Q2’17 Edition of the KPMG Enterprise Venture Pulse Report – A global analysis on VC Funding

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Despite a decline in the number of VC deals globally, there was a major spike in VC investment during Q2’17. A significant number of mega-deals in all regions and more importantly Asia, helped drive this funding increase. This includes China-based ride sharing company Didi Chuxing’s record-shattering $5.5 billion funding round. The VC market in India on the other hand saw a significant shift all of which was positive and augurs well for the future.

 

Key highlights from India and Asia Pacific:

 

  • Venture activity recorded another consecutive quarterly decline, the fifth such since a peak of 293 completed financings in Q1’16.
  • On the other hand, total VC invested stayed historically robust, closing in on $870 million in the quarter and testament to investors — particularly larger, nontraditional players — still desiring exposure to the Indian startup scene.
  • Investor Interest deep tech solutions particularly high
  • From and exit standpoint, India poised to witness IPOs in the tech space at the start of Q3
  • Late stage startups may look at considering early stage companies to bridge the gap in their portfolios
  • Funding readily available, with startup founders in India, becoming angel investors themselves
  • Impact of the goods and services tax (GST) to become clearer over the next quarter.
  • During Q2’17, the hottest sectors of VC investment in Asia were artificial intelligence, robotics, fintech, edtech and healthtech, although interest in cloud and infrastructure services also picked up speed
  • Venture capital activity is posed to remain strong in Asia, with deep tech, autotech and healthtech continuing to be major sectors of interest
  • A growing trend which was witnessed in Asia  was that of  startups looking to move up the value chain by investing heavily in training and customer service. Didi Chuxing( A ride sharing company)  for example, now requires all of its drivers to learn English. Many customer-focused startups recognize that in order to make money, they need to charge more — but to charge more, they need to enhance their services.

 

Commenting on the India findings, Sreedhar Prasad, Partner, Internet Business and Startups, KPMG in India said, “Most large companies are considering acquiring early-stage startups that are category leaders, these are both ecommerce players as well as traditional companies. They are looking to shorten their own product development cycles through acquisitions or trying to dominate the ecosystem by acquiring companies that enable their business. Consolidation is now on every board’s agenda.”

 

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