KPMG and CB Insights' Q1 2016 VC report highlights the latest trends in venture capital funding globally.
Venture Pulse Report - Q1 2016
Anand Sanwal, CEO & co-founder, CB Insights
Skepticism of sky-high startup valuations, a non-existent IPO market, public market uncertainty, and larger macro-economic concerns resulted in a continued slowdown for investment and deals into venture capital-backed companies. According to Venture Pulse, the first quarter of 2016 saw US$25.5 billion invested across 1,829 deals, marking the second-straight quarter in which investors dialed back VC funding and activity.
"This is the new reality. It’s harder to get financed at all stages, harder to raise massive rounds of financing, and harder to get the much coveted unicorn valuation."
Highlights from the report:
Mega-rounds fall back to Earth:
The scramble to find the next Unicorn saw investors open their checkbooks for mega-rounds throughout most of 2015. However, these $100M+ equity financings remain depressed after falling off a cliff in Q4’15, with all major markets trending flat at best. Q1’16 saw $8.7B invested across 37 such deals, compared to $11.5B over 40 deals last quarter.
US VC deals post decline:
Deal count to US VC-backed companies remained anemic, slipping a further 2% from Q4’15. Funding dollars rose 6% to $14.8B but was still well below the quarterly totals from the heady days of Q4’14 to Q3’15.
Unicorn creation at near-standstill:
As existing unicorns battled negative press, downrounds and markdowns, only five new VC-backed Unicorns were minted in Q1’16. That’s less than half that of any quarterly total in 2015.
European funding off to a slow start:
VC-backed companies in Europe saw a new peak in funding and deal activity in 2015, with $14B invested across more than 1500 deals. 2016 has started slower, with most of 2016 funding rooted in the $1B convertible note raised by Spotify and less than 350 deals occurring in the first quarter (compared to more than 400 in Q1’15).
China funding falls further:
VC-backed companies in China received $4B in funding, or just 39 percent of the
Q3’15 quarterly peak. Compared to the heady days of past quarters that saw multiple $1B+ deals, there was just a sole
$1B+ deal in Q1’16, a $1.2B round to Lu.com.