KPMG Report Says Venture Capital Activity Declines in 2016

vc-2016After two years of strong growth, both venture capital dollars invested and the number of deals in the United States declined in 2016.According to Venture Pulse, a quarterly report on global VC trends published by KPMG, total VC investment in 2016 declined to $69.1B after climbing from $68.9B in 2014 to $79.3B in 2015. Total deal count shrank by more than 20 percent in 2016 to 8,136, from 10,468 in 2015 and 10,550 in 2014.

The creation of both unicorns and IPOs was in short supply during 2016. The 2016 IPO market for VC-backed companies is said to have been the worst since 2013. As the IPO market weakened in 2016, corporate M&A became crucial for venture investors’ liquidity prospects. The $42.4B in exit value achieved via that exit route was the second-highest tally of the decade, only below the $68.8B in 2014.

Additional findings include:
– first-time financings in the US hit the lowest level last year since 2010 – with only 2,340 deals in 2016 – although the total of VC investment in those rounds remained substantial at $6.6B;
– the late-stage deal phenomenon of the past few years in the US appears to be cooling, although a median pre-money valuation of $145M at Series D or later is still 49 percent higher than in 2013; and
– pharmaceuticals and biotechnology companies dominated the exit scene in 2016, raching $17.2B, exceeding software’s $14.1B for the year.

FinSMEs

15/01/2017

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