2#Q3VC 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Welcome
Welcome to the Q3’18 edition of KPMG Enterprise’s
Venture Pulse —
a
quarterly report highlighting the key trends, opportunities, and challenges
facing the venture capital market globally and in key jurisdictions around
the world, including the Americas, Asia and Europe.
Global VC investment reached a new annual investment high this quarter
—confirming 2018 as a massive year for the VC market globally with 3
months of investment still to go. While total VC investment dropped
quarter over quarter, the decline was not surprising given Q2’18 results
were buoyed by the massive $14 billion deal by Ant Financial. Despite
the decline, results remained strong compared to other quarters, led by a
$2 billion raise by Grab in Singapore and $1 billion raises by Bitmainin
China and Oyo Rooms in India.
The IPO market globally now appears wide-open, helping to spur
ongoing interest in the VC market. More than 20 unicorn companies
globally have issued IPOs already in 2018 —far exceeding totals over
the past 2years. Post-IPO results have been relatively strong for most
companies —a trend spurring excitement for potential high-profile exits
expected heading into 2019.
Urban mobility continued to gain momentum in Q3’18, with many of the
big car-sharing companies continuing to expand into other forms of
transportation. Uber’s recent investment in Lime —an electronic scooter
and bike share company is a prime example of this. This trend follows
one that began in China —where unicorn company Ofo’sbikes are now
available through the DidiChuxingapp. In the mobility space,
autonomous driving also continued to gain investor interest —a trend not
expected to fade anytime soon.
Looking ahead, while developing trade wars between the US and China
and other countries are causing some investor concern, there continues
to be strong optimism in the market for the remainder of 2018 and
heading into 2019.
In this edition of
Venture Pulse
, we look at these and a number of other
global and regional trends, including:
―The massive strength of the VC markets in the US and Asia
―The resurgence in the number of new unicorn companies
―Growing VC investor interest in the co-working space
―The ongoing attraction of food-delivery options to VC investors
―The focus on investments and partnering in autotechand urban
mobility.
We hope you find this edition of
Venture Pulse
insightful. If you would like
to discuss any of the results in more detail, please contact a KPMG
adviser in your area.
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2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Jonathan Lavender
Global Chairman,
KPMG Enterprise,
KPMG International
Brian Hughes
Co-Leader,
KPMG Enterprise
Innovative Startups
Network, KPMG
International and Partner,
KPMG in the US
Arik Speier
Co-Leader,
KPMG Enterprise
Innovative Startups
Network, KPMG
International and Partner,
KPMG in Israel
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Contents
2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.Global
Americas
28
41
US
59
Europe
82
Asia
―VC investment hits $52 billion invested worldwide
―Median deal size for series D rounds almost doubles since 2016
―Corporate VC participation for 2018 surpasses 20%
―First time VC financings (YTD) fall to all time low
―Global exit activity surges on strength of IPO market
―Americas sees $28.9 billion invested across 2,056 deals in Q3
―Latin America and Canadian venture investment surpasses 2017 annual total
―Series D+ medians more than double since 2016–reaching $290 million in 2018
―Brazilian companies raise close to $300 million in Q3
―US venture capital boom continues, reaching $27.9 billion in Q3
―Total venture capital investment reaches $84 billion (YTD) –exceeding 2017
annual totals
―Quarter over quarter investment volume drops by 17.5%, initially
―IPO activity surpasses 2017 volume –with a quarter to go
―US sees 12 deals of $300 million or more
―Deal value hits $5.2 billion across 571 deals
―European deal volume falls by 36.6% quarter over quarter, initially
―Corporate VC participation rate approaches 24%
―Annual first-time venture financing volume and value reach record lows
―Largest 10 deals spread among 6 different countries
―Asia captures 9 of largest 13 deals globally this quarter
―Seed and angel stage deal volume plummets by 51% quarter over quarter
―Corporate participation rate surpasses 35% in Q3
―Massive quarter for IPOs in Hong Kong
―India surges to over $2.5 billion invested in Q3
4#Q3VC 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Is there a new normal
For some time now, against the backdrop of massive capital flows, a primary theme for the global
venture community has been whether or not the cycle would eventually revert to more reasonable
historical means or whether it has truly entered a new normal. At the earliest stage, volume did indeed
revert, but thus far, early-stage and especially late-stage activity has stubbornly failed to follow suit.
Instead, enormous sums of capital are still invested each quarter, while the volume of deals looks set to
persist at a historically healthy pace, unceasing. The reason why a new normal cannot yet be
determined, however, is for a true seismic shift in how the VC landscapes to have occurred, such a
trend would have to persist in the face of truly transformed market conditions. That has yet to occur.
Nearly every region looks set for a decade high
Three quarters in, the Asia Pacific region has already hit a new, gargantuan high in aggregate venture
capital (VC) invested. The US has as well, thereby bolstering the Americas to a record high too. Last
but not least, Europe is on pace to eclipse $23 billion invested this year alone, despite diminishing
volume. In short, the profundity of VC inflows seems hardly set to diminish anytime soon. Paired with
steadying tallies of activity, the venture industry looks more robust than ever.
Median financing size trends remain robust testament to evolving landscape
Hand in hand with the apparently new normal of diverging VC invested and plateauing volume, median
deal sizes have steadily crept up across all stages and look set on staying at record levels. More
importantly, such inflation has occurred across all regions. The critical question remains whether or not
this trend is primarily driven by financial marke