1
#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.
Venture
Pulse
Q2 2018
Global analysis of
venture funding
12 July 2018
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 Manbang Group 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
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.
6
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 KPMG Venture Pulse was being finalized, news broke of Highland Europe, a
growth-stage VC firm, closing its third fund at $540 million (based on exchange rates at that time).
Such a sizable close for the European fundraising ecosystem exemplifies the European venture scene
as it currently stands: A cadre of often late-stage-focused VC firms still successfully close the bulk of
capital within the continent, and invest across key metros, bolstering aggregate VC invested even if the
tally of early-stage activity continues to decline. Although early-stage fundraising will experience bouts
of bullishness, that market within Europe continues to face systemic hurdles more owing to the very
nature of early-stage VC than anything else, as well as interplay between EU agencies or national
governments as to specific roles.
Skewed by Ant Financial, capital flow surges to a new high
As Ant Financial's mammoth and skewing financing were already remarked upon earlier, it's important
to note for the Asia-Pacific venture ecosystem that quarterly VC invested came in quite below the
staggering highs previously reached in just the prior year. That said, the steadiness in late-stage
volume as well as historical robustness of capital represents another notch in the maturation of the
regional venture and technology scene. Ongoing political and trade concerns that look set to intensify
could result in some hiccups in the flow of capital to VC in particular, but thus far, things remain robust.
All currency amounts are in USD, unless otherwise specified, data provided by PitchBook.
Q2'18 summary
5
#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.
Corporate participation continues to be a highly important driver
In this and the previous edition of the Venture Pulse, corporate financings of companies that otherwise
meet all other criteria for venture-backed financings are included for the first time. Given the evolution
of private markets and the venture industry in general, most notably, the significant increase in
corporate VC participation rates, this change was necessary to truly reflect the importance of the role
that strategic acquirers and related investment arms are playing in the current landscape. Especially as
private companies continue to elect to grow while staying private, more and more companies are
looking to gain or maintain exposure to innovation within the private sphere, whether it be financial or
related to intellectual property. Participation rates are at all-time highs.
Still highly cyclical on a quarterly basis, fundraising suggests ongoing alternatives commitment
Midway through the year, fundraising volume is on pace to match the tally observed in 2017, roughly
speaking, at 234 closed vehicles. Total capital committed, however, is quite healthy, having increased
steadily on a quarter-over-quarter basis. What these data points suggest, in the context of the
remarkably strong fundraising cycle over the prior several years, is that the shift toward alternatives'
allocations on the part of institutional investors is as momentous as some in the industry have declared.
Increased allocation to VC by family offices, mutual funds (those often taking direct stakes) and others
as part of an overall augmentation of alternatives' portions of portfolios has directly underpinned the
bullishness of the VC cycle this past half-decade. If this trend continues, it will likely only further
encourage highs in VC invested on a historical basis, as well as late-stage exposure. As fundraising
volume is still skewing toward the mid-sized and large segments of the market, pure fund should
continue to exert upward pressure across the investing side of affairs.
Liquidity is all about timing
Private capital strategies are all about the premiums given to patient investors. With that in mind, the
fact exit volume has steadily slid since peaks in 2014 and 2015 should not yet spark concern,
especially as global exit value tallies have been fairly steady. What should spark concern is that there
have been few notable surges in exit value, driven by unicorns finally going public or being acquired.
The steady trickle of such exits still could pay off for many backers, as exemplified by Microsoft's
acquisition of Github and some recent notable IPO filings, such as that of Domo. The key therein is the
steadiness of such payoffs and consequent payouts to venture backers. As long as the timeline does
not become overly protracted, investors are expected to still take delayed exits of sufficient size over
less-robust liquidity events at the preplanned time. And, as the unicorn boom kicked off in earnest in
the early years of the 2010s, there is still runway for typical late-stage venture fund timelines it is
probable that non-traditional VCs that looked for quicker exits amid exposure to fast-growing tech
companies may be those left most disappointed, but all in all, from here on out it is the steadiness, not
the surge, in late-stage companies' exits that matters the most.
All currency amounts are in USD, unless otherwise specified, data provided by PitchBook.
Q2'18 summary
Globally, in Q2'18
VC-backed
companies raised
$69.8B
across
3,108 deals
7
#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.
Despite growing uncertainty globally, including concerns regarding US trade tariffs and changes to tax
regulations, Q2'18 saw companies around the world raise a massive amount of VC funding, propelling
global totals to a record high despite the continued decline in the number of VC deals.
Ant Financial sees largest VC funding round ever
China-based deals dominated global investment activity in Q2'18, accounting for eight of the 10
largest deals this quarter, including four $1 billion+ deals to Ant Financial, Weltmeister, Pinduoduo
and Manbang Group. The $14 billion raise by Ant Financial at the end of May represented the
largest VC deal in history. Investors may have seen this opportunity as a mezzanine round: a
chance to take hold of equity that could increase significantly upon an IPO that is rumored to be in
the works for next year.
US market activity also remained strong in Q2'18, led by Faraday Future's $2 billion round. While
European VC deal volume decreased again this quarter, overall investment continued to build on
an excellent start to the year.
Artificial intelligence technologies experiencing rapid investment growth
AI continued to see substantial VC investment globally during the second quarter of 2018. China-
based facial-recognition company Sensetime raised $1.2 billion over two separate funding rounds
this quarter, making it the world's most valuable AI company to-date.
The substantial investor focus on AI technologies reflects the widespread applicability of AI to
different industries and solutions. Many countries have also made AI innovation a priority. The
Chinese government, for example, has identified AI as a strategic area for investment, with a goal
to become a global leader in AI by 2020.
Gap in funding sizes remains noticeable
The $100 billion Softbank Vision Fund made waves in the global VC investment community when it
was announced in 2017. Since that time, other VC investors have announced large funds to try
and compete for late-stage deals, including Sequoia ($12 billion), Battery Ventures ($1.25 billion)
and General Catalyst ($1billion). Even the EU is getting on board the megafund trend, introducing
VentureEU in Q2'18, a $2.6 billion fund intended to drive investment in the region. During Q2'18,
Softbank also suggested a second Vision Fund is coming, a sure sign that mega-funds will
continue to be a significant contributor to the VC market in the quarters and years ahead.
mega-funds, however, are primarily targeted toward late-stage deals. While the focus on investing
in late-stage deals extends back to before the Vision Fund was announced, the increase in
attention being given to mega-funds over the past few quarters may be contributing to the ongoing
decline in deals activity at the angel and seed-stages. With a number of more mature investment
sectors such as food delivery and ride hailing reaching a fever pitch globally, mega-funds will
likely continue to invest in late-stage companies looking to fuel global expansion and take top
market position either regionally or globally.
Massive $14 billion raise by Ant Financial propels
global VC funding in Q2'18
8
#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.
Excitement over automotive sector technologies continues to build
In Q2'18, US-based electric car manufacturer Faraday Future reopened their last round and raised
an additional $2 billion in funding following the $1.5 billion raise in Q1'18, highlighting the
increasing attention VC investors are giving to automotive technologies, both in the electric car
space and in the autonomous driving space. In the first half of 2018, the total amount invested in
autonomous vehicles has almost eclipsed funds raised during all of 2017.
Most, if not all, traditional automotive companies are interested in the autonomous driving space
related to either technology development or to fleet management. Large investors such as
Softbank are also highly involved in this area, with many hedging their bets by making investments
in multiple market leaders. For example, Softbank has invested in Uber, Didi, Grab and Ola. By
investing heavily in different companies, it is likely Softbank will be able to force some cooperation
between competitors in key markets while furthering competition in others.
Cybersecurity continues to be a hot-button topic for investors
With the growing focus on the Internet of Things and on autonomous driving, it is no surprise that
VC investors have focused heavily on cybersecurity around enabling technologies. While few
actual breaches have been publicized, there is recognition that any potential threat needs to be
strongly mitigated right from the get-go in order to ensure confidence in the space. With the
growing number of connected components of vehicles (e.g. guidance systems, etc.), there is
growing pressure to ensure protections are in place.
Macroeconomic issues creating uncertainty globally
US trade tension with China, Canada and the EU is creating some uncertainty in the business
world globally, although the actual impact has not been significantly noticeable in the VC space to
date. The reality is that companies in China and the US have been competitors for many years in
different industries, with competition heating up recently in the race to become world leaders in
innovative technologies such as artificial intelligence. There has also been increasing industry-
based competition between the two countries, particularly in the telecom space where well
capitalized Chinese companies such as Tencent, Baidu and Alibaba have made inroads in markets
once dominated by US-based telecoms.
Exit market strengthens in the US bodes well for the future
The IPO market heated up in the US during the first half of the year, with a number of successful
exits, including Spotify, Dropbox and DocuSign. To date, both the number of IPO exits and their
combined IPO value are on track to exceed 2017 numbers. Median IPO deal size is up
substantially at $119 million, the highest the metric has been since 2018. The strength of this
number likely reflects the pent-up demand for exits in the market following 2 years of lackadaisical
activity. Post-IPO performance has also been very encouraging, with the vast majority trading
above their initial IPO price.
Massive $14 billion raise by Ant Financial propels
global VC funding in Q2'18, cont'd.
9
#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.
IPOS have also been rebounding in Asia, with new listing rules related to the Hong Kong Stock
Exchange spurring renewed interest among unicorns. It would not be surprising to see a number of
Asia-based fintech companies looking to the IPO market to exit over the next few quarters.
Some of the IPO activity this quarter appeared to be less about fundraising and more about
providing liquidity for founders and employees. This will be a trend to keep an eye on to see if it
becomes more prevalent over the remainder of the year. The desire to provide liquidity has also
continued to fuel growth in secondary market transactions, particularly in the US.
M&A was also strong in Q2'18, with activity such as Microsoft's $7.5 billion purchase of
development platform company GitHub.
Trends to watch for in Q3'18
Looking forward, tax reforms in the US, a significant amount of dry powder and the continued flow
of funding into the VC world are expected to keep the VC market strong over the next quarter.
Autonomous driving, healthtech and biotech are expected to be big winners over the next few
quarters, in addition to blockchain.
One area that may be one to watch over the next quarter will be valuations particularly for
companies with no tangible assets, where investors are focused on what the company might do in
the future. The level of assumption and risk involved in these types of valuations is quite high and it
is still to be seen if these valuations will be substantiated.
Massive $14 billion raise by Ant Financial propels
global VC funding in Q2'18, cont'd.
10
#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.
Global venture financing by stage
2010 Q2'18
Once again, the venture industry has seen another high exceeded by leaps and bounds. The second quarter
of 2018 recorded over $70 billion invested, dwarfing the prior high seen in the first quarter of the year and,
for comparison's sake, nearly seven times the tally of Q2 2010. There appears to be virtually no limit to how
much capital is pouring into late-stage financings of truly mammoth private companies. The poster child of
the global late-stage largesse is Ant Financial, which raised billions in 2016 and closed on no less than
$14 billion in fresh funding in this most recent quarter. Still, even without that gargantuan sum, Q2 2018
would have seen $56 billion, outstripping all but the prior quarter.
Source: Venture Pulse, Q2'18. Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018. Note: Refer to
the Methodology section on page 103 to understand any possible data discrepancies between this edition and previous editions of Venture Pulse.
The late-stage tide rolls onward
"Globally, we continue to see an upward trend in the amount of venture capital investment, even
as deal volumes decline. Asia had a particularly strong quarter accounting for 8 of the top 10
deals globally much of which was once again driven by record levels of corporate investment."
Jonathan Lavender
Global Chairman, KPMG Enterprise, KPMG International
0
1,000
2,000
3,000
4,000
5,000
6,000
$0
$10
$20
$30
$40
$50
$60
$70
$80
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
# of deals closed
Angel/Seed
Early VC
Later VC
11
#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.
Global median deal size ($M) by stage
2010 2018*
Global up, flat or down rounds
2010 2018*
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
Medians stay as high as ever amid influx of
positive sentiment
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Up
Flat
Down
$0.5
$0.5
$0.5
$0.5
$0.5
$0.6
$0.7
$1.0
$1.4
$2.5
$2.4
$2.1
$2.3
$2.8
$3.2
$3.5
$4.5
$7.0
$5.5
$6.3
$6.0
$5.8
$7.7
$9.0
$9.0
$10.0
$13.5
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Angel/seed
Early stage VC
Later stage VC
12
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Global median deal size ($M) by series
2010 2018*
The hurdles that fledgling companies must face in the current, capital-rich landscape, are clear when
examining the divergence between seed, Series A and Series B financing sizes. For the companies that can
clear those hurdles, the rewards are rich, but to jump from a median of $1.2 million at the seed-stage, then
nearly eight times higher at Series A, is increasingly difficult.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
New highs across the board
$0.5
$0.5
$0.4
$0.4
$0.5
$0.6
$0.7
$1.0
$1.2
$2.5
$2.8
$2.7
$3.0
$3.5
$4.1
$5.0
$6.0
$8.0
$7.0
$7.2
$7.0
$7.0
$10.0
$12.0
$12.0
$14.0
$17.0
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Seed
Series A
Series B
$10.0
$12.0
$11.6
$12.0
$15.0
$19.0
$22.4
$25.0
$30.0
$12.2
$14.8
$16.0
$15.9
$27.0
$35.0
$28.2
$40.0
$50.0
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series C
Series D+
13
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Global median pre-money valuation ($M) by series
2010 2018*
Series B valuations see the relatively greatest
leap upward between 2017 and 2018 to date
$2.8
$3.3
$3.0
$3.2
$3.4
$4.0
$4.4
$5.2
$6.6
$6.0
$6.9
$7.8
$8.4
$10.7
$12.6
$14.0
$15.6
$20.0
$19.3
$20.4
$20.9
$24.8
$30.9
$38.6
$37.0
$40.0
$60.0
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Seed
Series A
Series B
$36.3
$46.0
$49.0
$52.8
$56.9
$73.8
$80.0
$87.8
$120.0
$66
$82
$91
$98
$150
$184
$150
$262
$311
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series C
Series D+
"Global VC activity has been very strong so far in 2018, but there is still one big question out
there and that is valuations. It is very difficult to substantiate some of the valuations we are
seeing in the market based on current results. There's a lot of focus on what companies might
provide in the future. The level of assumptions and risk associated with these valuations are very
high and we have yet to see if they will be substantiated."
Arik Speier
Co-Leader, KPMG Enterprise Innovative Startups Network, KPMG International and
Partner, Head of Technology, KPMG in Israel
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
14
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Global deal share by series
2012 2018*, number of closed deals
Global deal share by series
2012 2018*, VC invested ($B)
The aggregate decline in the volume of angel and seed activity recorded since 2015 has very roughly
approximated the robust rise in venture financing sizes and valuations recorded between the depths of the
financial crisis and that same peak. Consequently, it seems safest to conclude that the decline is cyclical,
a rational response to rising prices at such a risky stage.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
The early stage sees further cyclical pullback
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2012 2013 2014 2015 2016 2017 2018*
Series D+
Series C
Series B
Series A
Angel/seed
$0
$20
$40
$60
$80
$100
$120
$140
2012 2013 2014 2015 2016 2017 2018*
Series D+
Series C
Series B
Series A
Angel/seed
15
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Global financing trends to
VC-backed companies by sector
2013 2018*, number of closed deals
Global financing trends to VC-backed
companies by sector
2013 2018*, VC invested ($B)
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
Sector lines continue to blur, pharma stays strong
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201320142015201620172018*Commercial
Services
Consumer
Goods &
Recreation
Energy
HC Devices
& Supplies
HC Services
& Systems
IT Hardware
Media
Other
Pharma &
Biotech
Software
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201320142015201620172018*
16
#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.
64%
27%
9%
61%
28%
11%
59%
26%
15%
57%
28%
15%
61%
26%
13%
65%
21%
14%
Americas
Europe
Asia Pacific
Financing of VC-backed companies by region
2013 2018*, number of closed deals
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
Volume stays robust in developed markets
2013
2014
2015
2016
2017
2018*
17
#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.
69%
17%
14%
67%
14%
19%
58%
13%
29%
52%
11%
37%
52%
13%
35%
47%
9%
44%
Americas
Europe
Asia Pacific
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
Asia-Pacific sees 44% of VC invested in 2018 YTD
2013
Financing of VC-backed companies by region
2013 2018*, VC invested ($B)
2013
2014
2015
2016
2017
2018*
18
#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.
Corporate VC participation in global venture deals
2010 Q2'18
Note: The capital invested is the sum of all the round values in which corporate venture capital investors participated, not the amount that
corporate venture capital arms invested themselves. Likewise, the percentage of deals is calculated by taking the number of rounds in which
corporate venture firms participated over total deals.
In a cautious, high-priced environment, corporates can justify joining in higher-priced rounds and enjoy
access to relatively much richer balance sheets, but their evolution into an important supporting player in the
global venture landscape is a testament to the slow-moving evolution of the venture industry on the whole. It
is important to note that direct investing is especially skewing figures, as evidenced by the sheer mass of
capital tallied in Q2 2018, in which corporates participated or dispensed solo.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
Corporate VC activity now exceeds more than
a fifth of all deals
0%
5%
10%
15%
20%
25%
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
% of total deal count
19
#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.
Global first-time venture financings of companies
2010 2018*
Midway through the year, 2018 looks on pace to record the lowest total of first-time financings in close to a
decade, due to a combination of factors. First, in a time marked by expensive financings and despite having
plenty of capital on hand, investors are reluctant to pay up for the riskiest investments brand-new
enterprises. Second, the massive gains observed in public markets has likely disincentivized angel
financiers from the high-stakes arena of funding fledgling opportunities. Last but not least, innovation cycles
come and go, and although there could be a new wave of realized innovations stirring within the crypto
sector, much of the lowest-hanging fruit in app-based, mobile-first enterprises has already been snatched.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 11, 2018.
Multiple factors combine for 2018 to perhaps hit
an all-time low in first-time VC financings
$9
$12
$13
$13
$14
$20
$17
$14
$8
3,793
5,066
5,922
6,663
7,324
6,786
5,424
4,415
1,570
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Capital invested ($B)
Deal count
20
#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.
Another remarkable quarter for unicorns' never-
ending ability to raise capital
Global unicorn rounds
2010 Q2'18
Note: PitchBook defines a unicorn venture financing as a VC round that generates a post-money valuation of $1 billion or more. These are
not necessarily first-time unicorn financing rounds, but also include further rounds raised by existing unicorns that maintain at least that
valuation of $1 billion or more.
Especially with Lyft recording a Series I financing this past quarter, in its steady progression through the
English alphabet, it is clear that thus far, investors are still more than willing to ply existing unicorns with
massive sums. New unicorns are still being birthed as well, but the true outliers that resulted in Q2 2018
seeing the largest amount ever raised by new and old unicorns still skew toward the latter.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
0
5
10
15
20
25
30
35
40
45
50
$0
$5
$10
$15
$20
$25
$30
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
# of deals closed
21
#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.
Global venture-backed exit activity
2010 Q2'18
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
2018 is proving significant for the exit cycle
0
100
200
300
400
500
600
$0
$10
$20
$30
$40
$50
$60
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Exit value ($B)
Exit count
22
#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.
Global venture-backed exit activity
(#) by type
2010 2018*
Global venture-backed exit activity
($B) by type
2010 2018*
Liquidity options continue to proliferate for venture-backed companies. The tech IPO market has revived
somewhat, with notable names such as Dropbox, Spotify, DocuSign, Smartsheet and Pivotal Software
finally debuting on public exchanges. However, buyouts by PE firms and M&A also remain key for both
backers and founders, gracing them with multiple options to find liquidity.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
2018 sees life in tech IPO market
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Strategic Acquisition
Buyout
IPO
$0
$20
$40
$60
$80
$100
$120
Strategic Acquisition
Buyout
IPO
23
#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.
Global venture fundraising
2010 Q2'18
The fundraising market is highly cyclical and skewed significantly by the popularity of alternative investments
overall among capital markets. Hence, the waxing and waning of fundraising volume over the past decade.
In the last edition of the Venture Pulse, we observed that although there could be recurrent upticks, by and
large, on a historical basis, the fundraising cycle is slowing marginally, suggesting limited partners' appetite
for exposure to VC may well have been mostly met. That could have been premature, as 234 closed funds
in 2018 to date may put the market on pace to match the 460 pools closed in 2017 but, at the very least, the
cycle is holding steady, not growing.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
One of the stronger quarters for VC raised
0
50
100
150
200
250
$0
$5
$10
$15
$20
$25
$30
$35
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital raised ($B)
# of funds raised
24
#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.
Global venture fundraising (#) by size
2010 2018*
After trending down as a proportion of overall fundraising volume from 2014 to 2016, first-time funds
worldwide are still enjoying a comeback first kicked off in 2017. This trend is at least somewhat cyclical. The
successes of the most prominent venture funds in the early part of this decade were bound to culminate in
venture partners leaving more-established firms to strike out on their own. It is also a testament to
bandwagoning, as the ongoing success of aforementioned prominent firms inspires other entities, such as
governments to foster fledgling funds.
Global first-time vs. follow-on venture
funds (#)
2010 2018*
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
First-time funds enjoy a continued renaissance
in 2018 to date
0
50
100
150
200
250
300
350
400
450
500
2010 2011 2012 2013 2014 2015 2016 2017 2018*
Under $50M
$50M-$100M
$100M-$250M
$250M-$500M
$500M-$1B
$1B+
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201020112012201320142015201620172018*First-time
Follow-on
25
#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 agtech sector continues to draw record investment as VCs and other investors seek to finance
solutions to the growing issue of food security amid a rapidly growing global population. VCs are
particularly attracted to technology and innovation that helps provide more scale, sustainability and
predictability in agriculture, a sector known for its unpredictable weather and market volatility.
VC investment in agtech continues to break records
2017 was a blockbuster year for VC investment in Agtech, with over $1.7 billion total invested
on the power of a series of mega-deals late in the year, including Ginkgo Bioworks, Indigo Agri
and Farmers Business Network. In 2018, we've seen this momentum continue with more than
$600 million invested across 105 deals in the first 5 months of the year, including AgriProtein
($107 million), Edico Genome, ConCentric ($54 million) and PrecisionHawk ($75 million).
New technology gives investors comfort in agtech investing
Agriculture has become a destination for VC investing due largely to the advancements in
technology that help farmers better predict, manage and boost crop production. Traditionally,
agriculture has been seen as a volatile industry, given the unpredictability factors such as, of the
weather, pest and disease outbreaks and regularly fluctuating commodity markets. Companies that
offer technology that helps to smooth out the food production process from field and soil to the
supermarket are considered attractive. Technologies that also help to boost production and
increase crop yields, while reducing financial and environmental costs, are also in favor in today's
agtech market. VCs are excited by Agriculture 4.0 and a range of technologies being developed
and refined including crop sensors, satellite imagery, the IoT, blockchain, swarm robotics,
automation and data analytics, to name a few examples.
For instance, distributed ledger technology is helping to trace the physical product through the
supply chain. This is important for efficiencies, but also meets a growing demand among
consumers to source where their food comes from. Another example is AI, which is helping farmers
better analyze animal behavior, as well as identify and track potential ailments. Meantime,
predictive analytics is being used to assess moisture levels in a field, which helps growers ensure
their crops received the appropriate amount of water and better predict growth curves, yields and
harvest dates.
Agtech attracting a hybrid of corporates
The agtech sector is maturing, as evidenced by a first wave of agtech unicorns, expansion of VC activity
and interest from big players in both the ag and technology sectors. There are more than 30 active
funds joining the agtech-focused funds such as Khosla, Fall Line, Finistere, Innovation Endeavors and
S2G, among others1. There were also some meaningful VC-backed exits in 2017. M&A activity is
expected to remain robust in the sector and a focus on the agtech startup scene where early-stage
companies are developing various digital solutions to help improve crop production.
Large ag players are expected to be active in M&A in the near term, as well as tech and retail
giants such as Google and Amazon, alongside more state-owned corporations. For instance, we
could see more financings like the $110-million Series D announced by Farmers Business Network
late last year, which included a mix of investors from Singapore's state investment firm Temasek to
Kleiner Perkins Caufield & Byers and GV (formerly Google Ventures)2.
VC investment in agtech continues to soar
1 https://techcrunch.com/2018/03/08/major-trends-in-agtech-for-2018/
2 https://venturebeat.com/2017/11/30/farmers-business-network-raises-110-million-to-bring-price-transparency-to-agriculture/
26
#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.
Agtech investment has few geographical boundaries
While the US, China, India and Brazil have a strong interest and investment in ag and agtech given their
growing populations (and mouths to feed), there are also innovative solutions coming out of Israel,
Australia, New Zealand and the Netherlands. For example, regions with multiple climatic conditions,
such as Australia, are most likely to have a wider range of agtech solutions. Meantime, Israel has
developed a strong reputation for its agtech innovation pivoting from defence technologies, while the
Netherlands has a strong reputation in the horticulture and floriculture space.
There's also a trend towards clustering, in particular bringing together ecosystems that include
industry bodies and research and knowledge players. The triple helix of industry, research and
government then start to attract the fourth key ingredient: capital which is where VCs are starting
to play a larger role.
Trends to watch in agtech
Agtech companies are trying to disrupt how, what and where we grow. Their goal is not only to help
feed more people more efficiently, but also to get aligned with the growing trends of transparency,
traceability and sustainability in food production.
Different technologies are helping to marry these various interests. For example, robotics will
become more important as producers are under greater pressure to get the crops off the field, into
the packaging and then through the supply chain as efficiently as possible and with the ability to
track the journey from farm to plate.
We also expect to see more consolidation not just of companies, but applications for farmers. This
will likely include putting multiple sensor-driven data inputs together and giving farmers fewer
platforms to work with either in the cab of their tractor, on their smartphone or a desktop. The
financial services sector is also expected to get more involved in ag and agtech, as it starts to think
differently about its role in the production of food and insurance. For example, insurers have an
increasingly important role to play around crop risk given the more severe weather patterns, from
flooding to drought, that are affecting global food production.
Lastly, there will be more emphasis on sustainability in farming to help protect the planet. One
example is a system where farmers are financially rewarded for their role in helping support
sustainability, which can then lead to lower financial and credit costs across the supply chain. That,
in turn, will lead to the adoption of technology to support the system. Regardless of the technology
and its intended solution, the future of agtech is about delivering certainty for all stakeholders
including farmers, bankers, investors and consumers.
VC investment in agtech continues soar, cont'd.
"As governments and NGOs strive to ensure they have sufficient food and water for their people,
and meet their environmental stewardship obligations, we expect to see interest in agtech grow
significantly and more VC activity."
Ben van Delden
Partner, Head of AgTech & Markets
Markets and Growth
27
#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.
Global venture financing of agtech companies
2010 Q2'18
The sum of VC invested in agtech between 2015 and 2017 rose exponentially, culminating in no fewer than
218 completed financings within the sector for a combined total of $1.8 billion last year. The 2018 figures
are no less robust. This trend is explained by several factors: the demonstrated potential for agtech
innovation to result in significant exits, such as those of Granular or Blue River Technology, the growing
awareness of the need for more productive and hardy crops, as well as more efficient supply chains in
general and last, but not least technical innovations such as, the plummeting cost of sensors that have
made even agtech solutions more feasible.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
Agtech is on the upswing
$0.1
$0.4
$0.3
$0.3
$0.7
$0.6
$1.1
$1.8
$0.6
44
57
80
78
149
163
192
218
105
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
Deal count
"There are a number of clear geographic leaders when it comes to agtech innovation and venture
capital investment. The US remains the clear leader in this space however Israel, Australia and
India have made inroads. We are also seeing a burgeoning agtech ecosystem in parts of Europe
such as the Netherlands, UK and France. Here in Israel, we already have between 400-500
agtech startups driving innovation in a wide range of areas."
Idit Blank-Varol
Head of Food & Retail, KPMG in Israel
28
#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.
Top 10 global financings in Q2'18
Ant Financial $14,000M, Hangzhou
Financial software
Series C
Weltmeister $3,176M, Shanghai
Transportation
Late-stage VC
Pinduoduo $3,000M, Shanghai
Internet retail
Series C
Faraday Future $2,000M, Los Angeles
Transportation
Late-stage VC
Manbang Group $1,900M, Beijing
Transportation
Late-stage VC
7
8
6
9
10
5
4
3
2
1
Ubtech $820M, Shenzhen
Robotics
Series C
Hellobike $700M, Shanghai
Transportation
Series E1
SenseTime $620M, Beijing
Artificial Intelligence
Series C
SenseTime $600M, Beijing
Artificial Intelligence
Series C
Lyft $600M, San Francisco
Transportation
Series I
China dominates the Q2 2018 rankings
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 11, 2018.
10
3
6
4
9
7
8
5
2
1
In Q2'18 VC-backed
companies in the
Americas raised
$28.2B
across
1,986 deals
30
#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.
VC investment in the Americas remained high in Q2'18, primarily driven by strong VC market
activity and investment in the United States.
US continues to account for biggest deals in the Americas
The US accounted for the lion's share of VC investment in Q2'18, attracting all ten of the biggest
deals in the Americas this quarter, including a $1B+ funding rounds to Faraday Future. While a
minor amount compared to US totals, Canada also saw a strong level of VC activity relative to
historical trends. Brazil, Mexico, and other countries in Latin America, however, saw limited
investment this quarter.
Rising trade tension between US and other countries in the Americas
While trade tension between the US and other countries in the Americas appeared to be declining
in Q1'18, the second quarter saw an unexpected reversal. While there was not a noticeable impact
on VC investment during the quarter, the sudden increase in trade tension between Canada and
the US could cause some ripples in the VC market over time should the tension continue
particularly for companies and investors in the manufacturing space.
Funding gap widening, creating challenges for middle stage funding
VC investors in the Americas continued to focus on late-stage deals in the Americas during Q2'18,
particularly in the US and Canada. While Canada in particular has seen some strong Series A and
B funding in the past, recent quarters have shown a shift to a new normal, one in which investors
have started to prioritize late-stage revenue generating companies now looking to scale over
companies earlier in their development cycle.
At the same time, there continued to be strong support for companies at the earliest of deal stages
in the Americas. The availability of funding at both ends of the innovation life cycle has only
increased recognition of the widening funding gap at the middle-stages of the deals continuum.
Strong quarter for Canadian VC investment
Canada saw a strong amount of VC activity in Q2'18, including a $98 million Series C raise by
smart-home company Ecobee, a $70 million raise by online advance ordering company RitualTech,
and a $54 million raise by Concentric.
During the quarter, US-based Salesforce also launched the Canada Trailblazer Fund, a new $100 million
VC fund in Canada aimed at investing in early-stage Canadian companies with the potential to align with
the Salesforce platform. While the fund is intended to support the strategic goals of Salesforce, it will also
likely contribute to the further development of Canada's SAAS innovation ecosystem.
Americas VC market continues blistering pace
31
#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.
Election uncertainty creating a pause in Brazil-based VC investment
The VC market in Brazil was relatively soft in Q2'18, amid growing concerns related to the
upcoming federal election to be held in October 2018. While VC investors continued to show
interest in the country, actual deals investment was relatively small as investors took a 'wait and
see' approach to their investment decisions.
Despite the uncertainty, fintech and logistics companies continued to attract some investment
during the quarter, including Neon Bank ($22 million) and Mandae ($7.1 million). While small, these
deals reflect areas of growing interest for VC investors in Brazil.
PagSeguro. which raised $2.3 billion during its IPO in Q1'18, announced in Q2'18 that it was going
to release follow-on shares. This announcement created some negative ripples in the stock price of
PagSeguro, however, the long-term impact of the move has yet to be defined.
Corporates increasingly active in VC investment space
Across the Americas, corporates have become increasingly active in the VC investment space
from the Canadian and Brazilian banks to technology companies like OpenText and Salesforce
which announced the creation of a VC fund focused on Canada during Q2'18. With the exception
of investments in the US, much of the corporate VC activity seen across the Americas has been
strategic to date, with companies focused on encouraging the development of beneficial
technologies or on gaining access to necessary innovation talent.
Artificial intelligence remains hot in Canada
In Q2'18, Canada continued to define itself as a hotspot for innovation in artificial intelligence,
particularly with respect to data and analytics. During the quarter, US-based NVIDIA announced
plans to develop an innovation lab in Toronto focused on AI, joining other global companies who
have already invested in AI innovation in Canada, such as Alphabet, Microsoft, Facebook,
Samsung, and Uber.
The focus of AI investments in Canada continues to be relatively diverse, ranging from support for
biomedical research to support for fintech innovation.
Trends to watch for in Q3'18
Heading into Q3'18, the outlook for the VC market in the Americas remains relatively positive,
although some uncertainties remain related to US trade tensions, the upcoming election in Brazil,
and the expectation of rising interest rates over time.
Americas VC market continues blistering pace,
cont'd.
32
#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.
Venture financing in the Americas
2010 Q2'18
Coming in just a few billion dollars shy of the high set in the first quarter of 2018, Q2 nevertheless raked in
sufficient capital to become the second-highest quarter on record in the decade. More importantly, ongoing
stability in late-stage financing volume plus an evening out in the quarterly volume of angel, seed and early-
stage rounds in the past few quarters hints at a rough stabilization in aggregate VC volume on the horizon.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 11, 2018.
Stabilization in venture volume on the horizon?
0
500
1,000
1,500
2,000
2,500
3,000
3,500
$0
$5
$10
$15
$20
$25
$30
$35
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
# of deals closed
Angel/Seed
Early VC
Later VC
33
#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.
Median deal size ($M) by stage in the Americas
2010 2018*
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
Up, flat or down rounds in Americas
2010 2018*
Up rounds proliferate even further
$0.5
$0.5
$0.5
$0.5
$0.6
$0.8
$0.9
$1.0
$1.4
$2.7
$2.7
$2.7
$3.0
$3.4
$4.0
$4.9
$5.5
$8.0
$6.0
$7.5
$7.3
$6.7
$8.8
$10.0
$10.0
$10.2
$14.4
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Angel/seed
Early stage VC
Later stage VC
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Up
Flat
Down
34
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
Median deal size ($M) by series in the Americas
2010 2018*
Series A, D and later see greatest relative increase
$0.5
$0.5
$0.5
$0.5
$0.5
$0.7
$0.8
$1.0
$1.3
$2.4
$2.5
$2.7
$3.0
$3.5
$4.2
$5.0
$6.0
$8.0
$7.0
$7.0
$7.0
$7.0
$10.0
$11.0
$11.0
$13.7
$16.5
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Seed
Series A
Series B
$10.0
$12.0
$11.8
$12.0
$14.0
$16.8
$20.2
$21.1
$27.0
$12.2
$14.5
$16.0
$16.0
$25.5
$30.0
$25.0
$32.2
$50.0
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series C
Series D+
35
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Median pre-money valuation ($M) by series in the Americas
2010 2018*
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
In the prior edition of the Venture Pulse, it was remarked that between Series A and B, plus Series C and D,
there was clear winnowing of the playing field of startups, as those relatively few companies that were able
to vault between those round types enjoyed huge increases in median valuations. Such disparity has only
persisted in 2018 to date.
Series B & D still stand out as clear phase shifts
$3.2
$3.8
$3.6
$4.0
$4.4
$5.0
$5.5
$6.0
$7.0
$6
$7
$8
$9
$11
$13
$14
$16
$20
$19
$20
$21
$25
$31
$38
$36
$40
$55
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Seed
Series A
Series B
$36
$46
$49
$54
$55
$70
$80
$80
$115
$66
$83
$92
$98
$140
$166
$137
$225
$279
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series C
Series D+
36
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Deal share by series in the Americas
2010 2018*, number of closed deals
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
Deal share by series in the Americas
2010 2018*, VC invested ($B)
Series D & later rounds already raking in huge sums
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series D+
Series C
Series B
Series A
Angel/seed
$0
$10
$20
$30
$40
$50
$60
$70
$80
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series D+
Series C
Series B
Series A
Angel/seed
37
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Venture financing of VC-backed companies by sector in the Americas
2010 2018*, VC invested ($B)
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
Venture financing of VC-backed companies by sector in the Americas
2010 2018*, # of closed deals
Traditional areas of VC focus remain robust
0
2,000
4,000
6,000
8,000
10,000
12,000
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Commercial
Services
Consumer Goods
& Recreation
Energy
HC Devices &
Supplies
HC Services &
Systems
IT Hardware
Media
Other
Pharma & Biotech
Software
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Commercial
Services
Consumer Goods &
Recreation
Energy
HC Devices &
Supplies
HC Services &
Systems
IT Hardware
Media
Other
Pharma & Biotech
Software
38
#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.
Venture financing in Canada
2012 Q2'18
Eight financings over $20 million in size of Canadian companies closed in the second quarter of 2018.
That healthy tally, plus diversity in the array of companies funded, with sectors ranging from agricultural
chemicals to intelligent thermostat systems, bodes well for the health of the Canadian ecosystem, despite
moderated volume.
Another strong quarter for VC invested
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
0
20
40
60
80
100
120
140
160
180
200
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
"AI innovation continues to be very prevalent here in Canada. It's a priority for everyone the
government, research institutions, traditional corporates and startups. This quarter, we saw
Nvidia announce plans to start an AI lab in Toronto, one of the first big American companies to
do so. It won't be the last. We expect to see a lot more following suit in the future."
Sunil Mistry
Partner, KPMG Enterprise, Technology, Media and Telecommunications,
KPMG in Canada
39
#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.
Venture financing in Mexico
2012 Q2'18
After a remarkably low tally of VC invested in Mexico-headquartered enterprises in Q1 2018
attributable to economic and geopolitical concerns the tide turned in Q2, with companies such as online
lender Konfio raking in multimillion-dollar rounds. That said, there could be future lows still, given the
overall trend over the past year and a half has been on the muted end, but the most viable companies
should still be able to get funding when they need it.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
A bounce back in VC invested for Mexico
0
5
10
15
20
25
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
40
#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.
Venture financing in Brazil
2012 Q2'18
Although the largest funding in Q2 2018 was a Series D round for business software maker ContaAzul,
most of the companies that closed on a round of funding are consumer-focused, speaking once more to
the Brazilian startup ecosystem's relative strengths and weaknesses.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
Uptick in activity among B2C-centric offerings
0
10
20
30
40
50
60
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
"With an election coming in October, a lot of VC investors are taking a 'wait and see' approach
before making any major investments. This doesn't mean interest isn't percolating. We're seeing
a lot of corporate VC funds coming to Brazil to look for investments and even a number of
local companies setting up VC funds. Signaling that Corporate VC is going to grow in Brazil
although it might take a few quarters to materialize."
Raphael Vianna
Director,
KPMG Enterprise in Brazil
41
#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.
Silicon Valley comes back with a vengeance in
Q2 2018
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 11, 2018.
10
7
6
3
8
5
4
9
2
1
Faraday Future $2,000M, Los Angeles
Transportation
Late-stage VC
Lyft $600M, San Francisco
Transportation
Series I
Allogene Therapeutics $411.8M, San
Francisco
Biotechnology
Series A
Robinhood $362.9M, Palo Alto
Financial software
Series D
Instacart $350M, San Francisco
E-commerce
Series E
7
8
6
9
10
5
4
3
2
1
Opendoor $325M, San Francisco
Vertical market software
Series E
Grail (Biotechnology) $300M, Menlo Park
Biotechnology
Series C
Tradeshift $250M, San Francisco
Financial software
Series E
Cohesity $250M, San Jose
IT storage
Series D
Dataminr $221M, New York
Artificial intelligence
Series E
In Q2'18 U.S.
VC-backed
companies raised
$27.3B
across
1,859 deals
43
#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.
VC investment in the US remains strong as IPO
market sees resurgence
VC investment in the United States held strong in Q2'18, with all ten of the top US deals this
quarter bringing in over $250 million in funding. An additional $2 billion raise by electric-car
manufacturer Faraday Future after reopening their Q1'18 funding round this year, helped propel
the US VC numbers this quarter.
VC investment in US late-stage deals big winner as number of seed and angel deals plateaus
US VC investors continued to focus on late-stage deals in Q2'18, with big follow-on raises by
Faraday Future ($2 billion), Lyft ($600 million), Robinhood ($362 million), Instacart ($350 million),
and others. The rapid maturation of industries considered cutting edge just a few years ago such as
food delivery, online lending and ride-hailing combined with a slow IPO market prior to 2018 has
led to a number of late-stage companies looking to the VC market to fuel growth and market
leadership plays.
With the tide turning on the IPO market, VC investors are starting to make strategic investments in
hot verticals, including autotech, biotech, and life sciences. Angel and seed-stage funding appears
to have plateaued following a long period of declining deals numbers. Big Series A raises by
Allogene Therapeutics during Q2'18 may be a sign of strengthening early-stage deals activity.
Seed and early-stage deals numbers could see a resurgence over the next few quarters in the US
as exit activity continues to gain steam.
IPO market in US continues to gain strength
Pent-up demand and positive post-IPO performance contributed to a continued resurgence in US
IPO activity in Q2'18. Positive exits by Docusign and Zuora this quarter, combined with strong IPOs
by Dropbox, Zscaler, and others earlier in the year, helped to spur a renewed interest in IPO exits
more broadly. While still early days, post-IPO performance has been quite positive for these
companies. Investors have also taken the long-term performance by companies like Twilio, now
2 years post-IPO, as proof that alternative business models can work and have longevity.
While many of the largest IPOs to date have come from software-as-a-service companies, it is
expected that other technology companies will also move to exit in the coming quarters, particularly
those that have delayed exiting due to the draught of exit activity that occurred in 2016 and 2017.
In terms of less mature companies listing for IPO, companies in the biotech and life sciences space
remain among the most active.
M&A activity was also positive during Q2'18, with Microsoft's acquisition of developer platform
GitHub for $7.5 billion.
Autotech remains big focus in US
Autotech continues to be a priority for VC investors in the US, as evidenced by Faraday Future's
second $1 billion+ raise this year. Many traditional automotive manufacturers are investing in
autonomous driving technologies in particular, despite the fact numerous hurdles remain before
such technologies can be implemented at a consumer level. VC investors are focusing particularly
on companies and management teams who have some ability to overcome recognized hurdles to
technology commercialization.
44
#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.
VC investment in the US remains strong as IPO
market sees resurgence, cont'd.
Breadth of cybersecurity investments expand
In Q2'18, cybersecurity firm Tanium raised $175 million, highlighting that cybersecurity continues to
be a big bet among VC investors. This is particularly true given that the breadth of cybersecurity
issues has quickly expanded beyond traditional norms. With the increase in connected
technologies from homes to cars to devices there has been a related increase in concern
regarding potential hacking. With many companies looking at breaches as a question of "When?"
not "If" corporate investments have also shifted to include technologies that enable rapid
response to breaches.
Convenience services a hot topic for investors
One trend of note so far in 2018 is the growing focus on 'convenience' companies. While verticals
like grocery and food delivery have long been convenience-focused, companies now appear to be
targeting more specialized niches. In Q1'18, dog-walking came under the investor microscope with
Wag's $300 million raise. In Q2'18, a second dog-walking focused app, Rover, raised $155 million.
The focus on dog-walking so far this year suggests that VC investors are willing to place bets on
companies trying to make people's day-to-day lives easier to manage.
Mega-funds and niche funds find traction in the market
Following the introduction of Softbank's Vision Fund in 2017, there has been an increase in
attention on the creation of other mega-funds such as the $12 billion fund being raised by
Sequoia Capital, the $1.25 billion raised by Battery Ventures, and the $1 billion being raised by
General Catalyst. These funds and their complementary minimum cheque size highlight the desire
of VC firms to be able to compete for the largest deals.
While there has been a significant focus on 'bigger is better' in terms of fund size, there has also
been some focus on small funds able to provide niche offerings, such as support to sustainable
companies in order to meet the needs of millennials. VC investors have also focused a significant
amount on creating specialized funds to support investments in other global markets, such as Asia,
Mexico, and Brazil.
Trends to watch for in Q3'18
Heading into Q3'18, the VC market in the US is expected to remain strong, even with ongoing
uncertainty related to tax reforms and trade tariffs with other countries. Activity in the IPO market is
expected to continue to increase with a greater variety of companies looking to exit. In terms of key
sectors, AI and autotech investments are expected to remain strong, in addition to investments in
healthtech, biotech, and life sciences companies.
45
#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.
Venture financing in the U.S.
2010 Q2'18
The money just keeps flowing. Last edition of the Venture Pulse, it was noted how remarkable the
consecutive highs in quarterly VC were but the back-to-back highs in the first half of 2018 are astounding.
Late-stage companies are closing rounds of financing, then even reopening for additional infusions of capital
in further tranches, in a testament to how much hype there is in the late-stage, unicorn-centric game.
.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
An unstoppable wave of late-stage capital
"While the successful IPO activity in the first half of 2018 has clearly been a catalyst for
continuing growth in late-stage investing, the increases in funding at the earlier stages of
investment bodes very well for the future of the VC-backed ecosystem in the US."
Conor Moore
National Co-Lead Partner, KPMG Venture Capital Practice, KPMG in the U.S.
0
500
1,000
1,500
2,000
2,500
3,000
$0
$5
$10
$15
$20
$25
$30
$35
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
# of deals closed
Angel/Seed
Early VC
Later VC
46
#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.
Median deal size ($M) by stage in the U.S.
2010 2018*
Up, flat or down rounds in the U.S.
2010 2018*
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
The disparity between angel & Series A widens
$0.5
$0.5
$0.5
$0.6
$0.6
$0.8
$0.9
$1.0
$1.4
$2.6
$2.7
$2.8
$3.0
$3.5
$4.3
$5.0
$6.0
$8.2
$6.0
$7.6
$7.4
$6.9
$9.0
$10.0
$10.0
$10.8
$15.0
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Angel/seed
Early stage VC
Later stage VC
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Up
Flat
Down
47
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Median deal size ($M) by series in the U.S.
2010 2018*
Note: Figures rounded in some cases for legibility.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
Latest stage surges even higher
$0.5
$0.5
$0.5
$0.5
$0.5
$0.7
$0.8
$1.0
$1.3
$2.4
$2.5
$2.7
$3.0
$3.5
$4.2
$5.0
$6.0
$8.0
$7
$7
$7
$7
$10
$11
$11
$14
$16
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Seed
Series A
Series B
$10
$12
$12
$12
$14
$17
$20
$22
$27
$12
$15
$16
$16
$26
$30
$25
$32
$50
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series C
Series D+
48
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Median pre-money valuation ($M) by series in the U.S.
2010 2018*
Note: Figures rounded in some cases for legibility.
Since 2016, the latest-stage median valuations have launched into the stratosphere. The oldest unicorns
that keep on raising sums contribute significantly to even the median of Series D and later rounds but, by
and large, it is also a testament to how deeply the venture landscape is awash in capital.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
Awash in capital, even medians stay high
$3
$4
$4
$4
$5
$5
$6
$6
$7
$6
$7
$8
$9
$11
$13
$14
$16
$20
$19
$20
$21
$25
$31
$39
$37
$40
$55
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Seed
Series A
Series B
$36
$46
$49
$54
$56
$70
$80
$80
$115
$66
$83
$92
$98
$139
$165
$137
$225
$278
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series C
Series D+
49
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Deal share by series in the U.S.
2018*, VC invested ($B)
Deal share by series in the U.S.
2018*, number of closed deals
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 11, 2018.
Angel & seed experiences greatest contraction
Deal share by series in the U.S.
2017, VC invested ($B)
Deal share by series in the U.S.
2017, number of closed deals
51.9%
22.9%
12.6%
6.8%
5.7%
Angel/seed
Series A
Series B
Series C
Series D+
8.7%
20.9%
23.4%
16.1%
31.0%
55.1%
23.8%
11.3%
5.5%
4.3%
7.0%
20.5%
19.3%
17.1%
36.1%
Angel/seed
Series A
Series B
Series C
Series D+
50
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Venture financing by sector in the U.S.
2014 2018*, number of closed deals
Venture financing by sector in the U.S.
2014 2018*, VC invested ($B)
The prior edition of Venture Pulse focused upon pharma & biotech's robustness both in VC invested and
volume in the first quarter of 2018, but it's worth noting that life sciences in general account for over 14% of
U.S. VC volume, the highest proportion in years. As life sciences span healthcare devices & supplies plus
pharma & biotech, it is a testament to how much more interested VCs are becoming in healthcare
innovation as the industry grows to an even larger share of the nation's economy.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
Life sciences stay strong
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014
2015
2016
2017
2018*
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014
2015
2016
2017
2018*
Commercial
Services
Consumer
Goods &
Recreation
Energy
HC Devices
& Supplies
HC Services
& Systems
IT Hardware
Media
Other
Pharma &
Biotech
Software
51
#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.
Corporate participation in venture deals in the U.S.
2010 Q2'18
After notching the first significant dip in a while, corporate players were back at it again in Q2 2018, joining
in more than 16% of all U.S. VC activity and a substantial portion of the period's largest venture rounds. As
they can afford it but more importantly also often have what are in essence R&D interests in staying
exposed to burgeoning technologies within their own industries, CVC entities are likely to stay invested.
CVC participation rebounds
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
$0
$2
$4
$6
$8
$10
$12
$14
$16
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
% of total deal count
52
#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.
First-time venture financings of companies in the U.S.
2010 2018*
Bouncing back from the tallies of Q1 2018, the year as a whole is recording a remarkably high aggregate of
VC invested in first-time funding (skewed by companies such as satellite imaging system maker EarthNow,
which had a $1 billion first-time round of Series A funds this year) even as volume remains quite low. Such
outliers hint that the innovation cycle is in a lull right now as entrepreneurs and financiers alike tackle harder
problems in more capital-intensive industries, such as agtech, aforementioned satellite imaging and the
like.
Diverging VC invested & volume point to
restarting innovation cycle
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 11, 2018.
$4.5
$6.0
$7.1
$7.2
$7.7
$8.8
$7.0
$7.3
$5.4
2,034
2,736
3,213
3,456
3,676
3,427
2,667
2,545
947
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Capital invested ($B)
Deal count
53
#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.
U.S. venture activity in pet technology
2012 2018*
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
Pet technology has exploded in popularity, and looks set to be entering its maturing later stages of hype and
funding cycles judging by the surge in VC invested in 2018 to date alone. Such investor enthusiasm is due, in
large part, to the healthy growth trajectory of the nation's pet industry.
Pet projects: VC invested hits new high
$24
$52
$245
$61
$157
$295
$488
8
13
21
16
19
25
14
2012
2013
2014
2015
2016
2017
2018*
Capital invested ($M)
Deal count
54
#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.
Venture-backed exit activity in the U.S.
2010 Q2'18
As 2018 to date has seen a healthy resurgence in tech IPOs plus alternate options of exits such as buyouts by
the likes of Thoma Bravo and Vista Equity Partners, the forecast for investors and founders looking to sell
appears rosy. Macro trends also are relatively promising, as exit values have been steady and on the higher
end, historically speaking, while volume has plateaued.
The U.S. sees steadiest rate of venture-backed
exits
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
0
50
100
150
200
250
300
350
$0
$5
$10
$15
$20
$25
$30
$35
$40
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Exit value ($B)
Exit count
"This has been the best six month period since before 2016 for the IPO market. There has been
a significant increase in the number of IPOs and of the companies that have completed IPOs,
approximately 70% are trading above their asking price. This is generating a lot of enthusiasm
for IPOs among investors. Over the next quarter or 2, this enthusiasm will likely translate into
other high-profile exits."
Brian Hughes
Co-Leader, KPMG Enterprise Innovative Startups Network, KPMG International and
National Co-Lead Partner, KPMG Venture Capital Practice, KPMG in the U.S.
55
#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.
Venture-backed exit activity (#) by
type in the U.S.
2010 2018*
Venture-backed exit activity ($B)
by type in the U.S.
2010 2018*
The bullish case for M&A as a source of liquidity for venture-backed companies in the U.S. in 2018 is still
strong; it appears that the M&A cycle, although not quite as strong as it has been in past boom years, still
has plenty of strength left.
Even with IPOs resurging, M&A is best bet
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
0
200
400
600
800
1,000
1,200
Strategic Acquisition
Buyout
IPO
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
Strategic Acquisition
Buyout
IPO
56
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Pharma startups raking it in
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
Venture-backed exit activity ($B) by sector in the U.S.
2010 2018*
Venture-backed exit activity (#) by sector in the U.S.
2010 2018*
0
200
400
600
800
1,000
1,200
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Commercial
Services
Consumer Goods &
Recreation
Energy
HC Devices &
Supplies
HC Services &
Systems
IT Hardware
Media
Other
Pharma & Biotech
Software
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Commercial
Services
Consumer Goods &
Recreation
Energy
HC Devices &
Supplies
HC Services &
Systems
IT Hardware
Media
Other
Pharma & Biotech
Software
57
#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.
U.S. venture fundraising
2010 Q2'18
As the epicenter of the venture industry, the U.S. fundraising cycle still accounts for the majority of global
volume. The cycle has been robust, with Q2 2018 one of the stronger quarters on record in terms of total VC
raised, however, by and large, it is difficult to see the pace of fundraising quickening in the future, at best it is
likely to persist at the current elevated level. There does not appear to be unlimited appetite on the part of LPs
for exposure to VC.
Even given third consecutive quarter of growth
in VC raised, the cycle is at the least plateauing
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
0
20
40
60
80
100
120
140
$0
$2
$4
$6
$8
$10
$12
$14
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital raised ($B)
# of funds raised
58
#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.
Venture fundraising (#) by size in
the U.S.
2010 2018*
As noted in the prior edition of the Venture Pulse, the resurgence in first-time fundraising volume in 2017 was
not necessarily going to persist, given the economics of that market, but in the year to date, things are
looking relatively promising for fledgling funds coming to market and looking for capital.
First-time vs. follow-on venture funds
(#) in the U.S.
2010 2018*
First-time fundraising still seeing decent figures
relative to follow-on funds
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201020112012201320142015201620172018*Under $50M
$50M-$100M
$100M-$250M
$250M-$500M $500M-$1B
$1B+
0
50
100
150
200
250
300
350
2010
2012
2014
2016
2018*
First-time
Follow-on
59
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Midway through the year, fledgling funds still
able to raise significant sums
Venture fundraising ($B) by size in
the U.S.
2010 2018*
First-time vs. follow-on funds ($B)
in the U.S.
2010 2018*
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
2012
2014
2016
2018*
Follow-on
First-time
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201020112012201320142015201620172018*Under $50M
$50M-$100M
$100M-$250M
$250M-$500M $500M-$1B
$1B+
60
#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.
2018 activity shifts to centralize around
traditional hubs, as other areas slowly grow
U.S. venture activity (#) by U.S. region
2010 2018*
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201020112012201320142015201620172018*West Coast
Southeast
South
Other Territory
New England
Mountain
Midwest
Mid-Atlantic
Great Lakes
In Q2'18 European
VC-backed
companies raised
$5.6B
across
631 deals
62
#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 diversity of the European VC market helped drive investment this quarter, with the top 11 deals
spread among six countries, including the UK, Estonia, Finland, Germany, Belgium and Israel.
However, the UK continued to show its strength, representing 3 of the top 4 deals during the quarter.
Regardless of the geographic and cultural diversity across the region, artificial intelligence was a
common and very dominant theme during Q2'18 in almost all European countries. This only
highlights AI's significant importance to the VC market both, locally and on a regional scale.
IPO market gaining slow traction in Europe
IPO exits in Europe have been sluggish over the last 2 years, but the tide might have started to
turn with an increase in activity this quarter. In Q2'18, Netherlands-based company Ayden held a
successful IPO although the move was focused on providing existing stakeholders with an exit
opportunity rather than on raising new capital. Over the first day of trading, the share price rose
67%, valuing the company at over $14 billion. The increase in IPO activity could drive a number of
other aging unicorns to look at IPO exits over the next few quarters.
VentureEU set to support bigger VC deals across Europe
During Q2'18, the EU and European Investment Fund launched VentureEU, a funding program
that has been in the works for several years, aimed at filling the gaps in VC investment in Europe
by providing access to bigger funding pools. With Europe lagging well behind both the US and
Asia in terms of VC funding availability, particularly for larger, later stage deals , it is hoped that
this fund, expected to reach approximately $2.6 billion, will help companies in Europe gain access
to the capital needed to scale and compete more effectively globally.
UK regaining ground in Europe with strong Q2'18
VC investment in the UK gained strength in Q2'18, propelling it back to the top of the VC market
in Europe. The UK accounted for six of the top 10 European deals this quarter, including Revolut
($250 million), Freeline Therapeutics ($119 million), CRM Surgical ($100 million), Liberis
($81 million), Culture Trip ($80 million) and Crescendo Biologics ($70 million).
During Q2'18, the UK also announced a massive $1 billion deal to put the UK firmly on the map in
terms of AI innovation. The deal included both new government funding for AI research, and
private sector investments. Under the deal, Japanese VC firm Global Brain and Canada-based VC
firm Chrysalix will both locate their European headquarters in the UK and will invest 35 million
and 110 million respectively in UK-based deep-tech, AI, and robotics startups. This funding deal
should only enhance AI investments in the UK, which are already significant. For example,
pharma-focused AI company BenevolentAI raised $115 million in Q2'18.
European VC investment holds steady in Q2'18
63
#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.
AI and biotech hot topics in Germany
Germany saw a dip in investment in Q2'18 following large raises in Q1'18 by Auto1 Group and
BioNTech. Despite the dip, venture capital investment remained respectable, led by a $76 million
raise by Frontier Car Group and a $73 million raise by Sonnen.
During Q2'18, Rocket Internet also announced its desire to invest approximately $3 billion in
artificial intelligence and fintech. With the e-commerce space becoming saturated, Rocket and
other e-commerce companies in Europe have begun to focus their attention on adjacent verticals
with broader applications and revenue generation opportunities.
In addition to AI, biotech is beginning to gain traction among investors in Germany, a surprising
trend given the reluctance on the part of investors to focus on the space over the past decade.
France continues to build strong innovation ecosystem
Q2'18 was another strong quarter for venture capital investment in France, with a $50 million raise
by OpenClassrooms, a $47 million raise by ENYO Pharma, and a $37 million raise by HiFiBio.
French unicorn BlaBlaCar also acquired carpooling app Less, which only launched in beta 4
months ago during Q2'18 to better support its core business.
Artificial intelligence received a significant amount of attention during Q2'18 in France, with the
government announcing 1.2 billion of funding over the next 4 years to support AI capabilities and
enhance the competitiveness of French companies.
Companies feel pressure as GDPR comes into effect
The General Data Protection Regulation (GDPR) went into effect in Europe this quarter, a regulation
that will have significant consequences for all companies operating in Europe. While the new regulation
may not have a major impact on VC investment directly, it may cause some distraction as startups look
to manage the new compliance regime. Given the stiff penalties associated with non-compliance, up to
4% of global revenue or 20 million Euros, whichever is greater, it is likely that companies that have not
done so in advance could be scurrying to do so over the next few months.
While there may be negative short-term consequences, the benefits of a strong data protection
system could make European companies more attractive over the longer term as they become
global leaders in how to manage private consumer and employee data.
Trends to watch for in Q3'18
Despite some political and macroeconomic uncertainty in Europe, there is a significant amount of
optimism for the VC market heading into Q3'18. Late-stage deals are expected to remain a key
focus for investors, while AI, biotech and life sciences are projected to gain significant momentum.
With the success of the Ayden IPO, a number of aging unicorns, particularly in the UK, may make
IPO plays over the next few quarters
European VC investment holds steady in Q2'18,
cont'd.
64
#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.
Venture financing in Europe
2010 Q2'18
Venture volume may continue to contract, by and large, across the European continent, but the influx of VC
invested continues as strong as ever. Late-stage financings may be responsible for the majority of the influx
of capital, but their very existence does speak to continued opportunities for tech startups across the
European venture scene, diverse as it is across multiple metropolises.
VC invested remains remarkably strong on a
historical and standalone basis
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
$0
$1
$2
$3
$4
$5
$6
$7
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
# of deals closed
Angel/Seed
Early VC
Later VC
65
#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.
Median deal size ($M) by stage in Europe
2010 2018*
Up, flat or down rounds in Europe
2010 2018*
Midway through the year, significant jumps in
median financing sizes over 2017 tallies persist
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
$0.5
$0.4
$0.3
$0.3
$0.3
$0.5
$0.6
$0.8
$1.2
$1.7
$1.5
$1.3
$1.2
$1.4
$1.5
$1.6
$2.2
$4.9
$3.2
$3.3
$2.9
$3.2
$3.6
$4.0
$4.4
$5.2
$9.1
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Angel/seed
Early stage VC
Later stage VC
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Up
Flat
Down
66
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Median deal size ($M) by series in Europe
2010 2018*
Late-stage deal sizes even out
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
$0.5
$0.4
$0.3
$0.3
$0.3
$0.5
$0.6
$0.7
$1.2
$2.4
$3.0
$2.5
$3.0
$3.3
$3.8
$4.6
$6.0
$6.6
$5.5
$6.5
$4.9
$5.6
$7.2
$10.9
$12.0
$12.2
$18.0
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Seed
Series A
Series B
$10.5
$5.8
$9.7
$8.5
$13.6
$19.2
$20.0
$23.0
$25.0
$9.4
$14.1
$15.0
$10.9
$29.8
$45.0
$27.5
$38.5
$38.0
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series C
Series D+
67
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Deal share by series in Europe
2010 2018*, number of closed deals
Deal share by series in Europe
2010 2018*, VC invested ($B)
Series B VC invested already matching 2017
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series D+
Series C
Series B
Series A
Angel/seed
$0
$2
$4
$6
$8
$10
$12
$14
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series D+
Series C
Series B
Series A
Angel/seed
68
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
European venture financings by sector
2014 2018*, number of closed deals
European venture financings by sector
2014 2018*, VC invested ($B)
Software & pharma remain focus of VCs
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014
2015
2016
2017
2018*
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014
2015
2016
2017 2018*
Commercial
Services
Consumer
Goods &
Recreation
Energy
HC Devices
& Supplies
HC Services
& Systems
IT Hardware
Media
Other
Pharma &
Biotech
Software
69
#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.
Corporate VC participation in venture deals in Europe
2010 Q2'18
CVCs keep invigorating the venture landscape
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
0%
5%
10%
15%
20%
25%
30%
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
% of total deal count
70
#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.
2018 looks set to record new lows for both
first-time financing value & volume
First-time venture financings of companies in Europe
2010 2018*
It's not that new companies aren't being started in Europe, to reiterate the point made in the prior Venture
Pulse relevant data has yet to catch up, as it's notoriously difficult to track new business creation but
that the current high-priced climate is discouraging their financings. Moreover, alternate forms of financing
may well be more appealing for now. Thus, 2018 looks set to be a historic year in terms of lows for both first-
time VC invested and overall activity.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
$3.0
$3.3
$3.6
$3.1
$2.6
$3.0
$3.5
$2.2
$0.9
1,163
1,482
1,709
2,011
2,206
1,789
1,473
1,100
310
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Capital invested ($B)
Deal count
71
#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.
Venture-backed exit activity in Europe
2010 Q2'18
Despite the slide in exit volume over the past few quarters, again, it's worth noting that venture-backed exit
activity in Europe is still historically healthy, especially when considering exit value tallies. Q2 2018 was
skewed significantly by two deals, both interestingly within the realm of payments: the $2.2 billion acquisition
of iZettle by Paypal and the IPO of Adyen on the Amsterdam stock exchange.
A mild rebound shows potential
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
0
20
40
60
80
100
120
140
160
180
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Exit value ($B)
Exit count
72
#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.
PE shops continue to provide an increasingly
used exit avenue
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
Venture-backed exit activity (#)
by type in Europe
2010 2018*
Venture-backed exit activity ($B) by
type in Europe
2010 2018*
0
100
200
300
400
500
600
Strategic Acquisition
Buyout
IPO
$0
$5
$10
$15
$20
$25
Strategic Acquisition
Buyout
IPO
73
#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.
After blockbuster Q1, back to normal for
European fundraising
European venture fundraising
2010 Q2'18
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
Again, fundraising figures by quarter are useful to analyze, but remain quite variable. But the most recent
high-profile raise Highland Europe's third flagship fund in six years closed on 463 million in June
shows that even if fundraising is still largely born on the backs of a bevy of experienced, late-stage focused
firms, the late-stage European venture scene, for those companies that can get to that stage, should remain
well supplied with capital.
0
10
20
30
40
50
60
70
$0
$1
$2
$3
$4
$5
$6
$7
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital raised ($B)
# of funds raised
74
#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.
Venture fundraising (#) by size in Europe
2010 2018*
First-time vs. follow-on venture funds (#) in Europe
2010 2018*
Increasing shift to the middle of the fundraising
market by size
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Under $50M
$50M-$100M
$100M-$250M
$250M-$500M
$500M-$1B
$1B+
0
20
40
60
80
100
120
140
160
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Follow-on
First-time
75
#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.
Venture financing in the United Kingdom
2012 Q2'18
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
Strong sums invested even as activity slides
Hot on the heels of a blockbuster 2017, the United Kingdom is still seeing aggregate sums of VC invested that
are on the very high end, historically speaking, despite a continuing slide in total volume. This suggests that
despite continued uncertainty on the macropolitical and macroeconomic ends, investors are only being
moderately risk-averse, concentrating capital in safer, more mature opportunities.
0
50
100
150
200
250
300
350
400
450
500
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
"We are seeing a new group of investment categories evolving AI first businesses, blockchain
businesses, and others. These are going to help establish a new VC life cycle with increasing
venture rounds over the next few quarters and years. Already AI first businesses are raising solid
early- and mid-stage funding rounds. Subject to successful R&D and commercialisation, they will
surely attract even more funding going forward."
Patrick Imbach
Head of KPMG Tech Growth, KPMG Enterprise in the UK
76
#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.
Venture financing in London
2012 Q2'18
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
A mild slowdown in volume
London-based companies are still raking in plenty of capital, even if there are as of yet no such outliers like
those seen at the close of 2017. However, third-highest quarterly sum of VC invested of the past 7 years is
hardly anything to sniff at, against a backdrop of slowly diminishing volume. Investors may be concentrating
more funds in safer prospects, but those companies' growth prospects are bright.
0
50
100
150
200
250
300
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
77
#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.
Venture financing in Ireland
2012 Q2'18
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
2018 VC invested well within historical norms
The diversity of Ireland's startup scene is more marked than many may think. The top raise in Q2 2018 was
a $64 million round by Sublimity Therapeutics, which focuses on oral drug delivery.
0
20
40
60
80
100
120
$0
$100
$200
$300
$400
$500
$600
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
"While the short-term impact of GDPR may cause some upset for European companies,
compliance could generate some significant opportunities in the future. Since GDPR is shaping
up to be the gold standard for the security and retention of personal information, compliant
companies should be well equipped to compete anywhere in the world."
Anna Scally
Partner, Head of Technology and Media, and Fintech Lead, KPMG in Ireland
78
#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.
Venture financing in Germany
2012 Q2'18
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
Q2 2018 deal volume evens out
Aggregate VC activity evened out between Q1 and Q2 2018, which, given additional data recorded in coming
months, could very well entail that Q2 volume was more robust than that of the first quarter. VC invested also
remained healthy, albeit skewed somewhat by used-car marketplace Frontier Car Group's $89 million round.
0
20
40
60
80
100
120
140
160
$0
$500
$1,000
$1,500
$2,000
$2,500
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
"There is a lot of liquidity in the market, which will bode well heading into Q3'18. However, the level of
uncertainty is more than we would normally see with GDPR across Europe, Brexit in the UK, political
tension here in Germany, and a budding trade war between the EU and the US. These developments
are going to keep investors on high alert, making them more cautious and selective."
Tim Dmichen
Partner, KPMG in Germany
79
#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.
Venture financing in Berlin
2012 Q2'18
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
Is the used-car marketplace heating up?
Interestingly enough, after a Q1 marked by a large financing of a used-car marketplace provider Auto1
Group the top raise in Berlin was by another used-car marketplace provider, Frontier Car Group. This could
well be the late-stages of a cycle of competition, with the last companies standing now refilling their warchests
for growth.
0
10
20
30
40
50
60
70
80
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
80
#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.
Venture financing in Spain
2012 Q2'18
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
Another strong quarter for VC invested
In the wake of Cabify's quarter-skewing raise in Q1, the Spanish venture ecosystem saw another healthy tally
of VC invested, even as activity remains near historic lows. Most of the action was centered around B2B and
consumer software plays, with listing platform Spotahome closing on $40 million in Series B funds and freight
delivery platform OnTruck raking in $29.6 million, also of Series B funds.
0
10
20
30
40
50
60
70
80
90
$0
$50
$100
$150
$200
$250
$300
$350
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
81
#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.
Venture financing in France
2012 Q2'18
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
France venture scene records another influx
Even after a strong Q1 that could have been deemed an outlier, French venture-backed companies continue
to rake in plenty of capital. As always when that occurs with a slide in rounds completed, one must look for
outliers, but surprisingly there was no single $100 million financing accounting for much of the robustness, but
rather a flurry of decently sized rounds, with no fewer than 15 exceeding $20 million.
0
20
40
60
80
100
120
140
160
180
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
"Unlike in many countries, seed-stage funding is still strong in France. The country has become a
unique innovation laboratory catering to the world. For 6 years, it has been demonstrating its
ability to create excellent startups able to harness an incredible level of innovation. This, in
addition to support by the state, has helped reduce risks for seed investors, making them far
more willing to invest than they might be otherwise."
Georges Gambarini
Innovation & Fundraising, Head of Innovative Startup Network
KPMG in France
82
#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.
Venture financing in Paris
2012 Q2'18
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
Paris remains central hub of French VC
Most of the money flowing to French companies still winds up in Paris, with only two of the top 10 financings in Q2
2018 occurring in non-Paris-headquartered businesses. The largest transaction of Q2 was a $60 million financing
of educational platform OpenClassrooms.
0
10
20
30
40
50
60
70
80
$0
$100
$200
$300
$400
$500
$600
$700
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
83
#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.
Revolut $250M, London
Financial software
Series C
Taxify $175M, Tallinn
Transportation
Early-stage VC
Freeline Therapeutics $119.2M,
London
Biotechnology
Series B
CMR Surgical $100.2M, Cambridge
Surgical devices
Series B
HMD Global $100M, Espoo
Distributors/wholesale
Late-stage VC
7
8
6
9
10
5
4
3
2
1
Frontier Car Group $89M, Berlin
Transportation
Series C
Liberis $80.9M, London
Consumer finance
Late-stage VC
Culture Trip $80M, London
Social content
Series B
Iteos Therapeutics $75.8M,
Gosselies
Drug discovery
Series B
Crescendo Biologics $70M,
Cambridge
Therapeutic devices
Series B
V-Wave $70M, Caesarea
Therapeutic devices
Series C
The edges of Europe stand atop Q2 rankings
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
11
10 7
6
3
8
5
4
9
2
1
11
In Q2'18 VC-backed
companies in the Asia
region raised
$35.9B
across
466 deals
85
#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.
Venture capital investment in Asia, and in China, in particular, was very strong this quarter, with more
than $35 billion in total investment across 466 deals. Late-stage megadeals continued to dominate in
Asia, representing 8 of the top 10 deals globally, including a massive $14-billion round by Ant Financial.
During the quarter, there was also a huge exit in India and the IPO of Japan's first startup unicorn.
Fintech investment remains strong
Investors worldwide lined up to finance fintech companies in China in Q2'18. The biggest deal of
the quarter was the $14-billion round raised by Ant Financial, operator of Alipay China's biggest
online payment platform. The funding, provided by a number of international VC firms, is expected
to help the company with its overseas expansion. Pintec, which offers end-to-end solutions based
on AI, big data, and blockchain also raised $103 million this quarter.
Funding to help 'Uber for trucks' boost supply chain
Truck-hailing firm Manbang, often described as China's 'Uber for trucks', received $1.9 billion
during Q2'18. The investment is expected to help the company improve its logistics and the supply
chain management. The investment was led by SoftBank's Vision Fund, which includes backers
such as Apple Inc, Foxconn, and Saudi Arabia's Sovereign Wealth Fund.
Healthcare and biotech remain robust
Biotech and healthcare-related technologies continued to draw significant VC investment in Q2'18.
In particular, there was considerable interest and funding for companies specializing in genetic-
sequencing-related technology for early detection of terminal diseases.
Investors have also shown interest in the use of AI across various applications, including initial
screening of diagnoses and pre-diagnosis of patients with certain conditions. AI is also being used
to review images (e.g. CT scans). Companies with access to large amounts data and a proven
ability to scale their business models can expect to be very attractive to investors moving forward.
In addition to research and AI-related technologies, there has also been more investment in
companies that provide greater access to healthcare. A major deal in Q2'18 was the $500-million
raise from China's WeDoctor, which provides diagnosis and online booking services. AI and health
care both separately and now together are considered a national priority in China given its
large and aging population.
AI continues to attract major capital
AI is also attracting investors across other sectors as more companies focus on integrating the
technology into their business models. China has a distinct advantage in terms of AI development
given its large population and massive pool of aggregated data.
As a result, it is not surprising that China continued to pull in massive investments in AI in Q2'18.
China-based SenseTime, which provides face, image and video recognition technology for various
sectors, raised over $1.2 billion across two deals this quarter. At a valuation of more than
$4.5 billion, SenseTime is now considered the world's most valuable AI startup3.
Ant Financial $14 billion funding round propels
Asia's VC investment
3 https://www.cnbc.com/2018/05/31/sensetime-raises-more-than-one-billion-dollars-in-mere-months.html
86
#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.
Chinese exchanges seek more start-ups; attract PE
China has been working to expand its capital markets, including developing new listing rules for its
major stock exchanges in Hong Kong and Shanghai to attract more local companies to list at
home4. In Q2'18, the Hong Kong Stock Exchange introduced new rule changes to encourage IPO
exits, including allowing companies with variable voting rights to list. This move is part of Hong
Kong's mission to turn itself into a capital markets hub for emerging and innovative Chinese
companies. Also this quarter, the China Securities Regulatory Commission (CSRC) announced
additional measures in Shanghai designed to attract new economy innovative businesses.5
IPOs on the rise in Hong Kong
The Hong Kong Stock Exchange appears to be picking up steam. While overall annual listing
volumes have been declining since 2014, late 2017 and the first half of 2018 have seen increased
activity. A number of major companies seen as potential listing candidates in the near future
include: Lufax, WeLab, Meituan Dianping and Ant Financial.
E-commerce exit dominates deals in India
Wal-Mart's $16-billion purchase of Indian e-commerce site Flipkart was the biggest exit for an Indian
tech company by a long shot. VC interest in internet-driven platforms and companies continued to grow
this quarter, particularly given the mobile-dominated marketplace in India. E-commerce players have
been expanding their product range into areas such as logistics, e-services, and payment services.
There has also been a proliferation of digital media companies catering to the surge in consumption of
news, entertainment and gaming inspired by successful models such as Amazon Prime. Overall in
India, almost half-a-dozen first-time venture capital investors have made their debut since the beginning
of this year, indicating growing investor interest in India's startups6.
Despite this activity, Q2 was a slow quarter for VC investment India, with the largest VC investment
being Capital Float ($80 million), followed by a number of much smaller deals.
A watershed moment for Japan's VC sector
Japanese flea market app operator Mercari raised $1.2 billion in its IPO in Q2'18, representing the
first IPO of a unicorn startup in Japan and proof that home-grown ventures in Japan can
present outstanding return opportunities of over 100x for VC investors. The IPO was considered
massive for a VC-backed company by Japanese standards. Traditionally, Japanese companies go
public at earlier stages and therefore for lower valuations. The Mercari IPO, used to raise funds for
international expansion is expected to encourage other Japanese entrepreneurs to seek funding to
grow beyond Japan's domestic market.
Trends to watch for in Q3'18
AI and analytics are expected to continue to drive VC activity across Asia over the next few
quarters, with investments expected across a range of sectors, including healthcare, biotech,
financial services, and retail. Other sectors expected to see increased investment include
payments, virtual banking, and consumer sectors that cater to Asia's rising middle and upper class.
We will be watching to see whether the trade tensions between China and the US lead Chinese
investors to look for opportunities in other regions. Chinese investment in the US may also hinge
somewhat on proposed legislation before the US Congress, which would give the government
greater oversight over deals involving foreign investors7.
Ant Financial $14 billion funding round propels
Asia's VC investment, cont'd.
4 https://www.caixinglobal.com/2018-03-10/shanghai-shenzhen-bourses-draft-new-rules-to-attract-tech-unicorns-101219652.html
5 https://www.scmp.com/business/china-business/article/2143158/new-listing-rules-likely-attract-dozen-applicants-first
6 https://www.dealstreetasia.com/stories/indian-startup-venture-capital-investors-98026/
7 https://www.bloomberg.com/news/articles/2018-05-16/venture-capitalists-fret-over-u-s-bill-targeting-chinese-investors
87
#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.
Venture financing in Asia
2010 Q2'18
Last quarter's edition of Venture Pulse noted it was remarkable that the region's VC ecosystem recorded
yet another $13 billion+ tally, signifying the growing maturity of its venture capital market. Ant Financial's
jaw-dropping $14 billion could not have been foreseen, but speaks to both the maturation of the scene's
ecosystem and its continued dominance by a handful of rapidly growing, late-stage companies.
Q2 2018 soars to unprecedented levels thanks
to Ant Financial's massive round
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
0
100
200
300
400
500
600
700
800
900
$0
$5
$10
$15
$20
$25
$30
$35
$40
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
# of deals closed
Angel/Seed
Early VC
Later VC
"During the past quarter, rule changes around the Hong Kong Stock Exchange have brought
renewed attention and interest to potential IPOs. There is tremendous anticipation around a
number of unicorns considering going public over the next few quarters, in particular in the area
of fintech and biotech. Allowing companies with variable voting rights is attracting new economy
companies to be listed in Hong Kong. Fintech and Autotech continues to receive significant
investments and we are seeing increased attention on the biotech and retail tech."
Philip Ng
Partner, Head of Technology, KPMG China
88
#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.
Median deal size ($M) by stage in Asia
2010 2018*
Late-stage figures even out, as early-stage
tallies edge up even higher
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
After an upsurge at the latest stage post 2014, which showed the impact of the first huge venture-backed
successes in the Asia-Pacific region, median transaction sizes now are evening out somewhat, which is
likely for the best as opposed to continued inflation and consequent potential overexuberance.
$0.3
$0.4
$0.3
$0.4
$0.5
$0.5
$0.5
$0.7
$1.0
$4.9
$5.0
$3.3
$3.0
$4.4
$5.0
$7.0
$6.4
$9.3
$10.0
$10.7
$9.0
$10.0
$16.0
$20.0
$16.9
$25.0
$25.6
2010
2011
2012
2013
2014
2015
2016
2017
2018
Angel/seed
Early stage VC
Later stage VC
89
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Median deal size ($M) by series in Asia
2010 2018*
Note: Select figures are rounded for legibility.
Series A figures maintain growth
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
$0.3
$0.4
$0.3
$0.4
$0.5
$0.5
$0.5
$0.7
$1.0
$3.5
$5.0
$3.5
$2.6
$4.5
$5.0
$5.0
$5.9
$7.9
$8.0
$10.0
$7.8
$7.1
$15.0
$16.4
$15.0
$15.0
$16.5
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Seed
Series A
Series B
$17.0
$20.0
$16.5
$15.0
$30.0
$35.0
$36.1
$41.7
$47.1
$50.0
$25.7
$30.0
$24.5
$60.0
$100.0
$50.0
$120.0
$121.2
2010
2011
2012
2013
2014
2015
2016
2017
2018
Series C
Series D+
90
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Deal share by series in Asia
2010 2018*, number of closed deals
Deal share by series in Asia
2010 2018*, VC invested ($B)
Skewed somewhat, Series C financings account
for majority of VC invested in 2018 to date
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
0
500
1,000
1,500
2,000
2,500
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series D+
Series C
Series B
Series A
Angel/seed
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series D+
Series C
Series B
Series A
Angel/seed
91
#Q2VC
2018 KPMG International Cooperative ("KPMG International"). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Software platforms remain most popular
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
Asia venture financings by sector
2014 2018*, number of closed deals
Asia venture financings by sector
2014 2018*, VC invested ($B)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014
2015
2016
2017
2018*
Commercial
Services
Consumer Goods
& Recreation
Energy
HC Devices &
Supplies
HC Services &
Systems
IT Hardware
Media
Other
Pharma & Biotech
Software
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014
2015
2016
2017
2018*
Commercial
Services
Consumer Goods
& Recreation
Energy
HC Devices &
Supplies
HC Services &
Systems
IT Hardware
Media
Other
Pharma & Biotech
Software
92
#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.
Corporate participation in venture deals in Asia
2014 Q2'18
Corporations and their venture arms remain essential to the Asia-Pacific ecosystem on the whole. Largely
due to how financial markets evolved within the region overall, their ongoing support and particular models
for involvement by and large are a positive, as they encourage and inculcate entrepreneurial efforts across
key hubs.
CVCs retain a hefty participation rate
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
0%
5%
10%
15%
20%
25%
30%
35%
$0
$5
$10
$15
$20
$25
$30
$35
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2014
2015
2016
2017
2018
Capital invested ($B)
% of total deal count
93
#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.
Venture-backed exit activity in Asia
2010 Q2'18
A maturing market results in quarterly volatility
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
0
10
20
30
40
50
60
70
80
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Exit value ($B)
Exit count
"The Hong Kong exchange is making some very strategic moves into the new economy. They are
trying to position Hong Kong to be the platform for IPOs in that space. It's not just changing the
exchange and what coming through it, but also what Hong Kong will be in the next five-to-10 years."
Egidio Zarrella
Head of Clients and Innovation Partner, KPMG China
94
#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.
Venture-backed exit activity (#)
by type in Asia
2013 2018*
Strategics still taking a breather in 2018, with
buyout shops filling the gap somewhat
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
Venture-backed exit activity ($B) by type
in Asia
2013 2018*
0
50
100
150
200
250
2013 2014 2015 2016 2017 2018*
Strategic Acquisition
Buyout
IPO
$0
$20
$40
$60
$80
$100
$120
2013
2014
2015
2016
2017
2018*
Strategic Acquisition
Buyout
IPO
"Mercari's IPO was a blockbuster exit by Japanese standards and is a watershed moment for
Japan's VC sector in particular. In addition to driving renewed VC interest in Japan, the great
outcome for early employees will be a strong catalyst to build a more robust local angel
ecosystem, accelerating the formation of exciting new ventures."
Paul Ford
Partner, Deal Advisory, KPMG in Japan
95
#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.
Venture fundraising in Asia
2011 Q2'18
As past peaks have indicated, there can be quite a few venture funds closed within the Asia-Pacific region
the thing is that there will be wild swings from quarter to quarter in aggregate tallies of count and capital
raised, primarily as the ecosystem is still growing and maturing. The downturn in Q2 2018 should accordingly
not be read overmuch into.
Fundraising volatility still suggests the regional
VC scene has a ways to grow
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
0
5
10
15
20
25
30
35
40
45
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2011
2012
2013
2014
2015
2016
2017
2018
Capital raised ($B)
# of funds raised
96
#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.
Venture fundraising (#) by size in Asia
2010 2018*
First-time vs. follow-on venture funds (#) in Asia
2010 2018*
Healthy first-time fundraising tallies suggest
promising signs for regional ecosystem
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 6/30/18. Data provided by PitchBook, July 12, 2018.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
2011
2012
2013
2014
2015
2016
2017
2018*
First-time
Follow-on
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Under $50M
$50M-$100M
$100M-$250M
$250M-$500M
$500M-$1B
$1B+
97
#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.
Venture financing in India
2012 Q2'18
The trend in venture volume continues to even out within India. While VC invested tallies clip along at a
steady pace the top two transactions in Q2 were on-demand food delivery platform Swiggy's $210
million Series G round and insurance provider PolicyBazaar's $200 million Series F funding, both of which
exemplify the ongoing focus on the consumer space.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
Volume steadies as B2C focus remains intact
0
50
100
150
200
250
300
350
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
"We see a very strong positive sentiment in India where companies are aggressively looking to
acquire capabilities rather than building in-house. It's more about 'who should I acquire?"
Companies in the Internet/CPG/Retail/ Financial Services industries are aggressively looking for
bolt-on strategies where they can acquire a category/capability which they can add to their
repertoire to succeed in the market."
Sreedhar Prasad
Partner, Consumer Markets, Internet Business and Startups, KPMG in India
98
#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.
Venture financing in China
2012 Q2'18
The sheer amount of money Ant Financial has raised is astounding, as it and it alone skews Chinese venture
figures so handily. Per PitchBook data, the company has raised $23.4 billion since its inception, across both
venture capital and debt. Such raises testify to just how much capital can pour into an enterprise that looks
set to capture the massive growth potential within a given Chinese sector.
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
All about Ant Financial
"I expect Chinese capital will continue to pour into venture capital investment inside China, as well as
across parts of Asia. Because of the trade tension between China and the U.S., some of the Chinese
investors might be looking at opportunities outside of U.S., depending on the sectors."
Irene Chu
Partner, Head of New Economy, Hong Kong Region, KPMG China
0
50
100
150
200
250
300
$0
$5
$10
$15
$20
$25
$30
$35
$40
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
# of deals closed
99
#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.
China accounts for all top Asia-Pacific financings
6
3
8
5
9
2
1
10
7
4
5
4
3
2
Hellobike $700M, Shanghai
Transportation
Series E1
SenseTime $620M, Beijing
Artificial Intelligence
Series C
SenseTime $600M, Beijing
Artificial Intelligence
Series C (corporate)
VIPKid $500M, Beijing
Education & training
Series D
Byton $500M, Nanjing
Automotive
Series B
WeDoctor $500M, Hangzhou
Application software
Corporate
1
7
b
Source: Venture Pulse, Q2'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, July 12, 2018.
Ant Financial $14,000M, Hangzhou
Financial software
Series C
Weltmeister $3,176M, Shanghai
Transportation
Late-stage VC
Pinduoduo $3,000M, Shanghai
Internet retail
Series C
Manbang Group $1,900M, Beijing
Transportation
Late-stage VC
Ubtech $820M, Shenzhen
Robotics
Series C
7
a
8
6
9
10
100
#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.
KPMG Enterprise Innovative Startup Network.
From seed to speed, we're here throughout
your journey
Contact us:
Arik Speier
Co-Leader, KPMG Enterprise
Innovative Startups Network
E: aspeier@kpmg.com
Brian Hughes
Co-Leader, KPMG Enterprise
Innovative Startups Network
E: bfhughes@kpmg.com
(SAR)
101
#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.
About KPMG Enterprise
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.
The KPMG Enterprise Global Network for Innovative Startups has extensive knowledge and experience
working with the startup ecosystem. Whether you are looking to establish your operations, raise capital,
expand abroad, or simply comply with regulatory requirements we can help. From seed to speed, we're
here throughout your journey.
About KPMG Enterprise
102
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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.
We acknowledge the contribution of the following individuals who assisted in the
development of this publication:
Jonathan Lavender, Global Chairman, KPMG Enterprise, KPMG International
Brian Hughes, Co-Leader, KPMG Enterprise Innovative Startups Network, and National Co-Lead Partner,
KPMG Venture Capital Practice, KPMG in the US
Arik Speier, Co-Leader, KPMG Enterprise Innovative Startups Network, and Head of Technology, KPMG
in Israel
Anna Scally, Partner, Head of Technology and Media and Fintech Lead, KPMG in Ireland
Ben van Delden, Head of AgriFood Tech KPMG in Australia
Conor Moore, National Co-Lead Partner, KPMG Venture Capital Practice, KPMG in the US
Egidio Zarrella, Head of Clients and Innovation Partner, KPMG China
Georges Gambarini, Innovation & Fundraising, Head of Innovative Startup Network, KPMG in France
Irene Chu, Head of New Economy, Hong Kong Region, KPMG China
Lindsay Hull, Associate Director, KPMG Enterprise Global Innovative Startups Network,
KPMG in the US
Melany Eli, Director, Marketing and Communications, KPMG Enterprise, KPMG International
Patrick Imbach, Head of KPMG Enterprise Tech Growth, KPMG in the UK
Paul Ford, Partner, Deal Advisory, KPMG in Japan
Philip Ng, Head of Technology, KPMG China
Raphael Vianna, Director, KPMG in Brazil
Sonia Chiu, Manager, KPMG Enterprise in the UK
Sreedhar Prasad, Partner, Consumer Markets, Internet Business and Startups, KPMG in India
Sunil Mistry, Partner, KPMG Enterprise, Technology, Media and Telecommunications, KPMG in Canada
Tim Dmichen, Partner, KPMG in Germany
Acknowledgements
103
#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.
KPMG uses PitchBook as the provider of venture data for the Venture Pulse
report.
Please note that the MESA and Africa regions are NOT broken out in this report. Accordingly, if you add
up the Americas, Asia-Pacific and Europe regional totals, they will not match the global total, as the
global total takes into account those other regions. Those specific regions were not highlighted in this
report due to a paucity of datasets and verifiable trends.
Fundraising
PitchBook defines venture capital funds as pools of capital raised for the purpose of investing in the equity
of startup companies. In addition to funds raised by traditional venture capital firms, PitchBook also
includes funds raised by any institution with the primary intent stated above. Funds identified as growth-
stage vehicles are classified as PE funds and are not included in this report. A fund's location is
determined by the country in which the fund is domiciled, if that information is not explicitly known, the HQ
country of the fund's general partner is used. Only funds based in the U.S. that have held their final close
are included in the fundraising numbers. The entirety of a fund's committed capital is attributed to the year
of the final close of the fund. Interim close amounts are not recorded in the year of the interim close.
Deals
PitchBook includes equity investments into startup companies from an outside source. Investment does
not necessarily have to be taken from an institutional investor. This can include investment from individual
angel investors, angel groups, seed funds, venture capital firms, corporate venture firms and corporate
investors. Investments received as part of an accelerator program are not included, however, if the
accelerator continues to invest in follow-on rounds, those further financings are included. All financings are
of companies headquartered in the U.S.. The impact of initial coin offerings on early-stage venture
financing as of yet remains indefinite. Furthermore, as classification and characterization of ICOs,
particularly given their security concerns, remains crucial to render accurately, we have not detailed such
activity in this publication until a sufficiently robust methodology and underlying store of datasets have
been reached.
Angel/seed: PitchBook defines financings as angel rounds if there are no PE or VC firms involved in the
company to date and it cannot determine if any PE or VC firms are participating. In addition, if there is a
press release that states the round is an angel round, it is classified as such. If angels are the only
investors, then a round is only marked as seed if it is explicitly stated.
Early-stage: Rounds are generally classified as Series A or B (which PitchBook typically aggregates
together as early-stage) either by the series of stock issued in the financing or, if that information is
unavailable, by a series of factors including: the age of the company, prior financing history, company
status, participating investors and more.
Late-stage: Rounds are generally classified as Series C or D or later (which PitchBook typically
aggregates together as late-stage) either by the series of stock issued in the financing or, if that
information is unavailable, by a series of factors including: the age of the company, prior financing
history, company status, participating investors, and more.
Corporate: Corporate rounds of funding for currently venture-backed startups that meet the criteria for
other PitchBook venture financings are included in the Venture Pulse as of March 2018.
Methodology
104
#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.
Growth equity: Rounds must include at least one investor tagged as growth/expansion, while deal size
must either be $15 million or more (although rounds of undisclosed size that meet all other criteria are
included). In addition, the deal must be classified as growth/expansion or later-stage VC in the PitchBook
Platform. If the financing is tagged as late-stage VC it is included regardless of industry.
Also, if a company is tagged with any PitchBook vertical, excepting manufacturing and infrastructure, it is
kept. Otherwise, the following industries are excluded from growth equity financing calculations: buildings
and property, thrifts and mortgage finance, real estate investment trusts, and oil & gas equipment, utilities,
exploration, production and refining. Lastly, the company in question must not have had an M&A event,
buyout, or IPO completed prior to the round in question.
Corporate venture capital: Financings classified as corporate venture capital include rounds that saw both
firms investing via established CVC arms or corporations making equity investments off balance sheets or
whatever other non-CVC method actually employed.
Exits
PitchBook includes the first majority liquidity event for holders of equity securities of venture-backed
companies. This includes events where there is a public market for the shares (IPO) or the acquisition of
the majority of the equity by another entity (corporate or financial acquisition). This does not include
secondary sales, further sales after the initial liquidity event, or bankruptcies. M&A value is based on
reported or disclosed figures, with no estimation used to assess the value of transactions for which the
actual deal size is unknown.
Agtech
PitchBook defines agtech as follows: companies that provide services, engage in scientific research, or
develop technology which has the express purpose of enhancing the sustainability of agriculture. This
includes wireless sensors to monitor soil, air and animal health; hydroponic and aquaponic systems;
remote-controlled irrigation systems; aerial photo technology to analyze field conditions; biotech platforms
for crop yields; data-analysis software to augment planting, herd, poultry and livestock management;
automation software to manage farm task workflows; and accounting software to track and manage facility
and task expenses. Pitchbook do not include novel foods, food delivery foodtech and food ecommerce
solutions in their definition of AgTech.
Methodology, cont'd
kpmg.com/venturepulse [website]
@kpmg [Twitter]
The information contained herein is of a general nature and is not intended to address
the circumstances of any particular individual or entity. Although we endeavor to
provide accurate and timely information, there can be no guarantee that such
information is accurate as of the date it is received or that it will continue to be
accurate in the future. No one should act on such information without appropriate
professional advice after a thorough examination of the particular situation.
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