Venture capital (VC) investment dropped from $71 billion in Q4 2018 to $53 billion in Q1 2019, due to a decline in Chinese investment, according to a KPMG report.
Globally, VC deal volume declined for the fourth consecutive quarter with only 2,657 deals – representing the lowest number in 31 quarters – since Q2 2011. The continued decline in deal volume was felt in every region, but was particularly pronounced in Europe that saw deal volume drop from 882 deals in Q4 2018 to 487 deals in Q1 2019.
The report said Chinese VC fell from $10.1 billion in Q4 2018 to $5.8 billion in Q1 2019, as mega deals took a pause.
Globally, VC deal volume declined for the fourth consecutive quarter with only 2,657 deals – representing the lowest number in 31 quarters – since Q2 2011.
Arik Speier, head of Technology, KPMG Somekh Chaikin in Israel, said: “Deal value was robust in the US and Europe – powered in large part by big investments in later stage deals.”
The largest VC deal included a $5 billion investment in New York-based The We Company and a $4.5 billion investment in Singapore’s Grab Taxi.
United States VC deal value reached $32.6 billion – the second highest quarterly total in the past 7 years.
The $5 billion raised by shared workspace company WeWork was by far the largest VC deal in the US this quarter. Other major VC deals in the US included Nuro ($940 million), Rivian ($700 million), Aurora ($530 million), Clover Health ($500 million) and SpaceX ($500 million).
VC deals volume in Europe dropped from 882 deals in Q4 2018 to 487 deals in Q1 2019. Europe had 10 deals at or over $125 million this quarter, compared to 6 during Q4 2018.
The 10 largest deals in Europe were spread among 6 different countries including 3 from Germany (N26: $300 million, BioNTech: $211.5 million and Wefox: $125 million). There were also two large French deals (Doctolib: $174.8 million and Ynsect: $128.2 million) and 2 big deals in the UK (Ovo Energy: $281.6 million and Iwoca: $195.6 million). Other countries represented in the top 10 deals included Finland, Switzerland, and Israel.
VC funding in Asia fell from $16.9 billion in Q4 2018 to $13 billion in Q1 2019, representing the lowest quarterly total since Q1 2017. Deal volume also slipped.
Grab Taxi in Singapore attracted $4.5 billion, Chehaoduo received $1.5 billion and Beijing-based AI company Horizon Robotics raised $600 million in early-stage funding. The top 5 deals were rounded out by Beijing-based Danke Apartment which raised $500 million and Shanghai-based Weltmeister Motor which raised $446 million led by Baidu. In addition to Grab Taxi, Southeast Asia also saw several large deals including Lalamove in Thailand, Ola in India and Zilingo in Singapore.
Asia continued to attract considerable attention from VC investors in key areas including artificial intelligence, automation, and facial recognition during Q1 2019, in part driven by the demand for more robust data analytics.
India experienced some solid VC activity as automotive services companies gained ground. India’s VC market did not see any $1 billion plus rounds this quarter.
Indian start-ups raised several $100 million plus deals, with logistics start-up Delhivery raising about $413 million and ride-hailing platform Ola raising $300 million.
Nitish Poddar, partner and national leader – Private Equity, KPMG in India said, “Edtech has the potential to become a breakout sector in India. The sector has evolved from companies simply offering online digital classes, to providing access to both online and offline tutorial offerings, to now offering even more innovative options.”