Global venture capital investment showed continued resilience in Q2 of the year, reaching US$62.9 billion across 4,502 deals, said KPMG recently.
The amount almost equalled total investment from Q1 of the year and was only slightly off the pace seen in Q2 of 2019, which registered $69.8 billion invested, the company pointed out.
Venture investors continued to pour money into their existing portfolios — particularly late-stage companies, according to KPMG, adding that this focus on late-stage deals continued a trend toward investing in supposedly safer bets seen in the quarters prior to the pandemic.
The top 10 deals globally accounted for well over US$9 billion of investment, KPMG said.
US autonomous driving company Waymo raised a $3 billion funding round in the quarter's largest deal, while China-based MGI Tech and Didi Bike both raised $1 billion rounds, the firm noted.
Meanwhile, the number of early-stage deals and first-time deals fell, KPMG observed.
While the impact of the pandemic on the VC market to date has been limited, it has rapidly accelerated digital trends and increased the importance of digital business models and solutions, such as B2B solutions and edtech (educational technology), said KPMG.
At mid-year, B2B productivity solutions accounted for $14.3 billion in VC investment, the firm added.
“The pandemic has forced many companies to rethink their 2020 plans, with many mature startups that may have planned for an exit delaying their efforts to 2021,” said Conor Moore, Co-Leader, KPMG Private Enterprise Emerging Giants Network, KPMG International. “This is leading VC investors to re-evaluate where they may need to invest more over the next quarter or two to help their portfolio companies bridge any gaps or whether they choose to deploy the capital to companies that are emerging/benefitting as a result of the pandemic.”
Digital business models attracting attention in Asia
VC investment in Asia remained steady quarter-over-quarter at $16.9 billion across 1,011 deals in Q2, according to KPMG.
The region’s top three deals were all from China, KPMG said. They were: a $1 billion Series B round by MGI Tech, a $1 billion early-stage raise by Didi Bike and a $750 million Series E raise by Zuoyebang.
Several sectors continued to thrive due to their applicability in the current business environment, including digital platform businesses focused on meeting consumer needs — such as edtech, home delivery, and online gaming — as well as healthtechs, the firm pointed out.
- The US alone accounted for more than half of VC investment globally during Q2'20, with $34.3 billion of investment across 2,197 deals.
- At a regional level, the Americas led VC investment in Q2'20, with $35.6 billion raised across 2,354 deals while Europe saw $10.1 billion raised across 1,062 deals.
- The five largest deals this quarter occurred in the United States and China: California-based Waymo ($3 billion), Shenzhen's MGI Tech ($1 billion), Hangzhou-based Didi Bike ($1 billion), San Francisco-based Stripe ($850 million) and Beijing-based Zuoyebang ($750 million).
- Global first-time venture financings remained weak - seeing only $10.2 billion invested across 2,439 deals in the first half of the year - well off last year's pace of $28.2 billion overall, across 7,490 financings.
- Global VC fundraising activity was strong at mid-year, with over $60 billion already raised across 299 funds.
- Corporate VC deal volume slowed considerably during the first half of 2020, dropping below 1,000 deals globally in Q2 2020.