Financing and deal sizes ballooned in the second quarter of 2015, with funding to venture capital-backed companies poised to surpass last year’s high. This was revealed in a report by KPMG International and CB Insights.
Over $60 billion has been invested so far this year, compared with $88.3 billion last year. North America leads the way with $19 billion in funding in 1180 deals, followed by Asia, with $10.1 billion in funding over 313 deals, and Europe, which seems a laggard in comparison with $3.2 billion in funding in 284 deals. The funding spread in the U.S. indicates many more startups managed to get funded, than in Asia where fewer startups got fatter funding.
North America and Asia drove the bulk of new unicorns — companies valued at over $1 billion — in Q2’15.
Asia’s rise in funding was powered by China, the economic powerhouse that has shown signs of slowing, and India. It comfortably pulled ahead of Europe both in deal count and the amount of funding. Over the last five quarters, more than $33 billion has been invested by venture capital firms in Asia, compared with just $13 billion in Europe. India’s Flipkart, and China’s Coupang and Dianping led mega fund-raises and the top six deals in the region accounted for $4.2 billion or 28 per cent of all funding. India saw a big leap, as deal flow rose to 122 from 84, and funding doubled.
Among the startups that got funding, internet and mobile startups grabbed the vast majority — 82 per cent — of it in Q2’15, compared with 65 per cent in North America and 74 per cent in Europe. In terms of funding dollars, 69 per cent went to internet-led startups, followed by those in the mobile and telecommunications sector. That has been pointed out by Indian startups as well, and is one of the reasons why several of them moved to Singapore or the Silicon Valley in California, where the spread is not as skewed in favour of internet and mobile sectors.
With such amounts of funding, it is little wonder that several firms have chosen to stay private for longer. “There is no question that companies would often choose to stay private longer because that gives the company more latitude to do what they need to do to grow their business for the long term,” said Brian Hughes, national co-partner, KPMG Venture Capital Practice.
Corporate investors participated in 32 per cent of financing deals in Asian VC-backed companies in the quarter, higher than in other regions of the world. The rest was made up by venture capital, mixed with hedge funds, and private equity investors.
Sequoia Capital India was the most active investor in Asia in Q2’15, participating in rounds to Grofers, Peppertap, and Urban Ladder, among others. SAIF Partners and Accel Partners rounded out the top 3 most active, with SAIF investing in Urban Ladder as well.