KPMG’s Venture Pulse is a quarterly report discussing the key trends, opportunities, and challenges facing the venture capital market globally.
While VC investment in the Nordic region softened somewhat in Q1’19, the region remained a growing area of interest to VC investors in Europe and internationally. Stockholm has evolved into a leading fintech hub, spawning a number of successful unicorns, including iZettle and Klarna.
In recent years, Helsinki has also gained momentum particularly in the gaming space with companies like Supercell, Rovio and Small Giant Games; in Q1’19, Finland also saw the region’s largest deal: a $200 million raise by retail planning solution Relex.
Fintech is seen as one of the hottest area of investment in the Nordic region, driven in part by open banking, PSD2 and other regulatory changes. In addition to the evolution of fintech startups like Tink, Bynk, and BIMA, the region has also seen traditional corporates getting into the fintech space. Nordea and SEB, for example, have established their own VC investment arms.
— The Nordics is attractive market to invest, with a stable economy, good availability of public funding, government support and high level of education. Fintech and gaming sectors lead the way but as the innovation ecosystems mature other sectors will also arise in to spotlight. There is a lot of liquidity in the market and deals on the pipeline, which bodes well heading into Q2’19, says Jussi Paski Head of Startup Services in KPMG Finland.
In Europe, VC investment saw mixed results this quarter, perhaps influenced by ongoing geopolitical uncertainty and associated challenges with Brexit. Despite the heightening level of uncertainty, many countries within Europe saw significant interest from VC investors. Overall VC capital investment reached $6.5 billion during Q1’19, just shy of the record high established in Q4’18. However, deal volume plummeted, falling from 882 in Q4’18 to only 487 this quarter – representing the lowest quarterly total since late 2010.
VC investment globally decreased quarter over quarter as numerous economic uncertainties caused some VC investors to pull back, at least in the short term. The rapid approach of the Brexit deadline and the resulting deadline extension, a perceived economic slowdown in China and heightening trade wars between the US and other regions all caused some concern to VC investors.
Globally, VC deal volume declined for the fourth consecutive quarter with only 2,657 deals – representing the lowest number in 31 quarters – since Q2’11. The continued decline in deal volume was felt in every region, but was particularly pronounced in Europe – which saw deal volume drop from 882 deals in Q4’18 to 487 deals in Q1’19.