venture capital with metal gears

Venture capital investment eased in in the third quarter (Q3 2018) with US$52 billion invested across 3,045 deals, according a quarterly report on global VC trends, published Wednesday by KPMG Enterprise.

Total investment for Q3 2018 is still well above historic norms despite a decline from Q2 2018’s total of US$73 billion, the report says, which included an outlier investment of US$14 billion in Ant Financial.

Overall, US$183.3 billion invested globally at the close of Q3 2018 has already surpassed 2017’s annual total of US$171 billion.

“Globally, the amount of venture capital invested has already surpassed 2017’s annual total – driven in large part by ever increasing deal sizes. However, this quarter we continued to see a decline in the volume of seed and angel investments, particularly in Europe and Asia,” says Arik Speier, head of technology with KPMG Somekh Chaikin in Israel, in a statement.

Indeed, the size of late-stage deals continues to grow, with the median size of later rounds jumping from US$26.5 million in 2016 to US$50 million this year. Asia produced the lion’s share of the big deals in Q3 2018.

Canada’s VC market continues to perform well, KPMG says, with late stage deals also leading the way. However, the number and value of deals declined in Q3 2018, the report shows.

Canada’s health and biotech sectors performed well, according to the report, and the clean tech, agritech and cannabis sectors are also on the rise. “Health and biotech will likely continue to be big hits among Canadian investors, in addition to artificial intelligence,” the report says.

The global initial public offering (IPO) market is becoming more attractive, according to the report. “As the IPO market continues to deliver strong returns to investors, we should expect to see further IPO activity in coming quarters,” says Brian Hughes, national co-lead partner in KPMG venture capital practice, in a statement.

Looking ahead, global VC activity is expected to remain strong heading in the fourth quarter, with annual investment totals expected to reach record levels by the end of the year. “In particular, IPO interest and activity is expected to continue to rise in Q4 2018, even in Europe’s historically soft IPO market,” the report says.