Unicorn’ Investment Remains High

In Q3, 23 companies became ‘Unicorns’: VC-backed companies with valuations in excess of $1B.

National Private Markets Group (PMG) Leader, and Co-Leader Venture Capital (VC)

KPMG in the U.S.

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On October 14th, 2015, KPMG in partnership with CB Insights released our Q3-2015 Venture Pulse Report – highlighting key trends and information relating to venture capital investment globally and in key regions around the world.

One of the key trends identified during Q3 was the fact that big deals are continuing to drive the actions of VC investors globally. In Q3, 23 companies became ‘Unicorns’: VC-backed companies with valuations in excess of $1 billion. With 58 new unicorns appearing during the first 3 quarters of 2015 (i.e. 12 in Q1, 23 in Q2, and 23 in Q3), the number of unicorns globally has already well exceeded the 38 new unicorns created during all of 2014.

In Q3, North America led the unicorns with the emergence of 17 new unicorns, up significantly from the 12 new unicorns seen in Q2. In the US in particular, healthcare companies made up a significant portion of the new unicorns during Q3. Among the new US healthcare unicorns were Stemcentrix – a biotech company focused on innovative treatments for cancer, ZocDoc – an online scheduling company focused on doctors’ appointments, and 23andMe – a company providing DNA testing and genetics reports. Other new unicorns in the US represented a wide range of interests, although many are focused on the online space, including Kik – an online messaging app company targeted at teens, Fanduel – an online fantasy sports game, and Github a social networking sight for code sharing.

In Asia, the number of new unicorns dropped significantly during this quarter, going from 9 in Q2 to 3 in Q3.  This decline may be fallout from the economic slowdown occurring in China, although not necessarily given 2015 total deal value is still on pace to reach record highs. Among Asia’s new unicorns were Ele.me – a food delivery service in China, and Guahao – a health-tech company also based in China.

Europe maintained a steady investment pace with 3 new unicorns, making it the fourth quarter in a row that Europe has spurred either 2 or 3 new unicorns. Among the new European unicorns were France-based Blablacar – a long distance ride sharing service, and Hellofresh – a Germany-based recipe and food preparation company.

Given the significant investor focus on late stage mega-deals, we expect that unicorn investing will continue to rise as more and more investors chase the biggest deals available. There seems to be a real fear among VC investors that they will be left out if they don’t have unicorns within their portfolio.

For more information on Q3 unicorns and other significant trends from Q3-2015, visit our Venture Pulse Report webpage.

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About the author:

Mr. Brian Hughes

Brian’s career has been focused primarily on public and non-public technology, software, business services and Venture Capital and Private Equity funds and portfolio companies. Brian has significant experience with initial public offerings, as well as acquisitions and divestitures. As co-Leader for the KPMG Enterprise Innovative Startups Network, he is responsible for setting the vision and strategy for KPMG’s global initiatives as it relates to working with the innovation ecosystem, including entrepreneurs, fast growing venture backed companies.

Brian’s client experience includes working with high-growth companies in the development stage, through subsequent rounds of financings and other capital formation transactions, or to an initial public offering or acquisition by a larger market participant.

Venture Pulse Blog

Blog series covering topics related to venture capital investment globally.

 
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Venture Pulse

Quarterly global report on VC trends published jointly by KPMG International and CB Insights.

 
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