In Q3’15, funding to VC-backed companies hit levels last seen during the dot com boom. There was a new unicorn birthed every 4th day. $100M+ financings were commonplace.
2015 was shaping up to be a banner year for venture capital… and then Q4 happened.
Today, we released an early snapshot of the KPMG International & CB Insights 2015 Venture Pulse Report, which highlights the drastic funding and deal shift we saw in Q4.
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NEGATIVE SENTIMENT HITS FUNDING & DEAL ACTIVITY IN Q4. LOWEST DEAL TALLY SINCE Q1’13.
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 activity saw a drastic drop-off in the final quarter of 2015. Funding fell 30% amid weakening mega-round activity while deal activity fell 13% vs. the previous quarter, reaching a level last seen in Q1’13.
While we expected a slowdown given the negative sentiment, the speed of the pullback was striking.
ARE MEGA-ROUNDS OVER? $100M+ ROUNDS TO VC- BACKED COMPANIES NEARLY CUT IN HALF IN Q4’15
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. the levels seen in Q3 2015. The quarter saw mega-financings dip in number to levels last seen in Q3’14. Overall the mega-rounds in Q4’15 raised over $11.4B vs. $20.3B in Q3’15.
UNICORN BIRTHRATE SLOWS DRASTICALLY TO BELOW BELOW 10 IN Q4’15
Mutual fund valuation write-downs, decreased mega-round activity, a public-private valuation disconnect, and some 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.
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