U.S. VC Investment Tops $27 Billion For 3rd Straight Quarter; Investors Continue To Focus On Late-Stage Deals: KPMG Report
Transportation, Healthcare and a rebounding IPO market are among areas driving VC investments
NEW YORK, October 11, 2018-- Venture Capital (VC) investment in the U.S. reached $27.9 billion during Q3'18, up from $27.6 in Q2'18 and buoyed by investors' continued focus on late-stage deals and a resurgence of the IPO market, according to KPMG's Venture Pulse Q3 2018 report.
While total investment increased, third quarter deal volume decreased to 1,937 deals, compared to 2,349 deals in Q2'18 and 2,297 deals in Q1'18. This is the third consecutive quarter that U.S. VC investment reached more than $27 billion. A substantial number of $100 million + megadeals helped keep investment levels strong.
The top 10 U.S. deals in the quarter accounted for more than $4.8 billion in investment.
"We continued to see an influx of mega deals with four companies raising $500 million or more and 12 companies raising $300 million or more this quarter," said Shivani Sopory, Audit partner, KPMG U.S. "Deal volume has also stabilized in recent quarters, following a prolonged decline in the number of angel and seed investments."
"Q3'18 saw a resurgence in IPO activity in the US , including VC-backed IPO's from Survey Monkey, speaker manufacturer Sonos and a notable positive IPO from ticket provider Eventbrite, whose share price rose almost 60 percent above its listing price," said Brian Hughes, National Co-Leader, Venture Capital Practice, KPMG LLP. "In addition, Biotech's positive run continued during Q3'18. As the IPO market continues to deliver strong returns to investors and the overall market volatility remains low, we should expect to see further IPO activity in coming quarters."
The transportation sector was hot during the quarter, with ride hailing company Uber and autonomous driving company Zoox both raising $500 million. Lime, a scooter and bike sharing company, raised $335 million, and car sharing company Getaround raised $300 million.
Agtech continued to be an area of investor interest, with Indigo Agriculture raising $250 million to support a digital platform for selling grain, representing the largest agtech deal of 2018.
Co-working space options have been a growing area of investor interest, as they look to capitalize on the sharing economy. Co-working space provider Convene, based in New York, raised $152 million this quarter.
Health care continues to attract investors because they are interested in potential solutions aimed at making health care more accessible and efficient, and their belief that health care will remain a critical priority for the foreseeable future. Oscar raised an additional $375 million this quarter while One Medical – focused on medical care – raised $350 million.
Convenience services such as food delivery and the rise of transportation-focused VC investments demonstrates their growing popularity. This has resulted in more partnerships as platform companies look to create stronger distribution options or to enlist more food providers to their network. The long-term viability of this area remains in question, with some investors wondering about the ultimate market share that can be captured by delivery services.
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