Life Sciences, autotech, healthtech and AI continue as strategic investments
Venture Capital (VC) investment in the U.S. reached $27.3 billion during Q2’18, buoyed by investors’ focus on late-stage deals and a resurgence of the IPO market, according to KPMG’s Venture Pulse Q2 2018 report.
Second quarter deal volume came in at 1,859 deals, compared to 1693 deals in Q1’18, and the top 9 U.S. deals each brought in exactly or more than $250 million in funding. This is the second consecutive quarter that U.S. VC investment reached more than $27 billion.
A $2 billion raise by electric-car manufacturer Faraday Future —the company’s final haul from a massive, prolonged process, as well as yet another fundraise by Lyft helped propel the U.S. VC numbers this quarter.
“Late-stage investment continues to grow in the U.S., and all regions of the world, as unicorns pull in increasingly large amounts to fuel their growth,” said Brian Hughes, U.S. National Co-Lead Partner, Venture Capital Practice, KPMG LLP.
“In addition, the long awaited influx of IPOs appears to be happening. Already in the first half of the year we’ve seen a significant increase in the number of companies going public – with the likes of Docusign and Zuora in the U.S.,” said Hughes. “Post-IPO performance has been particularly strong and we anticipate this will likely spur additional activity in the coming quarters.”
With the tide turning on the IPO market, investors are making strategic investments in hot verticals, such as artificial intelligence, healthtech, autotech, and life sciences.
“It is significant to note that life sciences in general accounts for more than 14 percent of the U.S. VC volume, which is the highest proportion in years,” said Conor Moore, U.S. National Co-Lead Partner, Venture Capital Practice, KPMG LLP. “This is a testament to how interested VCs continue to be in healthcare innovation as the industry grows to an even larger share of the nation’s economy.”
Autotech is a key focus for investors
Many traditional automotive manufacturers are investing in autonomous driving technologies, despite the numerous hurdles left to jump before such technologies can be implemented at the consumer level. Investors are focused on companies and management teams who have the ability to overcome recognized hurdles to technology commercialization.
Investment in cybersecurity expands
In Q2’18 cybersecurity firm Tanium raised $175 million, providing evidence that cybersecurity continues to be a big bet among investors. With the increase in connected technologies – from homes to cars to devices – there has been a related increase in concern for potential hacking. As many companies look at breaches as a question of “when” not “if,” corporate investments have also shifted to include technologies that enable rapid response to breaches.
Convenience services are hot for investors
The focus on convenience companies continues to grow for investors. While verticals such as grocery and food delivery have long been convenience-focused, companies now appear to be targeting more specialized niches. During Q2’18, dog-walking company Rover raised $155 million. The focus on dog walking this year suggests that VC investors are willing to place bets on companies trying to make people’s lives easier to manage.
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