Friday, 26 July 2019 01:37

Global venture capital investment on the decline: report

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Global venture capital investment on the decline: report Image Stuart Miles, FreeDigitalPhotos.net

Global venture capital investment witnessed a gradual decline in two consecutive months — May and June — in the second quarter of 2019, primarily due to a decline in the total number of VC investments in the US and China, according to analyst firm Global Data.

Collectively, the US and China accounted for more than 60% of the total investment volume during the quarter, while few key markets outside the US and China registered an upswing in deal volume, though they failed to completely offset the overall decline.

And the UK, France and Canada were among the few key countries that continued to witness consistent growth in VC investments during the review period.

According to Aurojyoti Bose, financial deals analyst at GlobalData, “With the ongoing US-China trade dispute showing no signs of slowdown, VC investors in these two markets will keep a close watch on the developments.

“Investment activity is also expected to be influenced by Brexit uncertainty. However, companies in other countries, more specifically in the emerging economies, are expected to be on the radar of VC investors more than ever before,” Bose said.

GlobalData reports that the share of deals across all the value ranges mostly remained unchanged/flat across all the months during Q2 2019, while the quarter witnessed the announcement of few mega deals (investment US$1bn), low value deals (investment US$10m) continued to dominate VC investments with 75.2% share in the overall volume.

In addition, all three months registered the highest number of deals in the range of US$1 million to US$5 million.

GlobalData also reports that a total of 1495 deals (with disclosed deal value) were announced in April 2019, out of which low value deals accounted for 75.5% – and it was the only month to record a US$1 billion+ deal in Q2.

The month also had two deals in the range of US$500 million to US$1000 million and the US topped with a total of 891 VC funding deals, with China a distant second position with 112 deals in April.

GlobalData says some of the notable deals in April included the announcement of Grab’s plan to raise US$2 billion and US$568 million Series D funding raised by UiPath.

And the VC investment deal volume (with disclosed deal value) witnessed a decline of 0.4% in May as compared to the previous month, with the month witnessing the announcement of six deals in the range of US$500 million to US$1000 million – the highest during the quarter.

May also witnessed the announcement of the highest number of deals in the range of US$1 million to US$5 million, and low value deals as a percentage of the total deal volume was also the highest (76.8%) during the month.

The number of VC investments declined by 2.6% in the US and 17% in China in May compared to the previous month.

Some of the notable deals announced in May included US$1 billion raised by JD Health and US$750 million raised by Megvii.

And GlobalData reported that June also saw a decline of 14% in VC deal volume (with disclosed deal value) compared to the previous month, while not witnessing any deals valued at more than US$500 million.

Low value deals as a percentage of the total deal volume stood at 72.9% in June, with the number of VC investments for the month declining by 22% in the US – although China "recovered", with the investment volume remaining flat when compared to April 2019 investment levels.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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