At mid-year, the pace of global venture capital (VC) investment lagged considerably behind the pace required to match the record level of annual VC investment seen in 2018, although it remained on track to match 2017’s investment total.
The more moderate level of VC investment experienced in both Q1’19 and in Q2’19 likely reflects concerns related to the trade war between the US and China, in addition to the ongoing challenges associated with Brexit, regulatory issues in China, and increasing tensions in countries such as Argentina and Turkey.
While VC investment remained steady quarter-over-quarter, the total number of global VC deals fell for the fifth-straight quarter, highlighting an ongoing investor focus on late-stage deals. With investment in early-stage deals stagnating in many regions of the world, there is concern that the health of the VC market could be affected over time as fewer early-stage companies attract the capital they need to grow.
Heading into Q3’19, the trend towards a smaller number of late-stage deals is expected to continue globally, which could affect the ability of some high-quality early-stage companies to attract funding. AI is likely to buck this trend given its almost unlimited potential to cause industry disruption, and the significant amount of attention it is being given by corporate investors.
Healthtech and food delivery are also expected to gain additional traction from investors heading into Q3’19, while foodtech and Agtech are well poised for growth.