1
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Venture
Pulse
Q3 2018
Global analysis of
venture funding
10 October 2018
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#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Welcome
Welcome to the Q3’18 edition of KPMG Enterprise’s Venture Pulse — a
quarterly report highlighting the key trends, opportunities, and challenges
facing the venture capital market globally and in key jurisdictions around
the world, including the Americas, Asia and Europe.
Global VC investment reached a new annual investment high this quarter —
confirming 2018 as a massive year for the VC market globally with 3 months
of investment still to go. While total VC investment dropped quarter over
quarter, the decline was not surprising given Q2’18 results were buoyed by
the massive $14 billion deal by Ant Financial. Despite the decline, results
remained strong compared to other quarters, led by a $2 billion raise by Grab
in Singapore and $1 billion raises by Bitmain in China and Oyo Rooms
in India.
The IPO market globally now appears wide-open, helping to spur
ongoing interest in the VC market. More than 20 unicorn companies
globally have issued IPOs already in 2018 — far exceeding totals over
the past 2 years. Post-IPO results have been relatively strong for most
companies — a trend spurring excitement for potential high-profile exits
expected heading into 2019.
Urban mobility continued to gain momentum in Q3’18, with many of the
big car-sharing companies continuing to expand into other forms of
transportation. Uber’s recent investment in Lime — an electronic scooter
and bike share company is a prime example of this. This trend follows
one that began in China — where unicorn company Ofo’s bikes are now
available through the Didi Chuxing app. In the mobility space,
autonomous driving also continued to gain investor interest — a trend not
expected to fade anytime soon.
Looking ahead, while developing trade wars between the US and China
and other countries are causing some investor concern, there continues
to be strong optimism in the market for the remainder of 2018 and
heading into 2019.
In this edition of Venture Pulse, we look at these and a number of other
global and regional trends, including:
― The massive strength of the VC markets in the US and Asia
― The resurgence in the number of new unicorn companies
― Growing VC investor interest in the co-working space
― The ongoing attraction of food-delivery options to VC investors
― The focus on investments and partnering in autotech and urban
mobility.
We hope you find this edition of Venture Pulse insightful. If you would like
to discuss any of the results in more detail, please contact a KPMG
adviser in your area.
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
28
41
US
59
Europe
82
Asia
― VC investment hits $52 billion invested worldwide
― Median deal size for series D rounds almost doubles since 2016
― Corporate VC participation for 2018 surpasses 20%
― First time VC financings (YTD) fall to all time low
― Global exit activity surges on strength of IPO market
― Americas sees $28.9 billion invested across 2,056 deals in Q3
― Latin America and Canadian venture investment surpasses 2017 annual total
― Series D+ medians more than double since 2016– reaching $290 million in 2018
― Brazilian companies raise close to $300 million in Q3
― US venture capital boom continues, reaching $27.9 billion in Q3
― Total venture capital investment reaches $84 billion (YTD) — exceeding 2017
annual totals
― Quarter over quarter investment volume drops by 17.5%, initially
― IPO activity surpasses 2017 volume — with a quarter to go
― US sees 12 deals of $300 million or more
― Deal value hits $5.2 billion across 571 deals
― European deal volume falls by 36.6% quarter over quarter, initially
― Corporate VC participation rate approaches 24%
― Annual first-time venture financing volume and value reach record lows
― Largest 10 deals spread among 6 different countries
― Asia captures 9 of largest 13 deals globally this quarter
― Seed and angel stage deal volume plummets by 51% quarter over quarter
― Corporate participation rate surpasses 35% in Q3
― Massive quarter for IPOs in Hong Kong
― India surges to over $2.5 billion invested in Q3
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#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Is there a new normal?
For some time now, against the backdrop of massive capital flows, a primary theme for the global
venture community has been whether or not the cycle would eventually revert to more reasonable
historical means or whether it has truly entered a new normal. At the earliest stage, volume did indeed
revert, but thus far, early-stage and especially late-stage activity has stubbornly failed to follow suit.
Instead, enormous sums of capital are still invested each quarter, while the volume of deals looks set to
persist at a historically healthy pace, unceasing. The reason why a new normal cannot yet be
determined, however, is for a true seismic shift in how the VC landscapes to have occurred, such a
trend would have to persist in the face of truly transformed market conditions. That has yet to occur.
Nearly every region looks set for a decade high
Three quarters in, the Asia Pacific region has already hit a new, gargantuan high in aggregate venture
capital (VC) invested. The US has as well, thereby bolstering the Americas to a record high too. Last
but not least, Europe is on pace to eclipse $23 billion invested this year alone, despite diminishing
volume. In short, the profundity of VC inflows seems hardly set to diminish anytime soon. Paired with
steadying tallies of activity, the venture industry looks more robust than ever.
Median financing size trends remain robust testament to evolving landscape
Hand in hand with the apparently new normal of diverging VC invested and plateauing volume, median
deal sizes have steadily crept up across all stages and look set on staying at record levels. More
importantly, such inflation has occurred across all regions. The critical question remains whether or not
this trend is primarily driven by financial market conditions i.e. the sheer abundance of dry powder
within VC plus entrance of non-traditional investors led to demand outstripping supply or whether larger
sums are merited simply due to the confluence of additional factors, such as much greater markets
enabled by the smartphone phenomenon. Thus far, the sustainability of the trend would suggest more
the latter than the former.
Completing the reversion at the earliest stages
At the global level, the quarterly tallies of angel and seed financing volume have finally appeared to
even out, almost in tandem with early-stage counts. Although driven in large part by angel and seed
investors in the US having long since evened out their activity after a period of exuberance, it is worth
noting that nearly every region now appears to see their earliest-stage tallies enter a plateau. This,
more than anything else, suggests mean reversion to more sustainable investing patterns at the riskiest
of stages may be nearing its completion.
The ongoing impact of mega-funds
The key trend to note with regard to recent strong fundraising is that such abundance of capital will
likely support dealmaking, particularly in larger size ranges given that funds of certain magnitude must
write checks of a certain size to remain economically meaningful. Accordingly, there is a very important
capital base to underpin even very large late-stage financings going forward; the challenge for
investors will likely be adhering to strategies with sufficient discipline.
All currency amounts are in USD, unless otherwise specified, data provided by PitchBook.
Q3'18 summary
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#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
A revamp in IPO methodology better demonstrates true extent of value, especially in Asia
An encouraging sign for overall liquidity for the backers of startups is the gradual recovery of initial
public offerings (IPOs), as volume has definitely picked up since the lows of 2016. Huge debuts on
exchanges from the New York Stock Exchange (NYSE) to Hong Kong, such as Meituan Dianping’s
$4.2 billion raise, yielding a market cap of almost $53 billion most recently, are illustrating how even
very high-valued companies that have yet to turn a profit can still demonstrate their worth in public
markets. However, it is worth noting that such debuts are mainly restricted to such large companies
that have hit the necessary scale to justify going public in the first place. Also, in this edition of the
Venture Pulse, the methodology of depicting exit values has been changed to better accommodate
such huge raises as have been seen in Hong Kong as of late. Rather than utilizing the offering size, the
pre-valuation has been included, thus depicting the extent of, say, Xiaomi’s debut on public markets
earlier this year. See the methodology for the report on page 101.
Healthcare sectors still seeing active interest
In Q2 the pharma and biotech sector was on a tear already in 2018. Now, with one quarter to go,
startups within the space have raised well over $19 billion, larger than any prior year by a considerable
sum. Although other healthcare sectors are still on pace for record or near-record levels of VC invested
this year as well, the largesse shown across such a relative volume is rather remarkable, if
explicable by that sector’s typical economics. However, the spate of enormous exits within
the space have demonstrated the financial potential of nascent technologies such as
immunotherapies.
The ongoing potential for liquidity
As noted in the prior edition of the Venture Pulse, exit values remain historically healthy, even as the
tally of completed exits subsided on a quarterly basis. In fact, the most recent quarters have seen a
marked increase in aggregate exit values, especially in light of the change in IPO value depiction
explicated above. Such elevated sums will need to persist, however, to match the largesse shown on
the dealmaking side, so investors would do well to keep a keen eye on any potential faltering in the
liquidity landscape. M&A remain the bulk of all exits, by and large, and will need to remain strong as
alternative paths to liquidity that were spotlighted in the prior edition of the Venture Pulse are growing,
yet not sufficient in and of themselves to bolster exits alone. Moreover, although IPO exit values will
show the true extent of potential liquidity for some firms, not all unicorns necessarily are still well-
disposed to go public,. Even some that have recently debuted are not performing up to where they
initially landed.
All currency amounts are in USD, unless otherwise specified, data provided by PitchBook.
Q3'18 summary
Globally, in Q3'18
VC-backed
companies raised
$52B
across
3,045 deals
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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.
Global VC investment surpassed the previous annual record set in 2017 during Q3’18, driven in part by
strong investment activity in all regions of the world. Both Asia and the US achieved new annual VC
investment highs this quarter, while VC investment in Europe remained relatively steady.
Record year for VC investment — with 3 months to go
With one quarter still remaining in 2018, VC investment globally surpassed the record $171 billion
raised during all of 2017. While the number of VC deals remained just over half of the peak annual
high of 19,890 achieved during 2015, deals have become much larger, thus accounting for the
massive uptick in investment. Globally, VC investors continued to focus on late-stage deals,
although there continued to be some stabilization of activity at the seed and angel deal stages — in
Asia and the US.
The VC funding base has continued to mature and strengthen compared to previous years — with
the availability of funds and the size of funds both growing quite substantially. While SoftBank’s
$100 billion Vision Fund continues to be an outlier fund, other mega-funds are expected to appear
over the next few quarters as other VC funds look to compete for the biggest bets. With companies
now looking more positively at exit opportunities, there could be a renewal in funding sources over
the next few quarters.
US and Asia continue to drive global results, while Europe remains steady
China and the US accounted for many of the biggest deals this quarter, although Singapore-based
ride hailing company Grab attracted the largest funding round: a $2 billion raise in August. In the
US, a strong economy, numerous $100 million+ mega-rounds, and a more positive IPO market
helped keep VC investment high, while a $1 billion series B deal by China-based bitcoin mining
equipment manufacturing company Bitmain led activity in China. India also saw a $1 billion raise
by hotel booking company Oyo Rooms this quarter. While the three $1 billion+ deals in Asia pale in
comparison to Ant Financial’s $14 billion raise during Q2’18, the deals highlight the ongoing
strength of the VC market in the region.
In Europe, VC investment fell well short of the funds raised in Asia and the Americas, yet remained
relatively steady compared to historical norms.
IPO market becoming more attractive with positive exits on the rise
Q3’18 saw an ongoing resurgence in IPO activity globally, with companies like event ticket provider
Eventbrite joining the likes of DocuSign, Zscaler, and Ayden — all of which issued IPOs earlier this
year. In its first day of trading, Eventbrite’s share price rose almost 60% above its listing price.
While less spirited, the IPOs of a number of Chinese-based technology companies — including
electric car manufacturer Nio on the NYSE, and smartphone company Xiaomi on the Hong Kong
Stock Exchange (HKSE) — took place during Q3’18. While both companies had relatively
uninspiring results in their first days of trading, the longer-term results will be critical to watch in
order to identify long-term trends.
Global VC investment reaches new annual high
at the close of Q3’18
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#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Over the next quarter, it is likely that both IPO interest and activity will continue to rise, even in
Europe which, has been considered to have a relatively soft IPO market historically. In the UK,
peer-to-peer lending unicorn company Funding Circle is poised for an IPO on the London Stock
Exchange in the near future. It is likely other unicorns will aim at IPO exits in Q4’18 and into Q1’19.
Unicorn births see a resurgence in Q3’18
The number of new unicorns (companies with a $1 billion+ valuation), globally continued to see a
bounce-back in the third quarter following on a resurgence that began earlier in the year. After 17
unicorn births in Q1 and 20 in Q2’18, 18 unicorns were birthed during Q3’18. While many of the
new unicorns came from the US, including Automation Anywhere, Starry, Lime and Toast — and
from China, including Link Doo, Xpeng and Tiger Brokers, other new unicorns came from a wide
mix of countries — including Singapore (Trax), Germany (Celonis), Hong Kong (Klook). The most
surprising unicorn to be birthed in Q3 was delivery platform company Rappi, based in Colombia.
Rappi is only the second unicorn to come from Latin America — following in the footsteps of Brazil-
based Nubank.
Cross-border investment remains healthy, despite US trade war concerns
US investors continued to make significant investments abroad, even as the US government
expanded its tariff wars with countries such as Canada and China. In September, the US
expanded tariffs to an additional $200 billion worth of goods coming from China, following on the
initial tariffs to $50 billion of Chinese goods. In retaliation, China imposed its own set of tariffs on
US products.
While VC investors are somewhat leery of the potential long-term consequences of trade tensions
between the US and other countries, VC investors have continued investing overseas, dialing up
activities in Europe — particularly in the United Kingdom. Others VC investors have started to look
at expanding to newer technology hubs in order to broaden their portfolios.
VC investors focusing on confluence of technologies
While a number of industries garnered a significant amount of attention from investors in Q3’18,
including transportation sharing, food delivery and agtech, VC investors globally also increasingly
focused their attention on companies with technologies that cross sectors and that blur the lines
between sectors. For example, ride hailing company Uber recently invested in bike and scooter
sharing company Lime in order to provide access to electric scooters via its app. This deal followed
on Uber’s acquisition of bike sharing company Jump Bikes at the end of Q2’18.
Healthtech and biotech remain big VC market winners globally
Healthtech and biotech again attracted a significant amount of investment this quarter, with $100
million+ raises by One Medical, 23andMe, BioNTech and Orchard Therapeutics among others.
While some companies have found it challenging to disrupt current processes and structures,
companies that have focused on either patient needs or on infrastructure have had some success.
Given the aging population and rising medical costs in most regions of the world, healthtech and
biotech are expected to be long-term areas of focus for investors.
Global VC investment reaches new annual high
at the close of Q3’18. cont’d.
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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.
Global venture financing by stage
2010 — Q3'18
For some time now, it has been clear that the unprecedented conditions financial markets experienced since
2010 have induced a dramatic shift in the venture industry in particular. First angel and seed investing
soared in volume in the middle of the decade as high-net-worth individuals’ portfolios recovered from the
financial crisis and more limited partners began to pledge capital to nascent seed-focused funds. Then,
significant growth at the late stage and even an emergent ‘private IPO’ market occurred, culminating in the
ongoing maturation of ecosystems beyond Silicon Valley. The question now is whether this new normal of
heightened levels of VC invested, within the range observed since the end of 2014, will persist.
Source: Venture Pulse, Q3'18. Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018. Note: Refer to
the Methodology section on page 101 to understand any possible data discrepancies between this edition and previous editions of Venture Pulse.
The new normal?
0
1,000
2,000
3,000
4,000
5,000
6,000
$0
$10
$20
$30
$40
$50
$60
$70
$80
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
# of deals closed
Angel/Seed
Early VC
Later VC
“With 3 months left to go, global VC investment is already ahead of funds raised during all of
2017. This speaks to the incredible levels of innovation happening across the Americas, Asia and
Europe. The opportunities companies are providing today are reshaping the world around us —
and VC investors want to be a part of that.”
Jonathan Lavender
Global Chairman, KPMG Enterprise, KPMG International
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#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Global median deal size ($M) by stage
2010 — 2018*
Global up, flat or down rounds
2010 — 2018*
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
Growth in medians seems more reasonable
than the preponderance of positivity
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016 2017 2018*
Up
Flat
Down
“Across the globe median
venture capital deal sizes
continue to steadily
increase across all stages,
reaching new heights in
2018. The abundance of
dry powder, continued rise
of corporate participation
and ever increasing market
sizes may continue to drive
investment for some time
to come.”
Arik Speier
Co-Leader, KPMG
Enterprise Innovative
Startups Network,
KPMG International
and Partner, Head of
Technology, KPMG
in Israel
$0.5
$0.5
$0.5
$0.5
$0.5
$0.6
$0.7
$1.0
$1.1
$2.4
$2.4
$2.1
$2.2
$2.8
$3.1
$3.5
$4.1
$5.9
$5.5
$6.4
$6.0
$5.8
$7.5
$9.0
$8.4
$9.5
$12.0
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Angel/seed
Early stage VC
Later stage VC
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© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Global median deal size ($M) by series
2010 — 2018*
Is a near-doubling in size, in the span of 2 years, sustainable? The median Series D and later round has
jumped from $26.5 million to $50 million between 2016 and 2018 to date. Perhaps a better question is again
whether the arena for private company growth has been irrevocably transformed by the overall shift in
financial markets, as more investors look for alpha gain in riskier, illiquid, yet potentially more profitable
venues. Despite the level of growth throughout this decade, it still is too soon to tell, as permanence will only
be truly indicated by the transformation of a crisis.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
Unceasing growth at the late stage
$0.5
$0.5
$0.4
$0.4
$0.5
$0.6
$0.7
$0.9
$1.0
$2.5
$2.8
$2.7
$3.0
$3.5
$4.1
$5.0
$6.0
$7.6
$7.0
$7.2
$7.0
$7.0
$10.0
$12.0
$12.0
$14.5
$16.5
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Seed
Series A
Series B
$10.0
$12.0
$11.6
$12.0
$15.0
$19.1
$22.5
$25.0
$31.0
$12.0
$14.8
$16.0
$16.0
$27.2
$35.0
$26.5
$39.7
$50.0
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series C
Series D+
Global median pre-money valuation ($M) by series
2010 — 2018*
Valuations march upward without pause
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
$3
$3
$3
$3
$3
$4
$4
$5
$7
$6
$7
$8
$8
$11
$13
$14
$15
$20
$19
$20
$21
$25
$31
$39
$37
$40
$58
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Seed
Series A
Series B
$36
$46
$49
$53
$57
$73
$81
$90
$125
$65
$81
$92
$99
$150
$197
$150
$260
$350
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series C
Series D+
13
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Global deal share by series
2012 — 2018*, number of closed deals
Global deal share by series
2012 — 2018*, VC invested ($B)
VC invested, in the current cycle, has clearly been massively skewed toward the later stages, specifically
Series C and D or later financings. What is interesting is that the reset of the cycle and in some ways
traditional nomenclature, wherein angel and seed financing volume first escalated and then reverted to
longer-term means, seems to have essentially been completed.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
The cyclical reset may be nearly complete
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
$160
2012 2013 2014 2015 2016 2017 2018*
Series D+
Series C
Series B
Series A
Angel/seed
14
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Global financing trends to
VC-backed companies by sector
2013 — 2018*, number of closed deals
Global financing trends to VC-backed
companies by sector
2013 — 2018*, VC invested ($B)
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
Globally, software still predominates
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201320142015201620172018*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
15
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Financing of VC-backed companies by region
2013 — 2018*, number of closed deals
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
2018 sees emerging markets’ volume tick up
64%
27%
9%
61%
27%
12%
58%
27%
15%
56%
28%
16%
60%
27%
13%
64%
22%
14%
Americas
Europe
Asia Pacific
2013
2014
2015
2016
2017
2018*
16
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
A dramatic shift in VC invested to Asia
2013
Financing of VC-backed companies by region
2013 — 2018*, VC invested ($B)
69%
17%
14%
66%
14%
20%
58%
13%
29%
51%
12%
37%
50%
13%
37%
48%
10%
42%
Americas
Europe
Asia Pacific
2013
2014
2015
2016
2017
2018*
17
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Corporate VC participation in global venture deals
2010 — Q3'18
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.
With one quarter to go, it is highly probable that corporates will reach an all-time high in the proportion of
global venture deals in which they participated. What is telling about this figure is that it is one of the more
clear indicators that the global venture industry has indeed evolved. The lines between outsourced Researxh
and Development (R&D), traditional R&D, traditional venture, collaboration and other modes of innovation
and research by companies are all blurring to greater degrees.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
Corporate VC participation now exceeds more
than a fifth of all deals
0%
5%
10%
15%
20%
25%
$0
$10
$20
$30
$40
$50
$60
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
% of total deal count
18
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Global first-time venture financings of companies
2010 — 2018*
Intriguingly, first-time financings by value look set to return to aggregate annual tallies seen earlier in the
decade, even as the total volume of first-time financings diminishes considerably. It is important to note that
first-time financing data will likely be lagged somewhat. Yet any lag would not affect final totals to such an
extent that 2018 to date has not set a potentially new low. This is likely more due to the business and
investment cycles coinciding in a relatively high-priced, high-valued environment, which has led to available
capital being pledged to somewhat less risky, even if still early-stage, investments, while semi-nimble
incumbents detract from startup rates by inculcating innovation internally.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
Multiple factors combine for 2018 to see an
all-time low in first-time VC financings
$10
$12
$13
$13
$14
$20
$18
$15
$12
3,798
5,076
5,901
6,665
7,352
6,882
5,579
4,789
2,751
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Capital invested ($B)
Deal count
19
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
The volume of unicorn financings is resurging
Global unicorn rounds
2010 — Q3'18
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.
For six quarters straight, the quarterly tally of VC raised by unicorns, whether new or existing, has eclipsed or
nearly hit $15 billion. During that timeframe, the clip of raising has proceeded at a steadier pace than nearly
ever before, hovering between 30 to 40 transactions per quarter as well. The only disclaimer from this trend
further supporting the evolution of the venture landscape is that existing unicorns still drive it substantially.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
0
5
10
15
20
25
30
35
40
45
50
$0
$5
$10
$15
$20
$25
$30
$35
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
# of deals closed
20
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Global venture-backed exit activity
2010 — Q3'18
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
A flurry of Hong Kong IPOs boosts Q3 total
0
100
200
300
400
500
600
$0
$20
$40
$60
$80
$100
$120
$140
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Exit value ($B)
Exit count
An important change in Venture Pulse methodology must be noted, given the significant trend differences.
Although exit volume remains largely the same, the shift in exit values is due to the fact that PitchBook now
utilizes IPO pre-valuations in the stead of IPO offering sizes. This better reflects the true extent of liquidity
that investors are able to point to in their own portfolio valuations.
21
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Global venture-backed exit activity
(#) by type
2010 — 2018*
Global venture-backed exit activity
($B) by type
2010 — 2018*
On a global basis, the tech IPO market has resurged primarily thanks to somewhat of a thawing in the US
and a true surge in Hong Kong listings. Taking IPO pre-valuations into account rather than IPO sizes, now
the true extent of potential liquidity considered by investors is visible and, moreover, signifies how just two
companies have skewed aggregate exit values.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
Two companies alone skew IPO values
0
500
1,000
1,500
2,000
2,500
Strategic Acquisition
Buyout
IPO
$0
$50
$100
$150
$200
$250
Strategic Acquisition
Buyout
IPO
“The exit pipeline has continued to see a surge in activity. This quarter, we saw several unicorns
exiting to strong results. While much of this activity is happening in the US, there are strong
indicators that the other regions are following suit — with filings in Hong Kong and London. We
are likely to see more unicorn investors gaining liquidity over the next quarter, which could lead
to further injection into early stage companies.”
David Pessah
Senior Director, KPMG Innovation Labs
KPMG in the US
22
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Global venture fundraising
2010 — Q3'18
As noted in the prior edition of the Venture Pulse, 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. All in all, volume on a quarterly basis does indicate
somewhat of a slowing of momentum, which is likely due to industry cyclical effects as the market sees
newer fundraises and more established managers focus on working their current vehicles.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
Fundraising chugs along
0
50
100
150
200
250
$0
$5
$10
$15
$20
$25
$30
$35
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital raised ($B)
# of funds raised
23
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
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, as
laid out in the prior edition of the Venture Pulse. More importantly, it is worth noting that this is proportionate
amid lowering volume, so the cycle of fundraising may be also in a re-establishing phase.
Global first-time vs. follow-on venture
funds (#)
2010 — 2018*
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
First-time funds enjoy best two-year stretch in
decade thus far
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
24
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
So far, 2018 has been a banner year for global VC investment in a wide variety of urban
mobility solutions — from bike and electric scooter sharing companies to technology
companies providing supports that make autonomous driving more viable.
Global VC investment in the autonomous driving space has been particularly hot the past
2 years. Year-to-date investment is well on pace to exceed the previous record, set in 2016 ,
showing the extensive longevity of the investment trend – one not expected to slow down any
time soon.
Focusing on islands of autonomy
VC investors globally are interested in urban mobility solutions aimed at helping people get
from where they are to where they want to go. From bike-, scooter- and car-sharing to
autonomous taxis, smart buses and real-time demand public transit — investors are interested
in taking advantage in the shift in transportation patterns and habits.
The challenge with mobility solutions is the fact that no two cities are the same. The characteristics
of New York are different from Chicago, Beijing, Tokyo, or Hamburg. While there are mobility
solutions that are applicable to widespread geographic regions — like car hailing, as evidenced by
the ongoing VC interest in Uber, Lyft, Grab and others — many must be looked at on a regional
level. Local regulatory regimes also play a factor in solution applicability.
Autonomous driving is particularly local in execution. This is why many companies and
investors looking to support autonomous driving have been focused on building islands of
autonomy rather than on trying to find solutions that could work anywhere. For example,
Waymo — a spin-off of Google’s self-driving car project — has been piloting autonomous
vehicles in Phoenix, Arizona. During Q3’18, Waymo made a deal for 62,000 autonomous
vehicles from Chrysler in a deal that could lead to a true commercialized model within the next
couple of years.
By focusing on specific jurisdictions, companies can create 3D models to ensure different
applications work well in that location. While the same technologies might support each island
of autonomy, the actual support structure or modelling might be different for each based on
each area’s unique characteristics.
Commercializing autonomous vehicles — focusing on shared service models
To date, much of the investment in autonomous vehicles has been by transportation
companies — such as the big automakers, by companies that support autonomous vehicles
(e.g. sensor developers) and by platform providers like Uber. But looking forward, it appears
that the main area of interest for investors is on the autonomous vehicle as a service model —
where a vehicle can be on the road capturing revenue almost 24 hours a day. Given the cost
of any autonomous vehicles is likely to be prohibitively expensive for most people in the near
term, the real revenue will likely be on using vehicles for commercial purposes — from
autonomous taxis to autonomous buses or commercial transportation vehicles.
Urban mobility at center of VC investment
storm globally
25
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
From cars to bikes to…scooters
While autonomous driving is a major focus of investors looking for urban mobility solutions,
VC investors have also continued to invest in ride hailing apps. In Q3’18, Uber raised another
$500 million in funding, while Singapore based Grab raised a $2 billion round. Yet, ride hailing
is seen by many as a saturated market — with the big companies having already placed
themselves above the rest. Now, VC investors, including the ride hailing platforms themselves
are looking into other mobility solutions. For example, in recent quarters, extensive bike share
programs spanning the globe have been able to attract massive funding from VC investors.
Corporates like Uber and Didi Chuxing have been a big part of this funding, recognizing their
ability to use their ride hailing apps to also manage bicycle options.
Following on cars and bicycles, scooters appear to be the next hot topic for urban mobility
investors. This quarter, Lime raised $335 million, while Bird Rides raised $300 million in
Q2’18. Paris appears to be a major hotbed for competition in the scooter space, with ride
hailing company Taxify announcing plans to launch dockless scooters during Q3’18. Both Bird
Rides and Lime already offer electric scooters in the city. Meanwhile, in Brazil, bike and
scooter sharing company Yellow raised $63 million this quarter in what is believed to be Latin
America’s largest Series A funding round ever.
Trends to watch for in the urban mobility space
Looking forward, urban mobility is expected to continue to attract significant VC investment —
across everything from autonomous vehicles to scooters. While ride hailing companies will
also likely continue to attract interest, it is expected mostly to be targeted at existing leaders in
the space.
In the autonomous vehicle space, there will likely be continued investment in the infrastructure
required to support autonomous driving (e.g. sensors, security), in addition to additional
investment by the traditional corporates. Over the next few quarters, most investments in the
urban mobility space will likely focus on commercial and shared-use business models.
Urban mobility at center of VC investment
storm globally, cont’d.
“Urban mobility is a global issue, but in many ways it’s also local. Every major city is an island of
autonomy, with its own characteristics and needs. It is impossible to fit every island in the same
box — meaning that solutions need to be tailored for individual circumstances. Autonomous cars,
scooters, bicycles — while global companies will provide many of these solutions, they will likely
only be successful if they account for local needs.”
Gary Silberg
Partner, National Sector Lead, Automotive Industry
KPMG in the US
26
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Global venture financing of urban mobility companies
2010 — Q3'18
At $22.1 billion, the aggregate total of VC invested in urban mobility companies may not quite eclipse the
massive record set in 2016, but it handily eclipses every other year. More importantly, volume looks as
healthy as ever, which signifies active interest on the part of many. As urbanization proceeds apace and
indeed densification in major areas of the world as well, startups and investors alike are grappling with the
ensuing problems, many of which are what seem like the simplest of problems: How does one get around
most efficiently in a congested cityscape? How to better arrange for the flow of goods and services? There
are plenty of available market niches, as the recent surge in electric scooters signals.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
Urban mobility is booming
$0.1 $0.2
$0.3
$0.7
$4.2
$8.6
$27.1
$14.0
$22.1
15
28
42
60
96
109
143
213
159
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Deal value ($B)
# of deals closed
27
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Top 10 global financings in Q3'18
Grab — $2,000M, Singapore
Ridesharing
Late-stage VC
Bitmain — $1,000M, Beijing
Computer hardware
Late-stage VC
OYO Rooms — $1,000M, Gurgaon
Hotel marketplace
Late-stage VC
Xpeng — $596.2M, Guangzhou
Transportation
Series B
Ximalaya — $596.2M, Shanghai
Entertainment software
Late-stage VC
Souche.com — $578M, Hangzhou
Platform software
Late-stage VC
7
8
6
4
2
1
Peloton — $550M, New York
Recreation
Series F
Didi Chuxing — $500M, Beijing
Transportation
Late-stage VC
Letgo — $500M, New York
Platform software
Late-stage VC
New Dada — $500M, Shanghai
Logistics
Corporate
Zoox — $500M, Foster City
Transportation
Series B
WeWork China — $500M, Shanghai
Real estate
Series B
Uber — $500M, San Francisco
Transportation
Late-stage VC
China dominates the Q3 2018 rankings
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding,
KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
6
4
7
8
2
1
8
8
8
8
8
8
8
8
8
8
2
2
4
4
In Q3'18 VC-backed
companies in the
Americas raised
$28.9B
across
2,056 deals
29
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
VC investment in the Americas reached a new annual record high in 2018, propelled primarily by
the record-setting pace of investment in the US. Latin America also had a stellar quarter of VC
investment in Q3, with two $100 million+ funding rounds and the birth of the region’s second
unicorn company. Canada’s VC market also continued to perform well, driven by a resilient
economy, highly-skilled technology workforce and strong government supports for innovation.
VC investors remain focused on late-stage deals in North America
In the US and Canada, late-stage deals took the bulk of investment in the VC market, with
numerous $100 million+ deals in the US and a number of $50 million+ deals in Canada this
quarter1. Among the largest deals in Canada, only League was able to secure early-stage funding,
with a CAD$62 million series B raise in July. League’s ability to gain funding for its digital health-
focused platform was likely a result of its strong executive team — well known to many in Canada’s
VC community. Funding for League came primarily from Canadian sources, including
telecommunications firm Telus Corp2.
Latin America sees second Unicorn birth ever — the first in Colombia
Despite investor concerns, there has been a dramatic increase in VC funding in Latin America over
the past 2 years — in part driven by the presence of bigger deals. Latin America had a particularly
strong quarter of VC investment in Q3’18, showcasing its ongoing potential as a high-growth and
underdeveloped region in the eyes of VC investors.
Latin America saw the creation of its second unicorn company ever this quarter, following a
massive-for-the-region $217.5 million funding round by on-demand delivery platform Rappi based
in Colombia. The innovative app provides customers with both delivery services and the ability to
withdrawal cash from Rappi delivery agents3. Brazil played host to the region’s second $100
million+ funding round this quarter with a $162 million raise by Movile.
Brazil VC market sees big investment in Q3’18
Despite an uncertain macroeconomic environment, VC investors continued to show a belief that
Brazil can grow as a hotbed for innovation in Latin America4. In Q3’18, for example, e-commerce
platform Movile raised a significant $124 million funding round, suggesting that while deals might
be slow to materialize, they will continue to occur in the region. Given the region’s high population
of underbanked and unbanked people, it is not surprising to see that fintechs have been best able
to navigate Brazil’s current turbulence and win investment5. Brazil-based trucking platform CargoX
also raised $60 million during Q3’18.
Following on a global trend, urban mobility is also starting to gain traction in Brazil. During Q3’18,
Sao Paulo-based bike and scooter sharing company Yellow raised $63 million in what is believed
to be the largest series A funding round ever in Latin America.
Americas sees strong quarter, as Latin America
VC investment soars
1 https://www.theglobeandmail.com/business/article-buoyed-by-surge-in-megadeals-canadian-venture-capital-activity-up/
2 https://www.cvca.ca/wp-content/uploads/2018/08/H1-2018_CanadaReport_ENG_FINAL1.pdf
3 https://techcrunch.com/2018/08/31/rappi-raises-200m-as-latin-american-tech-investment-reaches-new-highs/
4 https://techcrunch.com/2018/07/12/a-new-124-million-for-brazils-movile-proves-that-investors-still-see-promise-in-latin-american-tech/
5 https://techcrunch.com/2018/07/23/the-tech-investment-wave-has-reached-latin-america/
30
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Diversity of US market spurs ongoing growth
In the US, a wide-range of subsectors drew attention from VC investors in Q3’18, helping to spur
ongoing growth across the country. Among the $100 million+ deals in the US, numerous sub-
sectors were represented — from healthtech (Oscar and One Medical), to transportation (Uber and
Lime) to delivery (Getaround and autonomous vehicles (Zoox).
The success of recent IPOs in the US is expected to drive continued exits, with a number of
unicorns expected to list over the next couple of quarters. With the growing liquidity, there could be
a renewal of investment in early-stage VC in the US.
Health and biotech growing quickly in Canada
Healthtech and biotech continued to be driving forces for VC investment in Canada this quarter —
with companies like AbCellera ($10 million) raising nice sized funding rounds. Numerous
companies in the health and biotech space are scaling up quickly in Canada, highlighting a growing
maturation of the Canadian market in the space. A number of other sectors are also on the radar of
VC investors in Canada, including cleantech and Agritech. VC investors in Canada have also
become increasingly interested in Cannabis given the rapidly approaching legalization of the
substance in October.
Toronto rising on the radar as a technology hub
Within Canada, a number of cities stand out as technology epicenters, including Vancouver,
Montreal and Kitchener-Waterloo. Over the past quarter, however, Toronto’s role as an innovation
hub in the Americas took center stage, with global giant Microsoft announcing that it was moving its
Canadian headquarters to downtown Toronto — to help drive its AI innovation, expanding its
workforce and making a number of investments across the country focused on growing its
innovation capability, including expanding its Montreal-based innovation lab.
Trends to watch for in the Americas
Looking ahead, transportation is expected to remain a hot area of investment across all countries
within the Americas. In the US, the blossoming IPO market could cause a resurgence in early-
stage investing as investors gain liquidity. Healthtech and biotech will likely continue to be big hits
among Canadian investors, in addition to AI.
Americas sees strong quarter, as Latin America
VC investment soars, cont’d.
31
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Venture financing in the Americas
2010 — Q3'18
Largely steadied by the evening out of angel and seed financing within the US, the pace of quarterly
volume in the venture landscape has evened out for several quarters now. Given dry powder levels, there
is no reason to suppose this state of affairs will change barring a significant shock.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
Venture volume drops
0
500
1,000
1,500
2,000
2,500
3,000
3,500
$0
$5
$10
$15
$20
$25
$30
$35
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
# of deals closed
Angel/Seed
Early VC
Later VC
32
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Median deal size ($M) by stage in the Americas
2010 — 2018*
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
Up, flat or down rounds in the Americas
2010 — 2018*
Sentiment solidifies in positivity
$0.5
$0.5
$0.5
$0.5
$0.6
$0.8
$0.9
$1.0
$1.2
$2.6
$2.7
$2.7
$3.0
$3.4
$4.0
$4.7
$5.3
$6.6
$6.0
$7.5
$7.2
$6.8
$8.8
$10.0
$10.0
$10.0
$12.0
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Angel/seed
Early stage VC
Later stage VC
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Up
Flat
Down
33
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
Median deal size ($M) by series in the Americas
2010 — 2018*
Series D+ medians have doubled in two years
$0.5
$0.5
$0.5
$0.5
$0.5
$0.7
$0.8
$1.0
$1.1
$2.4
$2.5
$2.7
$3.1
$3.5
$4.2
$5.0
$6.0
$8.0
$7.0
$7.0
$7.0
$7.0
$9.7
$11.0
$11.0
$13.8
$16.0
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Seed
Series A
Series B
$10.0
$12.0
$11.7
$12.0
$14.0
$16.5
$20.5
$21.8
$29.0
$12.0
$14.6
$16.0
$16.0
$25.6
$30.0
$25.0
$32.2
$50.0
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series C
Series D+
34
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Median pre-money valuation ($M) by series in the Americas
2010 — 2018*
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
The extent of the reset with regard to private market valuations of high-growth companies is well exemplified
by the fact the median Series D+ valuation has more than doubled in two years’ time. Whether that trend is
truly sustainable or not remains to be seen, frankly. It isn’t necessarily out of the realm of possibility that the
landscape of venture and how companies traditionally evolve has in turn been permanently transformed.
Series B & D still stand out as clear phase shifts
$3.2
$3.8
$3.6
$4.0
$4.5
$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
$55
$56
$70
$80
$83
$115
$66
$82
$92
$98
$140
$166
$137
$225
$290
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series C
Series D+
35
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Deal share by series in the Americas
2010 — 2018*, number of closed deals
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
Deal share by series in the Americas
2010 — 2018*, VC invested ($B)
Series D+ rounds on way to a new record
0
2,000
4,000
6,000
8,000
10,000
12,000
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
$80
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series D+
Series C
Series B
Series A
Angel/seed
36
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Venture financing of VC-backed companies by sector in the Americas
2010 — 2018*, VC invested ($B)
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
Venture financing of VC-backed companies by sector in the Americas
2010 — 2018*, # of closed deals
Healthcare remains as robust than ever
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
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
$100
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
37
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Venture financing in Canada
2012 — Q3'18
After a bevy of large financings in Canada in the first half of the year, an off quarter was in the cards, if only
at the behest of the phenomenon of mean reversion. Longer term steadiness in venture financing suggests
the Canadian ecosystem is producing a fair clip of startup opportunities across multiple sectors, although
software stands out still, even as marijuana-focused companies garner the most headlines.
An off quarter, uncharacteristically
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
0
20
40
60
80
100
120
140
160
180
200
$0
$200
$400
$600
$800
$1,000
$1,200
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
“Venture capital investment in Canadian companies has been strong so far this year. The
information and communications technology (ICT) and life sciences sectors continue to lead the
way. Canadian VC volume has remained resilient — powered by a strong economy, talented
workforce and government support for innovation.”
Sunil Mistry
Partner, KPMG Enterprise, Technology, Media and Telecommunications,
KPMG Enterprise in Canada
38
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Venture financing in Mexico
2012 — Q3'18
The Mexican venture ecosystem is nascent and consequently prone to significant skew. Q2 may see a
robust sum invested, largely due to one deal, while Q3 may experience somewhat of a drought. This does
not mean there are not startups looking to raise funding in the nation, but rather there are not that many
seeking traditional venture funding as of yet. But companies will continue to raise at intervals, such as the
recent Mexican blockchain startup AirTM, which raised $7 million from various funds in September.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
A quiet quarter for Mexico
0
5
10
15
20
25
$0
$20
$40
$60
$80
$100
$120
$140
$160
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
39
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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.
Venture financing in Brazil
2012 — Q3'18
Despite headlines of political and potential economic distress, investors will likely still continue to plow funds
into companies looking to corner market opportunities largely predicated on consumer plays in Brazil.
Yellow, a bike-and-scooter-sharing service, recently raised $63 million in series A funds, for example.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
Uptick in activity among B2C-centric offerings
0
10
20
30
40
50
60
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2012
2013
2014
2015
2016
2017
2018
Capital invested ($M)
# of deals closed
“Companies across Latin America continue to raise increasingly large sums of venture capital.
This quarter alone, Colombian on-demand delivery platform Rappi raised $200 million, Brazil’s
Movile raised $124 million. However the big deals are by no means limited to late stage
investment as evidenced by Brazilian bike and scooter sharing platform Yellow raising $63
million in the largest series A ever in Latin America.”
Raphael Vianna
Director,
KPMG Enterprise in Brazil
40
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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.
Traditional hubs of VC activity predominate in Q3,
as capital flows to the coasts
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
10
7
6
8
5
9
2
1
Peloton — $550M, New York
Recreation
Series F
Letgo — $500M, New York
Platform software
Late-stage VC
Zoox — $500M, Foster City
Transportation
Series B
Uber — $500M, San Francisco
Transportation
Late-stage VC
Slack — $427M, San Francisco
Communication software
Series H
Compass — $400M, New York
Real estate services
Series F
7
8
6
9
10
5
2
1
Oscar — $375M, New York
Health insurance
Series G
One Medical — $350M, San Francisco
Healthcare services
Series I
Lime — $335.1M, San Mateo
Application software
Series C
23andMe — $300M, Mountain View
Biotechnology
Late-stage VC
Getaround — $300M, San Francisco
Application software
Series D
Postmates — $300M, San Francisco
Platform software
Late-stage VC
10
10
10 10
2
2
2
2
Top 10 financings in Q3’18 in
Americas
In Q3'18 US
VC-backed
companie
$27.9B
s raised
across
1,937 deals
42
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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.
US sets record level of VC investment in Q3’18
The US experienced another strong quarter of VC investment in Q3’18, bringing the year-to-date
total to an annual record high. While the total number of deals remained relatively low compared to
historical highs, a substantial number of $100 million+ megadeals helped to keep investment levels
strong. The top 10 deals alone in the US accounted for over $4.8 billion in investment.
US VC market remains healthy as investors continue to focus on late-stage deals
Following on a trend that has stretched for 12 months, VC investors in the US continued to focus
on late-stage deals during Q3’18. Rebounding stock market results, low market volatility, a
strengthening IPO market and a healthy economy all helped to extend the optimism permeating the
VC market. Consumer-focused technologies were the big winner this quarter — with the biggest
deals focused on a range of customer-focused offerings, from 23andMe (genetic testing) and One
Medical (primary care services) to Peloton (fitness workouts).
Transportation sector very hot
The dynamic nature of the US market saw a wide-range of sectors receiving big investments this
quarter. Transportation was particularly hot, with ride hailing platform giant Uber and autonomous
driving company Zoox both raising $500 million, Lime — a scooter and bike sharing company —
raising $335 million and car sharing company Getaround raising $300 million6,7.
On the autonomous driving front, partnerships continued to be a major trend, with Uber partnering
with Toyota to provide autonomous vehicles for ride-hailing via the Uber app. Many of the big
automotive manufacturers are forging partnerships with technology firms in order to access
distribution options — a trend expected to continue in the near future. Without such partnerships,
traditional manufacturers recognize they could be locked out of autonomous vehicle opportunities.
IPO market providing much needed liquidity
The US IPO market has firmly rebounded with solid IPOs in Q3’18 building on those held earlier in the
year. In Q3’18, some of the high profile VC-backed IPOs included event ticketing firm Eventbrite —
whose stock price rose 59% on the first day of trading, Survey Monkey — whose stock price rose 42%
in its first day of trading and high-end connected speaker manufacturer Sonos.
Biotech has had an extended positive run in the IPO market, one that continued in Q3’18. Biotech
companies use the public markets very differently from other technology firms, however, with many
raising series A or series B funding rounds and then moving to the IPO market — rather than
holding off until after later stage private funding rounds. The unique nature of biotech likely relates
to the long-lead times for development, high costs and the fact they are subject to FDA approval.
Agtech sees biggest deal of the year
Agtech continued to be an area of interest for VC investor in the US this quarter, with Indigo
Agriculture raising $250 million in a series E deal to support a digital platform for selling grain. This
deal represents the largest agtech deal of the year to date: more than triple the amount raised by
PrecisionHawk earlier in the year. While these two deals reflect the largest agtech investments in
the US in 2018, total VC funding to agtechs in the US was well above $1.3 billion at the end of
Q3’18, across more than one hundred deals.
6 https://venturebeat.com/2018/07/09/lime-raises-335-million-including-from-uber-whose-app-will-now-offer-scooters/
7 https://techcrunch.com/2018/08/21/getaround-raises-300-million-series-d-round-led-by-softbank/
43
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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.
US sets record level of VC investment in Q3’18,
cont’d.
Co-working spaces gaining more attention
Once the purview of accelerator and incubator programs, coworking space options have been
growing in the eyes of US investors — particularly real estate owners looking to diversify their
investments. While many of these investments simply reflect a shifting focus for existing space,
others are looking to capitalize on the sharing economy. In Q3’18, one co-working space provider
Convene, based in New York, raised $152 million.
Health care continues to be critical investment focus
The health care industry continued to be a major area for VC investment in the US. Oscar raised
an additional $375 million this quarter8, while One Medical — focused on the provision of medical
care — raised $350 million. Genomic firm 23 and Me also raised a $300 million round. Many
investors believe that the current health system and health insurance system is not working; as
such, they are keenly interested in potential solutions aimed at making health care more accessible
or efficient. It is expected that healthcare will remain a critical priority for the foreseeable future
given the high cost of care and aging population in the US9.
Convenience driving VC investment
Food delivery, both from restaurants and from grocery stores, continued to be a key area of interest
for VC investors. This, combined with the rise in transportation-focused VC investments, speaks to
the growing power of convenience. While the number of companies offering delivery services is
relatively high, actual market penetration is low. This has started to result in more and more
partnerships as platform companies look to create either stronger distribution options or to enlist
more food providers into their networks. The long-term viability of this area continues to be a
question mark — with some investors wondering at the ultimate market share that can be captured
by delivery services.
Trends to watch for in the US
Looking forward, the IPO market is gaining strength, so it is likely that a number of unicorns will
become public toward the end of the year and into the first half of 2019. With a renewed emphasis
on exits, there will likely be some stimulation of capital back into early-stage deals. This could start
another cycle of innovation, leading to a new tranche of mature companies in 3 to 5 years.
8 https://seekingalpha.com/article/4200285-venture-capital-deals-week-alphabets-375m-bet-oscar-health
9 https://pitchbook.com/news/articles/is-vcs-insatiable-appetite-for-biotech-sustainable
44
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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.
Venture financing in the U.S.
2010 — Q3'18
For three quarters now, the US has recorded well over $25 billion invested each quarter, with 2018 as a
whole on pace to see the most ever invested in private companies within the venture realm. Moreover, as
opposed to prior quarters, this has not coincided with a significant decline in VC activity, but rather, even the
angel and seed stage looks to have experienced an evening out in volume.
.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
Third quarter’s the charm
0
500
1,000
1,500
2,000
2,500
3,000
$0
$5
$10
$15
$20
$25
$30
$35
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
# of deals closed
Angel/Seed
Early VC
Later VC
“Venture capital investment remains robust in the US. We continue to see an influx of mega
deals — with four companies raising $500 million or more and a staggering ten companies
raising over $300 million this quarter. Deal volume has also stabilized in recent quarters,
following a prolonged decline in the number of angel and seed investments.”
Shivani Sopory
Partner
KPMG in the US
45
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© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Median deal size ($M) by stage in the U.S.
2010 — 2018*
Up, flat or down rounds in the U.S.
2010 — 2018*
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
Somewhat more modest increases in medians
$0.5
$0.5
$0.5
$0.6
$0.6
$0.8
$0.9
$1.0
$1.2
$2.6
$2.7
$2.8
$3.0
$3.5
$4.2
$5.0
$5.6
$7.0
$6.0
$7.8
$7.3
$7.0
$9.0
$10.0
$10.0
$10.0
$12.0
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Angel/seed
Early stage VC
Later stage VC
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Up
Flat
Down
46
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Median deal size ($M) by series in the U.S.
2010 — 2018*
Note: Figures rounded in some cases for legibility.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
From large to small, increases across the board
$0.5
$0.5
$0.5
$0.5
$0.5
$0.7
$0.8
$1.0
$1.1
$2.4
$2.5
$2.7
$3.1
$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
$29
$12
$15
$16
$16
$26
$30
$25
$32
$50
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series C
Series D+
47
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Median pre-money valuation ($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, as the last edition of
the Venture Pulse put it. Old unicorns keep raising, as they gradually trot toward the exit. New startups,
although quite few, are able to command hefty financings as they are formed by super-clusters of talent.
All this could be the new normal — if it persists through more changes in market conditions.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
A superabundance of capital swells valuations
$3
$4
$4
$4
$5
$5
$6
$6
$7
$6
$7
$8
$9
$11
$13
$14
$16
$20
$19
$20
$21
$25
$31
$39
$36
$40
$55
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Seed
Series A
Series B
$36
$46
$49
$55
$56
$70
$80
$83
$114
$66
$82
$92
$98
$140
$165
$137
$225
$285
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series C
Series D+
48
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© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Deal share by series in the U.S.
2018*, VC invested ($B)
Deal share by series in the U.S.
2018*, number of closed deals
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
Angel, seed and Series A contract slightly
Deal share by series in the U.S.
2017, VC invested ($B)
Deal share by series in the U.S.
2017, number of closed deals
8.9%
21.1%
23.2%
16.2%
30.6%
7.1%
19.9%
20.2%
18.0%
34.9%
Angel/seed
Series A
Series B
Series C
Series D+
53.3%
22.5%
12.3%
6.3%
5.5%
Angel/seed
Series A
Series B
Series C
Series D+
56.5%
23.4%
10.8%
5.3%4.1%
49
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Venture financing by sector in the U.S.
2014 — 2018*, number of closed deals
Venture financing by sector in the U.S.
2014 — 2018*, VC invested ($B)
Macro drivers for increased investment in life sciences remain as strong as ever. Software niches continue
to proliferate. As incumbents dominate the social media side, Amazon ramps up investment in cornering
opportunities centered on the voice-control ecosystem and newer startups compete in catering to specific
enterprise niches. Accordingly, the forecast for 2019 does appear to be more of the same, but if anything,
an intensification, with the ‘other’ category potentially growing as sector lines continue to blur.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
Forecasts currently call for more of the same
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*
50
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Corporate participation in venture deals in the U.S.
2010 — Q3'18
A longer-term trend is emerging with regard to corporates’ participation in US VC, with a historically high
but varying rate in the low 30% range. VC invested of course varies much more widely, but corporate
players tend to get involved in larger rounds that can skew results. What is interesting to contemplate is
whether this trend has steadied at a natural equilibrium, as traditional R&D balances with exposure to
startups via financial investment and affiliated corporate arms.
Is CVC participation evening out?
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
0%
5%
10%
15%
20%
25%
30%
35%
40%
$0
$10
$20
$30
$40
$50
$60
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
% of total deal count
51
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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.
First-time venture financings of companies in the U.S.
2010 — 2018*
The dwindling tally of volume of first-time financings in the past 4 years is strongly belied by the
massive sum of VC invested in such first-time fundings, at least in the US. What this suggests is an
abundance of capital that firms are willing to ply even fledgling ventures with, but also, such high
prices and valuations, plus competition, that are observed at the earliest of stages, naturally inducing a
much slower rate of said fundings.
Diverging VC invested & volume still point to
restarting innovation cycle
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
$4.6
$6.1
$7.1
$7.2
$7.6
$8.8
$7.0
$7.4
$7.6
2,031
2,737
3,205
3,449
3,679
3,440
2,701
2,676
1,594
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Capital invested ($B)
Deal count
52
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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.
Venture-backed exit activity in the U.S.
2010 — Q3'18
Tech IPOs have resurged to some degree in the US, but Hong Kong has seen far more listings that have
skewed exit values, given the shift in methodology in this edition of the Venture Pulse. Facebook still stands
as the outlier in that regard and an example of the immense value and wealth creation possible. But what is
more telling in the US is the evening out of exit activity at a steady clip. Liquidity is still not as constrained as
may be thought.
As opposed to other regions, the IPO
methodology shift does not affect US as much
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
0
50
100
150
200
250
300
350
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Exit value ($B)
Exit count
“Q3’18 saw a resurgence in IPO activity in the US, including a notable positive IPO from ticket
provider Eventbrite whose share price rose almost 60 percent above its listing price. As the IPO
market continues to deliver strong returns to investors and the overall market volatility remains
low, we should expect to see further IPO activity in coming quarters”
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.
53
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
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*
Given the methodology shift, it is easier to see how IPOs remain the primary driver of outlier value in the
case of unicorns debuting and the like. However, that is definitely the case for the outliers — M&A remains
the most important avenue given its preponderance in volume.
IPOs for outliers; M&A for the most
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
0
200
400
600
800
1,000
1,200
Strategic Acquisition
Buyout
IPO
$0
$20
$40
$60
$80
$100
$120
$140
Strategic Acquisition
Buyout
IPO
54
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Pharma & biotech on pace for record year
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
Venture-backed exit activity ($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
$20
$40
$60
$80
$100
$120
$140
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
55
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
U.S. venture fundraising
2010 — Q3'18
As stated in the prior edition of the Venture Pulse, there is not unlimited demand on the part of LPs for
exposure to VC. That said, there is still appetite for allocation, especially when considering the investor bases
for many funds that have only gained in experience and posted strong results throughout the entire market
cycle since the financial crisis are truly international. Hence, fundraising will still likely see very lucrative
quarters like that most recently, but the pace of fundraising has definitely slowed somewhat.
Fundraising remains strong
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
0
20
40
60
80
100
120
140
$0
$2
$4
$6
$8
$10
$12
$14
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital raised ($B)
# of funds raised
56
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
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 as more managers spin out from established firms that did well in the decade thus far.
First-time vs. follow-on venture funds
(#) in the U.S.
2010 — 2018*
First-time funds’ resurgence signals newer
managers spinning out
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201020112012201320142015201620172018*Under $50M
$50M-$100M
$100M-$250M
$250M-$500M $500M-$1B
$1B+
0
50
100
150
200
250
300
350
2010 2011 2012 2013 2014 2015 2016 2017 2018*
First-time
Follow-on
57
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
The lucrative environment leads to largesse for
even first-time funds
Venture fundraising ($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, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 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+
58
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
2018 activity may still centralize on traditional
hubs, but other regions still see growth
U.S. venture activity (#) by U.S. region
2010 — 2018*
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
2011
2012
2013
2014
2015
2016
2017
2018*
West Coast
Southeast
South
Other Territory
New England
Mountain
Midwest
Mid-Atlantic
Great Lakes
In Q3'18 European
VC-backed
companie
$5.2B
s raised
across
571 deals
60
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
After three strong quarters, VC investment in Europe dipped in Q3’18, likely a reflection of the
seasonality of investment in Europe. Solid VC investment at the beginning and end of the quarter
suggest the VC market in Europe continued to be strong despite the slow deal activity in the
region’s summer months.
As Brexit approaches, UK investment remains strong
Despite the rapid approach of Brexit, the UK-led VC deals activity in Europe this quarter
accounted for several of the region’s top 10 deals. This activity could reflect a number of factors —
from confidence in the UK innovation ecosystem regardless of Brexit or the calm before the storm
that could come with a potential hard Brexit. The next few quarters could be somewhat uncertain
as the March 2019 Brexit deadline approaches given negotiations are still ongoing.
Many companies have acted to mitigate the potential risks of Brexit — although the final
ramifications for businesses have yet to be determined. For example, several fintech companies
have pursued banking licenses elsewhere, in order to be able to continue to operate in and across
different jurisdictions10. Revolut is one example of this. The pursuit of banking licenses is also
being used by fintechs in order to extend their value propositions. For example, peer-to-peer
lending company Zopa and Revolut have recently obtained a banking license in order to access
new revenue streams.
Biotech and pharmatech big bets in the UK and around Europe
Health and pharmaceuticals continued to garner a significant amount of interest from VC investors
in Europe this quarter. In Q3’18, biotech investment was particularly hot, with Orchard
Therapeutics raising $147 million, BioNTech raising $120 million and ReViral raising $55 million.
The growing interest in biotech and pharmatech highlight the significant focus investors are placing on
building the next generation of pharmaceuticals based on a better working knowledge of how diseases
are caused and the genetic factors related to them11. With the population in the UK — and throughout
Europe — getting older, it is expected that biotech will continue to be a big bet for the foreseeable
future as companies look to find ways to treat and prevent different diseases.
In Germany, the shift in investment to pharmatech is relatively new. Historically, it was not seen as
having a risk reward profile that made VC investors enthusiastic. This trend is changing, however,
as investors begin to shift their focus from health infrastructure investments to therapeutics
investments.
Germany investments reflect focus on strong companies, not industries
Germany saw solid VC investment during Q3’18, including the biggest deal in Europe: a $300-
million raise by fashion e-commerce platform, About You. Investments in Germany were spread
across a diverse range of industries, including e-commerce, biotech, car sharing and others. VC
investors in Germany and to a degree across Europe more broadly, appear to be prioritizing
company characteristics over specific industry areas — investing in companies with proven
business models, leadership teams and their business plans. VC investors are also showing
interest in companies able to cater to well-defined niche markets.
Strong optimism in Europe despite decline in VC
deal volume during Q3’18
10 https://www.ft.com/content/3bcad1be-b1d7-11e8-8d14-6f049d06439c
11 https://markets.businessinsider.com/news/stocks/artios-pharma-announces-84-million-65-million-series-b-financing-1027448912
61
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Urban mobility driving investment and new partnerships
Urban mobility in many forms continued to draw VC investors across Europe in Q3’18. Paris, France
cropped up as an epicenter for a fight over the scooter market, with Taxify announcing an expansion
into scooters under the new Bolt brand. Bolt will be competing with two US firms that recently launched
scooter sharing in Paris — Bird (launched in May 2018) and Lime (launched in June).12
During this quarter, auto-sharing also received new attention, particularly from traditional automotive
manufacturers. Volkswagen launched its own car sharing system during the quarter while BMW and
Daimler have begun to merge their car sharing options in order to achieve scale. The need to
achieve scale is expected to continue to drive partnerships in the car sharing across Europe.
Israel sees strong quarter of VC investment
Israel experienced a strong quarter of VC investment in Q3’18, with good-sized deals by Sisense
($80 million), Mantis Vision ($55 million), Monday.com ($50 million) and others. Security continued
to be a big focus for investment in Israel, in addition to fintech. Foreign investors have proven to
be the most excited about Israel’s fintech opportunities, participating in more than 70% of fintech
deals so far in 2018. Healthtech also climbed on the radar of investors in Isael. Alpha Tau Medical,
for example, raised $29 million during Q3’1813.
Trends to watch for in Europe
VC investors across Europe will be watching the Brexit negotiations even more closely over the
next quarter as negotiation deadlines loom and the potential for a no-deal Brexit rise. Corporate
investment across Europe is expected to remain strong, particularly in the automotive space as
traditional manufacturers look for ways to take part in new trends and opportunities, such as car
sharing. Further investments in autonomous driving are also expected.
VC investors in Europe will also be keenly watching the performance of Funding Circle, which had
it’s IPO early in Q4’18. Funding Circle is one of several high profile European fintechs to either go
public or announce plans to. Fintech investors in particular will want to see if Funding Circle builds
on the momentum garnered by Adyen’s very successful IPO in Q2’18. Adyen’s stock price has
increased by 45% since its summer IPO.
Strong optimism in Europe despite decline in VC
deal volume during Q3’18, cont’d.
12 https://www.businessinsider.com/taxify-launches-dockless-electric-scooters-for-hire-in-paris-2018-9
13 https://www.timesofisrael.com/global-giants-boost-funding-to-israel-fintech-startups/
62
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Venture financing in Europe
2010 — Q3'18
Venture volume has contracted slowly but surely, primarily at the angel and seed stages, for some years
now across Europe. Q3 tallies will likely rise as time goes on, but overall remain subdued relative to prior
heights, returning to a more typical historical tally. What will remain and is still remarkable is the sheer
aggregate of VC invested. Key cities across the continent are still raking in significant sums of funding.
Volume looks poised to even out, as VC invested
remains remarkably healthy
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
$0
$1
$2
$3
$4
$5
$6
$7
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
# of deals closed
Angel/Seed
Early VC
Later VC
63
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Median deal size ($M) by stage in Europe
2010 — 2018*
Up, flat or down rounds in Europe
2010 — 2018*
Marked round size inflation persists with only
one quarter left in the year
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
$0.5
$0.4
$0.3
$0.3
$0.4
$0.5
$0.6
$0.7
$1.1
$1.7
$1.5
$1.3
$1.2
$1.4
$1.5
$1.5
$2.1
$4.1
$3.2
$3.3
$2.8
$3.2
$3.5
$3.9
$4.3
$4.7
$8.0
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Angel/seed
Early stage VC
Later stage VC
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Up
Flat
Down
64
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Median deal size ($M) by series in Europe
2010 — 2018*
The late stage aligns further
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
$0.5
$0.4
$0.3
$0.3
$0.3
$0.5
$0.6
$0.7
$1.0
$2.4
$3.0
$2.5
$3.0
$3.2
$3.8
$4.7
$6.0
$6.5
$5.5
$6.5
$5.0
$5.9
$7.2
$10.9
$11.3
$12.6
$17.5
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Seed
Series A
Series B
$10.5
$5.8
$9.8
$7.5
$13.3
$19.2
$20.0
$22.6
$30.4
$9.4
$14.1
$15.0
$11.2
$29.8
$43.3
$26.7
$36.0
$38.3
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series C
Series D+
65
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Deal share by series in Europe
2010 — 2018*, number of closed deals
Deal share by series in Europe
2010 — 2018*, VC invested ($B)
Series B onwards grow significantly
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 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
$16
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Series D+
Series C
Series B
Series A
Angel/seed
66
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
European venture financings by sector
2014 — 2018*, number of closed deals
European venture financings by sector
2014 — 2018*, VC invested ($B)
By value, software & pharma are joined by B2C
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 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
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014
2015
2016
2017
2018*
67
#Q3VC
© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Corporate VC participation in venture deals in Europe
2010 — Q3'18
CVCs continue to help propel total volume
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. Data provided by PitchBook, October 10, 2018.
0%
5%
10%
15%
20%
25%
30%
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Capital invested ($B)
% of total deal count
68
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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.
Even considering historical lags, 2018 is likely to
record new lows in value & volume
First-time venture financings of companies in Europe
2010 — 2018*
Prior to the supposition that new business funding has slowed to an anemic crawl, it must be noted that new
business creation is notoriously difficult to track and, moreover, historical lags affect not only venture
financing tracking, but also such figures (as frankly lagging affects all private financial and economic data).
That said, even taking lagging into account, it is clear that venture funding of new businesses is subdued at
a minimum and set for record lows unseen this decade thus far.
Source: Venture Pulse, Q3'18, Global Analysis of Venture Funding, KPMG Enterprise. *As of 9/30/18. Data provided by PitchBook, October 10, 2018.
$3.0
$3.3
$3.6
$3.1
$2.6
$2.9
$3.5
$2.4
$1.5
1,167
1,487
1,700
2,016
2,216
1,818
1,519
1,224
591
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Capital invested ($B)
Deal count
“Total venture capital invested in Europe remained strong this quarter — powered by 10 deals
over $80 million — spread over six different countries. However, many smaller companies
continue to struggle to attract early stage funding, as evidenced by the 6th consecutive quarterly
drop in volume of Angel and Seed Investment.”
Anna Scally
Partner, Head of Technology and Media and Fintech Lead,
KPMG in Ireland