A study by the consulting firm KPMG shows declining venture capital investments. Was 2016 an exception, or is the VC boom over?
We are constantly receiving new success stories from the startup scene regarding investments and exits. The management consultancy However, KPMG has published figuresthat point in the opposite direction: According to them, both the number and volume of venture capital investments fell last year.
According to the KPMG study, the VC investment volume in Germany increased by an average of around 391,000 million euros annually between 2010 and 2015, from 0.7 to 3.6 billion US dollars. Worldwide, the annual increase was 261,000 million euros, from 45 billion US dollars in 2010 to 141 billion in 2015.
Then, in 2016, the crash: The investment volume in Germany nearly halved, and worldwide, invested funds fell by 101,000 million. The number of deals experienced a similar decline, although this had already declined in the record investment year of 2015.
What does this tell us? Three interpretations
The interesting question now is what these figures mean. The development in Germany could be interpreted as a continuation of a moderate increase compared to 2013 after two years of hype. In a sense, the Return to normal.
Some financial experts also see some highly inflated startup valuations and expected the VC bubble to burst as early as 2016. The declining investment amounts could therefore be seen as Market consolidation be interpreted.
A third possibility would be a declining attractiveness of venture capital-Investments. However, given the positive market development and growing public support, this seems rather unlikely.
