Welcome to Venture Pulse Q2 - quarterly report highlighting the key trends and opportunities facing the venture capital market globally.
VC investment in the Nordic countries was very strong in Q2’19, driven primarily by the $1 billion raise by lithium-ion battery company Northvolt in Sweden. The massive deal was led by Volkswagen Group and Goldman Sachs Merchant Banking Division, with investments from BMW and others.
Corporate investment in general has blossomed in the Nordic countries in recent quarters, with many domestic corporates realizing the need to make VC investments, even as international corporates increased their investments in Nordic-based startups. Food delivery was also top of mind in the Nordic region in Q2’19, with Finland-based Wolt raising $130 million.
– The Nordic region is really trendy right now, with investments focusing on technologies like AI and machine learning, and across sectors from gaming to cleantech. This quarter’s $1 billion raise by Northvolt is a particularly huge deal - not just for the Nordic region, but for the European continent. Corporates and international investors are driving a lot of this investment at least at the larger deal stages, says Jussi Paski Head of Startup Services in KPMG Finland.
The strength of Europe’s VC market continued to be defined by the growing diversity of its innovation hubs; while VC investment in the UK was well-off of historical highs, increasing investment in the Nordic countries, France, Spain, Poland and others combined with steady investment in more established innovation centres in Germany and Israel helped keep VC investment in the region high during Q2’19.
Q3’19 is expected to see a continuation of Brexit uncertainty given the new deal deadline is in Q4’19. Despite any localized uncertainty, VC investment in Europe is expected to remain relatively strong – particularly in areas like fintech, food delivery, and healthtech. Drone delivery is one area of VC investment to watch in the future – not only in Europe, but globally.
At mid-year, the pace of global 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 like 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.
Head of Startup Services
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