2018 had a rousing start with US$49.3bn of venture capital investment raised across 2,661 deals in Q1, just shy of the global record for a single quarter, according to Venture Pulse Q1 2018, a quarterly report on global VC trends published by KPMG Enterprise.
While venture capital deal volume continued to decline, the median deal size globally continued to grow across all deal stages in Q1 reaching US$1.3m for angel and seed stage rounds, US$7.7m for early stage rounds, and US$15m for later stage rounds.
In Australia, Q1 VC investment reached US$130.5m across 16 transactions, spurred by significant deals including Canva’s US$40m Series C funding round, which valued the Sydney-based startup at US$1bn. Other significant funding deals recorded during the quarter included data room software startup Ansarada’s US$18.92m Series A round and Adelaide-based space IoT startup Myriota’s US$15m Series A round.
“Australian startups continue to attract increasing levels of commitment, both from local and international investors,” said Amanda Price, head of KPMG High Growth Ventures in Australia, “with larger investment rounds reflecting the ambitions and capabilities of these startups to expand into global businesses. Recent fundraising by Australian venture capital funds meaning there is more money on the table than ever before for our startup founders.”
The ride-hailing industry attracted massive VC investment this quarter, accounting for four of the quarter’s five largest deals, including: US$2.5bn raised by Singapore-based Grab, US$1.7bn raised by US-based Lyft, US$1.5bn raised by Indonesia-based GO-JEK, and US$1.25bn raised by US-based Uber. Electric car manufacturer Faraday Future rounded out the top five, raising US$1.5bn.
The US saw a record-setting level of VC investment in Q1’18, with US$28.2bn invested across 1,693 deals. In addition to the three US$1bn+ megadeals seen in the US, a bevy of US$100m+ deals helped propel VC investment to a new high. In addition to transportation and autotech, biotech was a big winner in the US this quarter, with large raises by Moderna Therapeutics (US$500m), Harmony Biosciences (US$295m), and Viela Bio (US$282m).
Across the Americas, Canada matched its second-best quarter of VC investment, with US$800m raised across 72 deals, including a US$219m raise by alternative fuels producer Enerkem. Brazil also saw a nice quarter of VC activity, with Nubank achieving unicorn status following a US$150m raise.
Europe saw US$5.2bn in VC investment in Q1’18. Amid a quarter-over-quarter decline, Q1 was the fourth highest on record in the region. The number of European VC deals continued its sharp decline, falling to 548, less than half of the number of deals seen during the same quarter last year.
Strong activity outside the UK helped keep European VC investment high although Ireland bucked the trend with investment increasing strongly quarter-over-quarter to US$162m. Germany saw its second highest quarter of VC investment, just shy of US$1.5bn raised and led by a US$560m raise by Auto1 Group. France, meanwhile, achieved a new high of US$767m of VC investment, further cementing its growing prominence as an innovation leader in Europe. Spain also saw a strong quarter, boosted primarily by a US$160m raise by Cabify.
Asia continued to see large deals in Q1’18, as two US$1bn+ megadeals were struck outside China with Singapore-based Grab raising US$2.5bn of Series G financing, and GO-JEK in Indonesia closing on US$1.5bn of Series E funds. While VC investment in China fell significantly quarter-over-quarter, the country saw a healthy number of US$100m+ megadeals and an increase in the number of deals. India’s VC market got off to a great start in Q1’18, seeing a strong rebound in investment. Food and grocery delivery was the hottest area of investment this quarter, with unicorn company Zomato raising US$200m and BigBasket raising US$300m.
VC activity globally is expected to remain strong heading into Q2’18, with an increasing focus on artificial intelligence (AI) autotech, and healthtech. With exit and IPO activity also expected to increase over the next few quarters, there will likely also be a renewal of activity at the earliest deal stages.
“Venture capital investors continue to pour money into late-stage companies, in part because of the number of aging unicorns that have remained private,” said Brian Hughes, National Co-Lead Partner, KPMG Venture Capital Practice, and a partner for KPMG in the US. “With strong IPO exits by Dropbox and Zscaler this quarter, and an increase in the number of IPO filings, we could see the tide turning over the next few quarters, bringing with it a resurgence in early stage deals activity.”
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