The final quarter of 2018 saw nearly US$64 billion* in VC investment globally, led by a $12.8 billion funding round to US-based e-cigarette manufacturer Juul.
The VC deal, second only to the $14 billion raised by China’s Ant Financial in Q2’18, helped propel annual VC investment globally from $175 billion in 2017 to a massive $255 billion in 2018, according to the Q4’18 edition of the KPMG Enterprise Venture Pulse report.
While every region identified in the report —the US, Americas, Asia and Europe — saw a record high level of annual VC investment during 2018, the total number of VC deals globally declined to a 6 year low of 15,299 deals during the year, compared to 17,314 in 2017 and a peak high of 20,172 in 2015. The drop in quarterly deal volume was even more stark, with the 3,048 deals seen in Q4’18 the lowest number in 25 quarters since Q3’12.
“The record levels of funding we are seeing around the world highlight the intense focus VC investors are placing on late-stage deals. One billion+ mega-deals alone in Q4’18 accounted for $22 billion in investment – approximately a third of the total funding raised this quarter,” said Brian Hughes, National Co-Lead Partner, KPMG Venture Capital Practice, and a partner with KPMG in the US. “While the extended decline in the number of deals, particularly at the earliest deal stages, is somewhat concerning, the highest quality companies are still attracting investment and we expect to see a strong IPO market in 2019.”
Key Q4’18 Highlights
Global VC investment rose from $56 billion in Q3’18 to more than $64 billion in Q4’18. The $12.8 billion Juul deal, in tandem with five $1 billion+ megadeals, helped bring the Q4’18 total to the second highest level of funding ever.
In Q4’18, both the Americas and the US set a second consecutive record for quarterly VC investment. In the Americas, nearly $43 billion was raised in Q4’18, with the US accounting for $41.8 billion of this total.
The $12.8 billion Juul deal also set the record for the largest VC deal ever in both the Americas and the US. In addition to the deal, the US saw one other $1 billion+ funding round: a $1.25 billion raise by Epic Games.
VC in Asia dropped significantly this quarter, from $17.6 billion in Q3’18 to a seven-quarter low of $15 billion during Q4’18.
Despite the decline the region saw four $1 billion+ deals, including China-based ByteDance ($3 billion), Singapore-based Grab ($2.85 billion), Indonesia-based Tokopedia ($1.1 billion), and India-based Swiggy ($1 billion).
European VC investment rose slightly, with $5.9 billion raised in Q4’18 compared to just over $5.6 billion in Q3’18. Europe’s largest deal this quarter was a $200 million Series D raised by UK-based Graphcore.
2018 Annual Highlights
Every series achieved a new high in median pre-money valuations in 2018, from a staggering $375 million for Series D or later rounds, to $6.7 million at the seed stage.
The global median Series A financing was $7.5 million in size in 2018, far outstripping any prior year.
Global median pre-money valuations rose across all deal stages in 2018, including a staggering $375 million for Series D or later rounds, and $6.7 million for seed stage rounds.
The global median Series A financing rose dramatically in 2018, reaching $7.5 million.
VC investment in urban mobility skyrocketed from $26 billion in 2017 to close to $45 billion in 2018.
VC investment in artificial intelligence related to healthcare almost doubled, from $1.25 billion in 2017 to $2.34 billion in 2018.
Agtech continued to rise on the radar of VC investors, with total global investment growing from $1.93 billion in 2017 to $2.15 billion in 2018.
India Highlights
Strong VC investment activity in India to end 2018 – It was a robust year for Indian VC. The downturn in the final quarter of 2018 belies the fact the Indian venture ecosystem, although not seeing the highs experienced earlier the decade, is still going strong, especially relative to historical tallies. The year closed at $7.9 billion overall, the third-highest tally of the decade, in aggregate VC invested
Deal sizes in the country grew considerably, a sign of the increasing maturation of the India VC market.
Fintech continued to be a big bet for VC investors in India throughout the year, in addition to marketplace platforms and ride hailing
India saw four new unicorns emerge during 2018. The new unicorns reflected the growing diversity of India’s start-up ecosystem, with each unicorn representing a different industry. Heading into Q1’19, VC investment in these industries is expected to continue to grow
There will also likely be an increase in a number of niche innovation areas, such as digital platforms to facilitate used car sales
Speaking on the India findings, Nitish Poddar, Partner and National Leader – Private Equity, KPMG in India said, “India is the fastest growing large economy in the world, so anything with a consumer story is very attractive to investors today.
We’re seeing a lot of action in consumer solutions –in addition to industrial, automotive and healthcare. The outlook is very positive heading into 2019”.
