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Record in startups: More venture capital than ever before

$ 254 billion in venture capital flowed into startups last year – more than ever before. The previous high of 2017 (174.6 billion) was exceeded by almost 50 percent. Thanks to some successful IPOs, the exit volume also rose to a new high of more than $ 300 billion. These are the key facts of a new study by the consulting firm KPMG.

Startups, on point

Numbers show pleasing picture in terms of venture capital. After that, never before has so much venture capital been made available as today. Thanks to this record amount, among other things, numerous “megadeals” with a volume of at least $ 1 billion. First and foremost Fintech Ant Financial (14 billion in the second quarter) and e-cigarette maker Juul (12.8 billion in the fourth quarter). In addition, there were several newly launched VC funds such as Sequoia (8 billion), Tiger Global (3.75 billion), Bessemer Venture Partners (1.85 billion) and GGV Capital (1.36 billion). The number of “unicorns” (start-ups with a rating of at least $ 1 billion) doubled from 2017 (53) to almost 94 in 2018.

It seems to be easier for large and successful companies, especially in the fintech scene, to gain capital. However, meanwhile money is increasingly gathering among the big ones – both here in Germany and around the world.

Why is this trend increasing?

Despite the new investment record, the number of deals worldwide has dropped. Investors are now paying more attention to what they invest in. And so the trend is increasingly towards the more mature late-stage deals. From the investor’s point of view, the high number of IPOs of VC-financed companies is pleasing. In the US alone, there were more than 80 IPOs last year. . ” says Stefan Kimmel, Partner KPMG.

After the stock market turmoil in late 2018, it will be interesting to see how this market develops, especially as Lyft and Uber have recently launched their IPO process.

More financing and benevolent business valuation

It is striking how strongly both the median of the deal sizes and the median of the pre-money valuation in the various financing phases have increased since 2010. While the median for Later Stage Venture Capital Financing was $ 5.5 million in 2010, it more than doubled to $ 11.5 million by 2018. The same development is evident in angel / seed and early stage financing.

Even more drastic is the development in the pre-money valuation. Here, the median of Series B financing in 2010 was $ 19.2 million – by 2018, this had risen to 60 million. Similar to Series A and Seed financing, the median grew from $ 6 million to $ 20 million and $ 2.8 million to $ 6.7 million, respectively.

Artificial intelligence as a megatrend of the next years

Several industries and technology sectors were able to enjoy particularly high cash inflows in 2018. Technologically, investment in Artificial Intelligence has been at the forefront; Transport & Logistics and the health and biotech sector turned out to be the most attractive sectors. It can be observed that the all-inclusive topic has covered all sectors and affects all sectors, from manufacturing and industry to banks and fintechs to e-commerce and marketing.

It can be assumed that in Germany too this year a lot of money will flow into start-ups that deal with the application of artificial intelligence. Because this technology is still in the early stages of development in this country and has enormous potential across all industries.

Also published on Medium.

Published inStartups

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