KPMG has published its Venture Pulse Q3’19 report, tracking venture capital (VC) activity around the globe. Findings show that $55.71 billion* of venture capital investment was raised globally across 4,154 deals in the third quarter of the year. This represents a slight drop from Q2’19 figures of $64.96 billion invested across 5,138 deals. In Ireland, $185.3 million was raised over 22 deals, with the largest deals in the IT and financial services sectors.
In Ireland, IT company Fenegro closed the largest deal worth $74.5 million, with plans to invest the capital to grow the company’s global footprint and presence in new and existing international markets. The second largest deal was closed by Dublin-founded student loan specialist Future Finance who raised $26 million.
Commenting on activity in Ireland in the third quarter, Anna Scally, Partner and Fintech Lead at KPMG in Ireland said that “Ireland continues to attract a significant amount of attention from VC investors and fintech remains a very hot sector, with Fenergo and Future Finance securing over $100 million between them this quarter. Recent announcements by both Revolut and Starling Bank on opening international offices in Dublin is further proof of the calibre and reputation of the hub we have developed here in Ireland for fintech. It’s also interesting to see a large investment of $19.5 million in Strong Roots – perhaps there is further opportunity for Irish companies in the lifestyle foods area.”
Anna continued, predicting that companies involved in climate action will see increased interest from investors in the near future saying “companies who are developing products and services to help address climate change and support the decarbonisation agenda are probably not attracting the VC dollars they should expect. I predict that over the next few quarters, we will see more investors putting their money behind early stage companies with decarbonisation solutions. And I think public sentiment, at least in Europe, would support that. In fact, KPMG has been collaborating with the World Economic Forum to establish a unique global Cleantech venture capital proposition – the global Sustainable Energy Innovation Fund (SEIF). SEIF will be a public/private blended finance structure designed to fund transformative innovation solutions for the climate change agenda. It is expected that the SEIF will be formally launched at DAVOS 2020.”
Europe saw US$9.79 billion in VC investment in Q3’19, just eclipsing the quarterly record set in Q2’19. At the end of Q3’19, the region has already exceeded the total VC invested during all of 2018. VC investment in the UK accounted for its third highest quarter of investment ever with US$2.99 billion. This is despite a decline in the number of VC deals to 245 – the lowest deals volume in the UK since Q3’12.
Germany set a new quarterly record for VC investment in Q3’19, attracting US$2.29 billion – led by the US$564 million raise by FlixMobility. Deals in Sweden (Klarna: US$460 million), Belgium (Drylock Technologies: US$167 million), Israel (Monday.com: US$150 million), and Switzerland (Acronis: US$147 million) rounded out the top 10 deals in Europe – showcasing the continued diversity and health of the VC market in Europe.
The US saw US$28.19 billion in VC investment in Q3’19. While a decline over Q2’19, the amount remained relatively robust compared to previous quarters – particularly given deal volume dropped to a ten-quarter low of 2,265. The robustness of the US market was carried in part by the widespread diversity of companies attracting investment, fintech Misson Lane (US$500 million), insurtech Compass (US$370 million), transportation company Lime (US$310 million), and others.
Following a jaw-dropping US$141 billion in exit activity in Q2’19, the US saw exit activity drop back to a still robust but much lower US$35.4 billion.
At the end of Q3’19, year-to-date global VC investment in cybersecurity-focused companies reached US$5.8 billion – not far off the record US$6.4 billion set during 2018. Given the increasing focus on technology innovation across sectors in all regions of the world – and the rapid evolution of cybersecurity risks, there is likely no end in sight as to the growth in cybersecurity investment.
While global VC investment is expected to fall well short of the record levels seen in 2018, annual results are expected to be very robust compared to all previous years. Europe is well-poised for continued VC investment growth despite the uncertainties associated with Brexit, while investment in the US and Americas is expected to continue to hold relatively steady. Given US and China trade relations, VC investment in Asia will likely remain soft into Q4’19.