Global VC market softens, but Canada remains robust

Amid ongoing geopolitical concerns, global venture capital (VC) investment declined in the second quarter, according to a new report from KPMG LLP.

The firm reports that VC investment in the second quarter came in at US$52.7 billion globally, down slightly from the previous quarter.

“U.S. and European investment remained relatively robust; however, investment in Asia was weak for the second consecutive quarter, reaching only US$10.1 billion, as Chinese mega deals continued a pause in activity,” the firm said.

VC deal volume also declined for the fifth consecutive quarter, the firm said, with 3,855 deals in the second quarter. Deal volume was particularly weak in Europe, it noted.

At the end of the first half of 2019, global VC deal activity is well behind last year’s record-setting pace, KPMG said.

The slowdown, it suggested, “likely reflects concerns related to the trade war between the U.S. and China, in addition to the ongoing challenges associated with Brexit, regulatory issues in China, and increasing tensions in countries such as Argentina and Turkey.”

In Canada, while deal volume declined a bit in the second quarter compared with Q1, deal value rose. In particular, the fintech, biotech and healthtech sectors all saw solid activity in Q2, KPMG reported.

“The Canadian venture capital scene turned in another strong performance in Q2, both in terms of deal volume and value, highlighted by several large deals in the fintech space,” said Sunil Mistry, partner, KPMG Enterprise, Technology, Media and Telecommunications, in Canada.

“We anticipate continued strength in Q3, powered by economic growth combined with continued interest by U.S. investors looking for lower valuations north of the border,” he added.

Globally, VC investment is expected to continue to diversify across sectors, KPMG said.

The fintech, healthtech and food delivery sectors are all expected to see continued strong investments, the firm noted. And, within the tech space, artificial intelligence “is expected to remain the hottest area for VC investors,” it said.

“With a significant amount of private capital still available in the market and a stable economy, we expect VC investment will continue at a solid pace into the next quarter,” said Brian Hughes, national co-leader of the KPMG Venture Capital practice in the U.S.

Staff

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