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VC funding globally stays flat in 2019 Q2 as Asia lags behind

Mumbai: Venture capital funding in start-ups globally decreased 2% compared to the previous quarter, with Asia slowing even as the US continues to see large-scale dealmaking, according to a report from market intelligence platform CB Insights along with consultancy firm PwC.

Investments in the US, Europe and Asia for the second quarter of 2019 totalled $53 billion, 2% lower than the previous quarter, while the number of deals increased by 2% to 3,474 for the quarter, says the report titled MoneyTree Report: Q2 2019.

While Asia came close to surpassing North America’s deal activity in Q3 2018, the region’s deal activity has since declined by 24% in the current quarter.

Funding in the US was driven by deals of over $100 million mega-rounds driving funding higher: Driving the trend toward bigger deals, US companies raised a record quarterly number of large rounds, with 64 mega-rounds accounting for nearly half of all funding raised, compared to the 48 and 51 rounds for each of the previous quarters raised.

The slowdown in Asia also seems to be driven by a slowdown in China, where funding has slowed down after a record breaking decade of funds raised, investments and valuations. However, funding in India continues to remain strong. Mint reported on 30 June 30 that start-ups in India have raised a record $3.9 billion from venture capitalists in the six months ended 30 June, as the world’s biggest investors doubled down on their bets in the country buoyed by the Flipkart-Walmart deal last year.

Sector wise, internet companies raised the maximum capital, $12 billion in the quarter, followed by healthcare and mobile and telecom firms, which raised $4.6 billion and $3.1 billion respectively.

Following the stock market listing of ride hailing firm Uber Inc., e-cigarette company Juul Labs become the most funded start-up, with $12.6 billion in funding over the years, from investors including Altria Group, the makers of Marlboro cigarettes.

In the quarter, exits via mergers and acquisitions (M&A), remained flat, at $162 billion, but exits via initial public offerings shot up to $33 billion, compared to $15 billion and $16 billion for the preceding two quarters.

This was driven by a slew of public market listings in the US- from Uber and social network Pinterest, to workplace collaboration platform Slack and Zoom Video Communications.

Source: Livemint