KPMG’s Venture Pulse Q3 report is highlighting the key trends, opportunities, and challenges facing the venture capital market globally.
VC investment in the Nordic region remained robust, on pace to shatter its record for annual VC funding. International investors and corporates accounted for a large part of this funding. Across the regional venture ecosystems of Stockholm, Helsinki, Copenhagen and more, the Nordics boast a significant array of startup hotbeds, which has helped keep venture financing at healthy levels for most of a year now. At a sector level, fintech was the biggest winner during Q3’19, with Sweden-based Klarna raising $460 million in order to fund its expansion into the US. A number of VC firms are fundraising for new funds in the Nordics and bigger funds are also cropping up in all of the Nordic countries. We’re seeing also lot of increased attention from Asian conglomerates towards the region. More funding could spur higher valuations compared to historical norms as competition for the best deals might increase in the future.
- The Nordic region is seeing more money in the VC market than ever. A lot of VC firms are fundraising for new funds, while new micro funds are also trying to enter the market focused on specific technologies or industry sectors. We’re seeing VC investors embracing numerous industries across the Nordic countries –from fintech to gaming and SaaS. In recent quarters, there’s also been a strong uptick in corporate investment, mostly focused on late stage deals, says Jussi Paski Head of Startup Services, in KPMG Finland.
During Q3’19, VC investment flourished across much of Europe, despite the ongoing uncertainty around the changeover of key positions within the European Commission and Brexit in advance of the October 31st deadline. If completed, the outcome of Brexit will likely have a resonating impact on the region during the quarter and into 2020. Despite a decline in the number of VC deals, the amount of VC investment in Europe increased in Q3’19, setting a new quarterly record.
Across the region, fintech, mobility, healthtech and biotech are expected to remain very hot. Given the growing emphasis being placed on climate change and sustainability in the region, there could also be an uptick in investment in related technology areas.
Q3’19 saw global VC investment hold steady despite increasing levels of economic and geopolitical uncertainty and a lack of $1 billion+ megadeals during the quarter. A significant number of $100 million+ megadeals across the US, Americas, and Europe helped to buoy results.
While global VC investment is well-off pace to match last year’s record, which included the massive $14 billion raise by Ant Financial, investment is expected to exceed levels seen in all years prior to 2018 by the end of the year. While VC investment in China may have slowed significantly, other regions have seen significant upticks in investment. Despite the significant uncertainty surrounding Brexit in the UK, for example, Europe has already exceeded 2018’s record level of VC investment – with one quarter remaining in the year.
While there continues to be a significant amount of liquidity in the global VC market, it is expected that VC investors will be more cautious when making investments over the next quarter and into 2020, putting greater emphasis on company business models and expectations related to profitability.
Fintech, transportation, mobility, healthtech, and biotech are all expected to be hot areas of VC investment on a global level, with AI continuing to be a critical focus at a technology level. B2B solutions, productivity solutions, and solutions with real world impacts are also expected to grow on the radar of investors.
Head of Startup Services
p. +358 40 1484 202