Globally, Q3 2015 saw 1799 deals relating to VC backed companies, with a total of $37.6bn invested. Regionally, there were 1076 US deals ($20.3bn), 313 European deals ($3.5bn) and 373 deals in Asia, which raised $13.5bn.
According to KPMG Enterprise, Q3 2015 was an ‘exciting time’ for many regions. While the volume of deals was lower than in Q2, VC backed investments so far this year are 11% higher than all such investments in 2014 and almost double the level of investment in 2013. ‘All in all’, says the report, ‘Q3 was a quarter for big, big deals. Less so for seed-stage and Angel financing, both of which were down for the fifth consecutive quarter on a global basis. Only Europe bucked the downward trend in Q3, with a small increase in seed-stage deals compared to last quarter’.
Perhaps not surprisingly, internet and mobile focused start ups grabbed investors’ attention, claiming more than two thirds of all deals. Internet related start ups represented 49% of investments, with mobile related taking an 18% share. Technology companies are still holding investors’ interest, with 77% of Q3 deals, compared to 12% healthcare and 12% ‘other’.
An interesting finding in the report is that corporates are continuing to back start ups. According to the statistics, 26% of all deals in the quarter featured money from such organisations; a figure which has remained fairly constant over the last year.
There has also been a rise in what KPMG calls ‘mega rounds’. So far in 2015, there have been more than 170 financing rounds in which more than $100m was raised and 23 of these investments have been in European companies.
“Everyone is chasing really large deals,” said Francois Chadwick, national tax leader for KPMG’s venture capital practice in the US. “It’s the herd mentality. Those that are coming in late suddenly feel like they’ve been left out, not invited to the party, and they now need to buy the really expensive ticket to get into the party.”
Another apparent reflection of the ‘herd mentality’ has been the growth in the number of so called ‘unicorns’ – companies valued at more than $1bn. KPMG says 46 have been added in the last two quarters.
One of the highlights of Q3 2015 in the UK was a number of big investments in healthcare related companies. ‘From biotech to medical devices’, says the report, ‘all aspects of healthcare appear to be on the UK VC investment radar’.
VC backed companies in Europe have raised a total of $10.1bn in the first three quarters of 2015, with 990 deals struck. Q3 was also the third in a row where more than $3bn was invested, with the investment of $3.5bn representing the highest amount for almost five years. And KPMG sees the trend continuing, with interest in more high tech companies.
“We believe that we will see a renaissance of high tech engineering products, of hardware products and of the Internet of Things in Europe and, in particular, in Germany, in the near future,” said Tim Dümichen, a partner in KPMG Germany. “It is a sleeping giant that has already started to wake.”
Download the report here.
