2#Q2VC 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 Q2’18 edition of KPMG Enterprise’s Venture Pulse —
a quarterly report highlighting key trends, opportunities and challenges
facing the venture capital market globally and in key regions around
the world.
A record-shattering $14 billion raise by Ant Financial in China, in addition
to $1 billion+ mega-rounds to Weltmeister, Pinduoduo, Faraday Future,
and ManbangGroup helped propel VC investment in Asia and the
Americas. While VC investment in Europe remained far behind the other
regions, a rebound in investment in the UK helped to keep European
investment relatively strong quarter-over-quarter.
Artificial intelligence continued to be a hot area of investment in all
regions of the world in Q2’18, while autotech, cybersecurity, agtech
and biotech were also seen as key priorities.
The IPO market gained momentum in Q2’18 with the successful IPOs
of Ayden in the Netherlands, DocuSign in the US and a number of
other software-as-a-service companies. M&A activity was also robust,
led by the $7.5 billion acquisition of GitHub by Microsoft. With post-IPO
results showing positive returns, it is likely that other VC-backed
companies in the US, Europe and Asia could move forward with IPOs
over the next few quarters —if only as a means to create exit
opportunities for their early investors.
Looking forward to Q3’18, AI and data analytics are expected to
remain high on the radar of VC investors.It is also expected that
companies in maturing sectors, such as e-commerce, will continue to
broaden their offerings and investments in order to access new or
adjacent verticals.
In this edition of Venture Pulse, we look at these and other global and
regional trends, including:
—The implications of the plateau in seed and angel stage deals in
the US
—The major focus on artificial intelligence by both governments and
investors
—The strengthening IPO market globally and the shifting rationale for
holding IPO exits
—The evolution and rising prominence of agtech
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 Enterprise adviser in your area.
message
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
You know KPMG, you might not
know KPMG Enterprise.
KPMG Enterprise advisers in
member firms around the world are
dedicated to working with
businesses like yours. Whether
you’re an entrepreneur looking to
get started, an innovative, fast
growing company, or an established
company looking to an exit, KPMG
Enterprise advisers understand what
is important to you and can help you
navigate your challenges —no
matter the size or stage of your
business. You gain access to
KPMG’s global resources through a
single point of contact —a trusted
adviser to your company. It is a local
touch with a global reach.
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
29
42
U.S.
61
Europe
84
Asia
―New record for VC topping $70 billion invested worldwide
―Late-stage accounts for ever increasing percentage of total investment
―Global fundraising remains strong —on pace with 2017
―Median deal size for 2018 reaches $50 million for Series D+
―Corporate VC participation surpasses 20%
―VC totals second highest quarter in the decade
―Median pre-money valuation for Series D+ jumps to $279 million
―Canadian VC remains robust —at over $700 million
―VC investment in Mexico rebounds from Q1 lows
―Over $28 billion invested on 1859 deals in Q2’18
―Another strong quarter for Corporate Venture Capital —with $14+ billion
invested
―Volume of first-time venture financings remain below historic averages
―Venture-backed exits robust —powered by IPO resurgence and strong M&A
―Over $5.6 billion invested on 631 deals in Q2’18
―Angel/seed deal volume continues downward trend in Europe
―Jump in median financing size persists —in particular for early and late-stage VC
―Corporate VC participation rate spikes —nearing 25%
―UK continues to dominate top deals, led by massive rounds in London and Cambridge
―Massive $35.9 billion invested on 466 deals in Q2’18
―Corporate venture capital participates in whopping 30% of deals
―First-time financing remains robust
―Chinese companies represent 8 of top 10 deals globally
4#Q2VC 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.
The unstoppable tide of capital
The first quarter of 2018 recorded a truly massive tally of VC invested worldwide, with the final figure
landing at well over $50 billion once all data was collected. But even that mammoth sum pales in
comparison to what the second quarter of 2018 recorded: $69 billion+. It has to be noted that the outlier
company of all outlier companies —Chinese fintech giant Ant Financial —once again skewed even
annual figures significantly, raising $14 billion in a late-stage VC round that almost beggars typical
venture methodologies. Without that single transaction, VC invested would still have been a remarkable
$56 billion, give or take, which signals that the unstoppable tide of capital abundance within venture
has yet to abate.
Late-stage volume marches slowly but steadily forward
Prior to Q1 2018, even the heady period from late 2015 to the end of 2017 never saw late-stage VC
activity account for more than 20% of global venture volume, although eventually quarterly tallies crept
close. However, the first two quarters of 2018 have each seen well over 20% of global venture volume
classified as late stage. The primary implications of this trend are twofold: one, companies are staying
private longer, and two, they are still able to raise plenty of capital. But given the gradual decline in
aggregate deal count by quarter, the riskiest potential deals are less and less likely to be closed.
Valuations persevere atop the flood of capital
Venture valuations are difficult in practice, and even somewhat so in theory. Given their degree of
uncertainty, it is still intriguing that they remain so consistently high across the board. Such persistence
argues significant capital abundance and consequent competition as well as investors’ belief that such
valuations will eventually pay off. That belief should not necessarily be met with skepticism; software
M&A multiples and the rip-roaring performance of technology stocks over the past several years should
always be borne in mind when analyzing VCs’ willingness to take huge, even if risky, bets. That said,
there is still plenty of talk around increasing caution.
European venture still characterized by late-stage-focused funds
As this edition of the