Mega-deals boost global VC investment in Q1 2017: report

Global venture capital (VC) investment grew to US$26.8 billion in Q1 2017, even while deal volume continued to fall during the same period, says a trends report by KPMG Enterprise.

That’s because there was a resurgence in mega-deals, even though there were only 2,716 deals completed globally in Q1 2017, compared to 3,201 in the previous quarter, the report shows.

During the first quarter, the Americas accounted for US$17.8 billion, with the U.S. making up US$17.3 billion of that total. In Asia, VC investment grew slightly while European investment remained relatively flat.

VC investment in Canada was down, says the report–likely a result of a natural reversion to the mean following a record 2016. Mexico also experienced a slide, due to investor anxiety around U.S. trade and immigration policies, while Brazil held steady.

Read: Canada bucks trend with 7% climb in VC deals

The good news is “we may have reached a turning point,” says Brian Hughes, national co-lead partner of KPMG Venture Capital Practice and a partner for KPMG in the U.S.

Hughes explains, “Market conditions and valuations are stabilizing. In addition, public markets have been relatively strong and there have been a number of solid tech IPOs late in the quarter that indicate that the IPO market, particularly in the U.S., is opening.”

Key highlights

• Global VC investment rose from US$23.8 billion in Q4 2016 to US$26.8 billion in Q1 2017.
• Global median deal size at early VC financing stages continued to increase.
• Pharmaceuticals and biotechnology saw an upsurge in the percentage of overall VC investment in Q1 2017, with companies raising US$3.9 billion during the quarter across 188 financings, compared to the US$11.4 billion raised throughout 2016.
• California-based and China-based companies dominated the top 10 global VC deals rankings during the quarter.

Looking ahead to Q2 2017 and beyond, investor caution is expected to linger across most global regions. This will change, the report says, as government positions in the U.S. and Europe are clarified.

Read the full report.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.