A total of $155.4 billion in venture capital flowed into startups worldwide in 2017. Venture capital investments in Europe also reached a new record high.
Compared to 2016, VC investments increased by 14 percent last year. European startups even recorded a 19 percent increase: from $16 billion in 2016 to $19.1 billion. Meanwhile, the number of investments fell worldwide from 16,206 to 13,380 (down 17.5 percent) and in Europe from 4,370 to 3,220 (down 26.3 percent). The average amount invested per deal increased significantly accordingly.
This trend is also evident in Germany: Compared to 2016, investors in this country invested more than 30 percent more, at $2.6 billion; at the same time, the number of deals fell from 436 to 356. Stefan Kimmel, partner at the consulting firm KPMG, which conducted the study, says:
"What is striking is the growing divergence between total invested capital and the number of deals. While more and more money is flowing into the global venture capital ecosystem, investors are increasingly focusing on fewer, but larger, deals. The volume of angel and seed-stage deals has been steadily declining for three years. 70 percent of last year's investments were now focused on financing rounds of at least $25 million."
The current value of a startup is calculated based on the amount of money investors are willing to pay for shares. As investment amounts increase, company valuations often rise as well. Accordingly, the number of "unicorns," i.e., companies valued at least $1 billion, has grown from 77 in 2016 to 93 today. Unicorns are, on average, 8.8 years old.
AI and foodtech startups on the rise
The biggest beneficiaries of the venture capital boom were startups that deal with artificial intelligence and Biotech and MedtechCompanies. $12 billion flowed into AI applications, double the previous year's figure. Biotech and pharmaceutical startups secured $16.6 billion—an increase of more than a third. Tim Dümichen, also a KPMG partner, says:
"Given the broad application potential of artificial intelligence across a wide range of industries, the topic is likely to remain high on investors' agendas this year. But startups in the food and agriculture sectors, so-called foodtechs and agtechs, are also now well positioned to attract the attention of investors."
