The VC market is picking up: In the first quarter of 2017, significantly more venture capital flowed than in previous months. Investors focused on fewer companies.
In the first quarter of 2017, $26.8 billion in venture capital flowed into growth companies worldwide. That, at least, is what the auditing firm KPMGIn the previous three months, this figure was $23.8 billion. This represents an increase of almost 13 percent. Meanwhile, the number of deals fell by almost 9 percent, from 3,201 to 2,716. A total of $400 million flowed into German companies in 73 deals. KPMG partner Tim Dümichen says:
"At the end of last year, many investors were still holding back. Now that the stock markets are developing positively and the IPO market is picking up speed again, the situation is becoming increasingly positive."
According to the company, the trend in VC investments is moving away from many small deals and toward a few larger commitments. Investments in Airbnb ($1 billion), Grail ($914 million), and SoFi ($454 million) played a decisive role in the VC upswing.
The MedTech industry in particular benefited from the VC boom: $4.7 billion was invested in 362 investment rounds by companies in this sector. Dümichen comments:
“Given the sharp rise in healthcare costs worldwide, investor interest in medical technology companies that develop more efficient methods of combating disease or contribute to cost reduction is likely to increase.”
Investors are looking for safe investments in Europe
The equivalent of $3.4 billion flowed into Europe in 565 deals. Investors primarily invested their money in later-stage companies. The study suspects this is due to an increased need for security.
Given the sometimes horrendous company valuations in the US, American investors' interest in European companies is apparently also increasing. The assessment of KPMG partner Marius Sternberg:
“Many US investors team up with European VC partners, who then take the lead in the financing rounds.”
According to Sternberg, some US investors are still holding back on investing big money in view of the planned tax reform in the US.
