The Venture Pulse Report, Q2 2016

KPMG and CB Insights' Q2 2016 VC report highlights the latest trends in venture capital funding globally.

Looking for the updated Venture Pulse Report? Get our Q3'16 data here.

The second quarter of 2016 saw venture capital funding activity rise slightly following 2 quarters of declines, while deal activity fell for the fourth consecutive quarter. Large rounds by companies like Uber, Snapchat and Didi Chuxing helped buoy investment despite the ongoing decline in the number of deals.

While the Brexit referendum in the UK caused many investors to hold back from making significant investments, over the quarter, specifically in the UK, the upcoming US presidential election, the potential increase in US interest rates, and an economic slowdown in China also added to investor caution.

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Report Highlights:

Deal activity had already slowed noticeably in Q4’15 and Q1’16 but global financings dropped a further 6% in Q2’16, down to 1886. Deal count fell in both Asia and North America, though it rose slightly in Europe.

2015 saw investors write many $100M+ checks into private tech companies thanks to crossover investors, corporates and other-deep pocketed investors entering private markets. 2016 has seen that trend cool significantly, with North America seeing just 14 $100M+ rounds in Q2’16 compared to 37 in Q3’15.  Asia outpaced North America in $100M deals for the second quarter in a row.

After a slight uptick in deal activity in Q1’16, North America saw another sharp drop in Q2’16, with just 1117 deals into VC-backed companies. This is the lowest level of deal activity in the region since Q1’12. Funding, however, increased for the second quarter in a row, on the backs of Uber raising $3B+ and Snapchat raising $1B+.

Global investors continue to dial back deal activity

$100M+ mega-rounds to VC-backed companies continue to fall

Deal activity into North American VC-backed companies drops

VC-backed European funding off to a slower start in 2016

VC-backed companies in Europe saw a new peak in funding and deal activity in 2015, with $14B invested across 1600 deals. 2016 has so far seen $6.3B invested across 750 deals, slotting it between 2014’s and 2015’s levels of activity and investment at the current run rate.

Deals to Asian VC-backed companies drops, but Seed deal share ticks upward

Asian seed deal share rose to a 5-quarter high of 39% in Q2’16, up from 33% the quarter prior. In absolute terms, seed deals held relatively steady from Q1’16, while most other stages fell (particularly Series A, which saw a corresponding drop in deal share).