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2019 Venture Capital Investment Trends

 Compiled among the most attention-grabbing tendencies, added a few of our personal conclusions and predictions for 2019. 

Robust VC exercise continued

In 2018, we noticed one other 50% progress in VC exercise, with a staggering whole quantity of $255 Billion invested:

  • Firms residing within the Americas nonetheless dominate the worldwide scene with 53% of the whole investments acquired with $136 Billion
  • Firms in Asia Pacific raised funding actively and funding exercise grew to over $90 Billion, however the international share declined barely due to the super-fast progress in Americas
  • VC funding to European corporations grew solely barely to simply over $24 Billion, however the international share of European VC dropped to beneath 10% of the worldwide funding exercise.

Regardless of the report quantity of funding, the worldwide variety of offers declined for the third 12 months in a row – the main target was in massive late-stage offers:

  • There have been almost 150 funding rounds with a post-money valuation of $1 Billion or extra, with Ant Monetary (China, $14B) and Juul (US, $12.8B) main the way in which
  • Particularly the big, international VC funds had been appearing increasingly like Non-public Fairness gamers and focused on very massive later-stage offers
  • In whole, there at the moment are greater than 300 non-public unicorn corporations globally – it may be mentioned that in lots of circumstances IPOs are being changed with mega rounds that embody exits by the early traders, whereas late-stage traders maintain corporations non-public for an extended time

The European perspective

  • Europe and the Nordic area are producing a good quantity of unicorns however they’re primarily funded with US-based investments. Nordics and Baltics are the clear sources of late-stage progress, with fifteen 1B USD+ exits, representing greater than half of the European unicorns.
  • The median deal dimension in Europe took a giant leap to the suitable route however continues to be clearly behind the remainder of the world
  • The Nordics – and particularly Finland – are, sadly, clearly behind the remainder of Europe once we take a look at deal sizes. See the graph under for particulars:
Another worrying VC trend: Finland lags behind in deal sizes

Finland lags badly behind in median deal sizes
(KPMG Enterprise Pulse Q42018 report and  for
Finland estimates from the Make investments Europe EDC database 2017)

Company Enterprise Capital

  • The share of Company Enterprise Capital stored rising and CVCs had been concerned in over 20% of all VC offers
  • Nonetheless, there was a pointy decline in CVC participation in Q3 an This autumn, more than likely because of the inventory market correction
Venture investments by stage

Funding quantity is up however the variety of offers is down – once more

Rising markets are stepping up

  • China is the undisputed king of VC in APAC however corporations from Singapore (Seize), Indonesia (Tokopedia), and India (Swiggy) raised $1B+ rounds
  • Giant rounds are occurring in exterior of APAC, as effectively. The Brazilian digital content material supplier Moviles raised a $500M+ spherical in This autumn
  • Firms from rising economies akin to Brazil, Colombia, Mexico, India, Malaysia, and Indonesia attracted effectively over $eight billion in funding

Valuations and up rounds nonetheless rising

  • Deal sizes and valuations rose in all phases
  • The portion of up rounds was additional up, reaching almost 80% with down rounds amounting to simply over 10%
  • Funding phrases remained very entrepreneur-friendly

A robust exit market, affected in This autumn by the inventory market correction

  • The overall exit market (together with each M&A and IPOs) set a simple all-time-high with greater than $300B in exits. This was greater than double than the exit quantity of the already sturdy 2017
  • Exit exercise was significantly excessive in Q2 and Q3, however got here down in This autumn amid the worldwide inventory market correction
  • The variety of M&A transactions was decrease than any time since 2010 however the greenback quantity hit a brand new report at almost $100B

Fundraising continues to be robust

  • Whereas the variety of new VC funds declined considerably, the whole greenback quantity raised hit a brand new excessive at $78 Billion
  • Whereas the share of first-time funds grew considerably, follow-on funds nonetheless amounted to over 80% of recent funds
  • Each the quantity and relative share of $100M+ funds grew clearly in comparison with earlier years
  • Nonetheless, in Finland, just one fund of extra (ever so barely) than 100 Meur has been raised

Nexit’s tackle VC tendencies

We wish to provide 4 predictions based mostly on our expertise and the way in which we take a look at the market and expertise panorama:

  • 2019 can be an thrilling and unpredictable 12 months within the VC business. Whereas 2018 was a report 12 months, the This autumn inventory market correction did affect the market and volatility grew. Inventory markets are nonetheless nervous and the political scenario (e.g. US vs. China, Brexit, India vs. Pakistan) is extra unsettled than it was in the beginning of 2018.
  • As we predicted final 12 months, Company Enterprise Capital did calm down with the H2 market correction (albeit the general CVC share grew). Whereas the degrees are nonetheless excessive, continued progress depends on how the inventory markets get well in the course of the 12 months.
  • We predicted that the ICO market would calm down throughout 2018 and this did certainly happen. As we mentioned final 12 months, we imagine ICOs don’t go away as a funding mechanism however that they’ll develop right into a safer and extra consumer-friendly crowdfunding car. Laws and regulation controlling ICOs will undoubtedly get tighter.
  • We proceed to imagine within the digital disruption and the enabling applied sciences behind it. That is a particularly vital and long-lasting pattern that may continue to grow in 2019 and much past, impacting closely all industries across the globe. This can be a nice supply of alternatives for entrepreneurs (and VC funds).

DIGITAL DISRUPTION IS AN ON-GOING, LONG-TERM, GLOBAL MEGATREND

We at Nexit imagine that the following long-term productivity-enhancing set of applied sciences have emerged to remodel business-to-business operations and numerous industrial processes.

  • Machine Studying based mostly applied sciences increase scalable working fashions, deliver higher predictability and quicker, a extra agile approach for corporations to react to dynamic adjustments of their working setting.
  • AI-based superior {hardware} platforms and data-driven software program stacks assist corporations to allow or exploit new enterprise alternatives.

An ideal storm with the present obtainable expertise, available and inexpensive computing capability, and the power and the instrumentation to seize related industrial knowledge from the enterprise and product operations is right here at this time. In response to the World Financial Discussion board, AI-generated digital dividend will exceed 100 Trillion {dollars} of worth to societies and enterprise, and industrial actors can seize almost 13 Trillion USD of worth from AI by 2030.

PriceWaterhouseCoopers, McKinsey & Co., and World Financial Discussion board all estimate that international GDP may very well be 14% to 16% cumulatively increased (13-16 trillion USD) in 2030, because of the adoption of utilized synthetic intelligence applied sciences throughout totally different industries. McKinsey additional estimates that as much as 70% of the businesses have adopted AI-based applied sciences by then– however not totally.

Sadly, Europe’s share of investments in utilized synthetic intelligence applied sciences is simply 9% of the worldwide investments (mimicking the modest share of the general VC exercise within the area). Different elements slowing down adoption and the usage of machine studying as a aggressive benefit in Europe, are comparatively conservative company cultures in European firms and lack of adoption in data-driven strategic choice making.

We imagine that firms in Europe should begin growing adoption of the utilized AI applied sciences, by way of acquisitions of AI-based services and probably incorporating startups by way of M&A to their core future enterprise operations.

European share of the M&A deal move has been round 30% of the worldwide M&A deal move when it comes to circumstances, however solely 18% when it comes to greenback worth. To hurry up the adoption and to create aggressive benefits, European firms may enhance the influx of recent concepts, applied sciences, and expertise by way of quicker and extra aggressive funding and M&A exercise.

Northern European utilized AI startup ecosystem has by no means regarded stronger when it comes to high quality and alternatives to spend money on our opinion. Nexit Ventures is executing our mission to speculate Nordic progress capital sustainably and profitably to strengthen the digital disruptor’s constructive affect on society.

Sources and additional studying

Under please discover some principal sources utilized in researching this weblog publish and different good sources of enterprise business data.

  1. KPMG Enterprise Pulse: World and regional tendencies in VC
  2. PwC MoneyTree: Detailed US VC exercise since 1995
  3. PitchBook-NVCA Enterprise Monitor: US VC ecosystem
  4. Fenwick & West VC Survey: VC deal phrases within the Silicon Valley
  5. Make investments Europe exercise statistics: Pan European VC & PE exercise (most of the reviews are for members solely)
  6. Argentum Perception: Nordic VC & PE exercise
  7. FVCA statistics: Finnish VC & PE exercise
  8. PwC IPO Watch: IPO statistics
  9. Silicon Valley Financial institution: US view on the innovation economic system
  10. CB Insights: Recreation Altering Startups 2019
  11. World Financial Discussion board: $100 Trillion by 2025: the Digital Dividend for Society and Enterprise
  12. McKinsey: Notes from the AI frontier – Modeling the affect of AI on the world economic system
  13. PWC: AI to drive GDP good points of $15.7 trillion with productiveness, personalization enhancements
  14. World Financial Discussion board: The worldwide economic system can be $16 trillion larger by 2030 because of AI