Global Venture Capital Report - Q4 2015

KPMG and CB Insights’ Q4 2015 quarterly VC report highlights a banner year for venture capital funding, with a pull-back in private market investing in Q4

US deal activity reaches lowest point since Q4’11:

US startups saw a $6B+ decrease in funding with Q4’15 seeing just one deal of $500M+, to While funding was low, deal activity was even lower, falling for the second straight quarter to 981 deals, its lowest total since Q4’11, and down 22% versus the same quarter a year prior.

Late-stage deal sizes swell in Europe:

Late-stage deal sizes increased to a 5 quarter high of $18.6M in Q4’15. Relative to Q4’14 and Q1’15’s lower figures, the past 3 quarters have all topped $15M as larger late-stage financings have become more prevalent.

Mega-rounds fall out of style:

After Q3’15 saw a combined 72 $100M+ equity financings to VC-backed companies, the mega-round trend cooled in Q4, with just 38 such deals. Both North America and Asia saw a significant decrease in mega-rounds vs exuberant levels seen in Q3’15. The quarter saw mega-financings dip in number to levels last seen in Q3’14. Overall the mega-rounds in major markets in Q4’15 raised over $11.4B vs $20.3B in Q3’15.

China crashes into end of year:

After a monster Q3 in 2015, startup funding saw a significant pullback in China in Q4’15 as funding fell 29% and deal activity fell 39% versus Q3’15.

After an exuberant Q3’15, which hit dot com funding levels, Q4’15 cooled dramatically. Sentiment which became very negative in late Q3 quickly manifested itself in Q4 activity as overall investment saw a drastic drop-off in the final quarter of 2015 as venture-capital backed companies raised $27.2B across just 1742 deals.

Key highlights include:

Wounded Unicorns: 

Mutual fund valuation write-downs, decreased mega-round activity, a public-private valuation disconnect and some public Unicorn company performance issues resulted in the number of new Unicorns dropping significantly in Q4’15. This level of new Unicorn births was last seen in Q2’14.