Global VC funding declines in 2016 Q3, Chinese investors eye overseas acquisitions, finds KPMG analysis

Global VC funding declines in 2016 Q3, Chinese...


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Global funding into venture capital (VC)-backed companies declined in 2016 Q3, however Chinese VC investors continue to actively look to acquire overseas, finds recent KPMG analysis.

Global VC investment in Q3 declined 14 percent from the previous quarter, to USD24.1 billion, the lowest quarterly funding total since 2014 Q3. Global deal activities, however, climbed slightly from Q2 to 1,983, according to Venture Pulse, the quarterly global report on VC trends published jointly by KPMG International and CB Insights. 

In China, 84 VC investment deals were recorded in the third quarter totalling USD3.9 billion, compared to 79 deals and USD5.7 billion three months earlier. 

Lyndon Fung, Partner, U.S. Capital Markets Group, KPMG China, “It’s becoming more of a buyer’s market in China. There’s less bidding going on and VCs are taking more time to evaluate each company. Investment committees are asking deal teams to put personal funds into projects to ensure they have a real stake in a company’s success.”

Irene Chu, Partner and Head of the High Growth Technology and Innovation Group, KPMG China, adds: “Chinese VC investors are focusing on markets outside of China, taking advantage of government incentives. In particular, Chinese companies have recently acquired or invested in technology companies in Israel, Canada and the UK. Israel based companies have been especially keen to work with tech VC funds in China in order to promote their technologies to the Chinese market for their mutual benefit.” 

Over the next few quarters, Asia based VC investment is likely to remain focused on technology enablement – using technology to help improve service or product quality or to make them more accessible for individuals. The healthcare sector is poised to be a big winner in this regard, both in terms of providing accessible primary healthcare and in terms of making processes like booking appointments and writing prescriptions easier for both doctors and patients, according to the report. Investment in entertainment and media technologies is also expected to rise heading into 2017. 

Chu concludes: “In Asia, the next wave of innovation will be about building globally competitive companies. To excel, companies need to understand how foreign businesses are run including their different cultures and management styles.”

– Ends – 

About CB Insights

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About KPMG

KPMG China operates in 16 cities across China, with around 10,000 partners and staff in Beijing, Beijing Zhongguancun, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Hangzhou, Nanjing, Qingdao, Shanghai, Shenyang, Shenzhen, Tianjin, Xiamen, Hong Kong SAR and Macau SAR. With a single management structure across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located. 

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 155 countries and regions, and have 174,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG China was also the first among the Big Four in mainland China to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong office can trace its origins to 1945. This early commitment to the China market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in the Chinese member firm’s appointment by some of China’s most prestigious companies.

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