Venture Pulse q2 2020 Global PDF

Venture
Pulse
Q2 2020
Global analysis of
venture funding
22 July, 2020
© 2020 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. #Q2VC 1
Welcome
message
Welcome to the Q2’20 edition of Venture Pulse, KPMG Private
Enterprise’s quarterly report highlighting the key trends, opportunities, and
You know KPMG, you might not
know KPMG Private Enterprise.
challenges facing the venture capital market globally and in major regions
around the world. KPMG Private Enterprise advisers in
member firms around the world are
Q2’20 saw regions across the globe continuing to grapple with the dedicated to working with you and
challenges associated with COVID-19, including economic turbulence, your business, no matter where you
sudden spikes in unemployment rates, restrictions on travel and are in your growth journey — whether
movement, and the ramifications of the continued shutdown or slowdown you’re looking to reach new heights,
of many sectors and industries. As countries and territories began to embrace technology, plan for an exit,
re-open their economies during Q2’20, both Venture Capital (VC) or manage the transition of wealth or
investors and startups worked to understand the ‘new reality’ and how it your business to the next generation.
would affect business operations.
Venture Capital investment continued to show some resilience compared

to broader economic trends, particularly in the US and Europe. In the US,
autonomous driving company Waymo raised a massive $3 billion in the
largest VC deal of the quarter. Fintech investment was particularly hot in
the US during Q2’20, with Stripe, Samsara, Palantir Technologies and
Indigo (Horticulture) all raising large deals. In Europe, sectors seen as
high potential despite or because of COVID-19 attracted significant
investors attention, including food delivery, fintech and health and biotech.
VC investment in Asia remained relatively soft in Q2’20, despite $1 billion
raises by China-based Didi Bike and MGI Tech.
Over the next quarter, many VC investors are expected to remain highly
focused on their own portfolio companies, assessing whether they can
thrive in the new reality and providing follow-on funding for companies that
have had to delay their exit plans. While early-stage companies globally
will likely continue to find it difficult to attract funding, companies that
respond to accelerating trends, such as remote working, ecommerce, and
health and biotech, could see an uptick in investment interest. It is also
likely that companies looking for investment will need to demonstrate an Jonathan Lavender
even greater commitment to equality and diversity. Global Head, KPMG Private
Enterprise, KPMG International
In this quarter’s edition of Venture Pulse, we look at these and a number
of other global and regional trends, including: Conor Moore
Global Co-Leader — Emerging
— The impact of travel restrictions on VC investment in key jurisdictions Giants, KPMG Private Enterprise
— The downward pressure on valuations as a result of COVID-19 Partner, KPMG in the US
— The longer-term impact of COVID-19 on consumer and business
behaviors Kevin Smith
— The increasing focus on profitability and cash management Head of KPMG Private Enterprise
in EMA, Global Co-Leader —
We hope you find this edition of Venture Pulse insightful. If you would like Emerging Giants, KPMG Private
to discuss any of the results in more detail, please contact a KPMG Enterprise
adviser in your area. Partner, KPMG in the UK
Throughout this document, “we”, “KPMG”, “KPMG Private Enterprise”, “us” and “our” refer to the network of
independent member firms operating under the KPMG name and affiliated with KPMG International or to
one or more of these firms or to KPMG International. KPMG International provides no client services. No
member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis
third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
Unless otherwise noted, all currencies reflected throughout this document are US Dollar.
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Contents
Global
—
—
—
VC investment remains robust — reaching $62.9 billion on 4502 deals
Later stage valuations remain high
Tough times for first time investments
4
— Corporate VC participation pulls back in somewhat caution
— Fundraising outpacing 2019 — with over $60 billion raised in H1
US
—
—
—
Overall VC investment remains robust, reaches $34.3 billion across 2197 deals
Series C and D+ see increasing valuations
Biotech sector receives massive uptick in VC
24
— Corporate deal value outperforms 2019 as participation volume sinks
— Fundraising on pace for a record year — reaching $43 billion in H1
Americas
—
—
—
VC investment strong at $35.6 billion across 2354 deals
Total VC investment in Canada remains steady
VC investment in Mexico and Brazil see dramatic decline
40
— First-time financings drop dramatically in both deal value and volume
— Top 10 deals dominated by the US — Waymo leads the way
Europe
—
—
—
Investment in Europe remains robust reaching $10.1 billion across 1062 deals
Median deal sizes rise dramatically at all stages
Corporate Venture investment reaches near record levels
53
— First time funding volume sinks to new low of only 538 deals in H1’20
— Fundraising on pace for record year
Asia
—
—
—
Total VC invested remains muted — at $16.9 billion across 1011 deals
VC in India suffers challenging quarter — drops below $2 billion
China sees slight resurgence in VC investment and deal volume
79
— Biotechs see strong quarter amid COVID-19 crisis
— Shenzhen based biotechnology company MGI Tech raises record $1 billion
Global US Americas Europe Asia
Globally, in Q2‘20
VC-backed
companies raised
$62.9B
across
4,502 deals
Despite decrease in deals, VC investment

remains robust
The number of global VC deals continued to decline in Q2’20, although actual VC investment remained
fairly robust, given the ongoing global pandemic. A significant amount of dry powder and a strong pipeline
of deals in both the US and Europe likely helped to keep investment relatively steady during the quarter.
US and Europe continue to attract VC investment

VC investment in the US remained relatively solid in Q2’20, led by a massive $3 billion funding round by
Waymo, a company focused on autonomous driving. Fintech and B2B companies were also attractive
for US-based investors with Stripe, Samsara, Palantir Technologies and Indigo (Horticulture) raising
$850 million, $700 million, $500 million and $500 million respectively. While VC activity in the broader
Americas was less resilient than in the US, Canada attracted several strong healthtech, biotech and
edtech investments, including a $105 million raise by AbCellera, and a $71 million raise by Apply-Board,
which earned the company unicorn status. In Latin America, VC investment remained very limited
outside of an $82.8 million raise by delivery company CargoX, based in Brazil.
While food-delivery company Deliveroo raised Europe’s largest deal of the quarter ($575 million), fintech
and healthtech companies were also a high priority for investors in the region. In the fintech sector,
Germany-based N26 raised $570 million, while in the health and biotech sector, Switzerland-based
Arville Therapeutics raised $222 million, and Belgium-based iTeos Therapeutics: $207.8 million.
VC investment in Asia remained stable quarter over quarter but remained relatively soft compared to
historical highs. The ongoing trade tension between the US and China combined with Covid-19 saw
many VC investors in Asia continuing to act cautiously during Q2’20, although China saw several large
funding rounds, including $1 billion raises by Didi Bike and biotech MGI Tech, and a $750 million raise
by edtech. India, Singapore, and Japan also attracted large funding rounds during Q2’20, with Navi
Technologies raising $398 million, Ninja Van raising $279 million, and Paidy raising $251 million.
Fundraising remains strong, as investors focus on longer term

At mid-year, global fundraising activity is well ahead of pace compared to 2019. While not expected to
outpace 2018’s record level of fundraising, the trend bodes well for the longer-term VC investment
market globally. The experience of many investors, who have successfully weathered the 2008 financial
crisis and the dotcom burst, is likely helping them keep focused on the long-term outlook despite the
impact of COVID-19. While some funds may see short-term blips, there are still expectations that
returns will be strong over the life of the funds.
Valuations starting to see some downward pressure

At mid-year, the global median pre-money valuation for seed stage deals was down compared to 2019,
although it was up for later deal stages. Many companies have been hit hard by the resonating impacts
of Covid-19 on the business environment. While companies that conducted funding rounds in late 2019
and early 2020 might have the liquidity to manage the lengthy market uncertainty, others are beginning
to run out of cash. Companies looking for funding, particularly at the earliest deal stages, will likely have
to compromise on valuations. There will likely also be some pressure for consolidation, particularly in
sectors with numerous competitors. The pandemic could hasten consolidation as the better capitalized
competitors take market share and others fall by the wayside.
Despite decrease in deals, VC investment

remains robust, cont’d.
Food delivery sector gains steam in Q2’20
Delivery services of many types were high on the radar of VC investors globally in Q2’20, although food
delivery was a particularly hot ticket for investors. In April, UK-based Deliveroo got provisional approval
from the Competition and Markets Authority (CMA) for a $575 million funding round backed by Amazon
in part due to the impact of COVID-19.1
In Q2’20, Europe-based Just Eat Takeaway.com also announced its acquisition of US-based Grubhub
for $7.3 billion.2 The announcement followed on the CMA’s approval of Takeaway.com’s acquisition of
Just Eat earlier in the quarter. 3
Corporate VC slows as investors focus on their core

The number of global corporate VC deals continued to drop in Q2’20, although investment held almost
steady quarter-over-quarter. Given the global pandemic, many corporates have had to take time to
focus on their own operations, finding ways to improve their own operating position rather than
considering investments in startups. As some traditional corporates see their revenues hit hard by the
current crisis, however, there could be increasing investments aimed at startups able to help them drive
new growth and revenue. With some startups running out of money, well-positioned corporates, similar
to PE firms, will likely also be on the lookout for deals.
Early-stage companies feeling pressure as VC investors focus on late-stage deals

Globally, many VC investors spent Q2’20 focusing on the companies within their own portfolios. Before
making new investments, VC investors are making sure they have the ability to support their existing
companies. This is particularly true for VC investors that expected a mature portfolio company to go public in
2020. With COVID-19 and a US presidential election in the fall, many companies are delaying IPO plans into
2021; VC investors recognize that they delay might mean the need for additional funding to bridge the gap.
As VC investors continue to be cautions, the global VC market has continued to see declines in early-
stage VC deals. While the trend toward late-stage deals began long before COVID-19 began to make
waves, the pandemic is making it even more difficult for early-stage companies to attract funding.
Trends to watch for globally

There is still a significant amount of uncertainty around the world heading into Q3’20. While VC
investment may have been buffered somewhat in Q1’20 and Q2’20 by the long lead time for deals,
Q3’20 will likely show whether VC investment is really able to withstand the full brunt of the pandemic’s
impact given the long period of travel restrictions and other challenges. While some countries and
territories are opening up their economies, there is still likely to be challenges with international travel
and deal-making for some time. This is causing many VC investors to focus more on opportunities in
their local markets, which could have a negative impact on VC investment in countries and territories
that rely significantly on international investment.
Over the past few months, people and businesses around the world have been forced to embrace digital
solutions, for remote working, shopping, banking, health care, food delivery, and more. This is
accelerating the pace of digital change in many regions in a dramatic fashion, a trend that will have a
long-term impact on consumer and business behaviors. This will likely help drive VC investment,
particularly on the part of corporates that may have lagged behind on the innovation front and now
recognize the very real imperative to change.
1 https://www.theverge.com/2020/4/17/21225099/amazon-deliveroo-investment-funding-food-delivery-restaurant-industry
2 https://fortune.com/2020/06/10/grubhub-acquired-just-eat-uber-food-delivery/
3 https://www.bloomberg.com/news/articles/2020-04-23/takeaway-just-eat-merger-cleared-as-cma-gets-delivery-amid-virus
A storm has yet to come

Global venture financing
2013–Q2'20
$100 8,000
$90
7,000
$80
6,000
$70
5,000
$60
$50 4,000
$40
3,000
$30
2,000
$20
1,000
$10
$0 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2013 2014 2015 2016 2017 2018 2019 2020
Deal value ($B) Deal count Angel/Seed Early VC Later VC
Source: Venture Pulse, Q2’20. Global Analysis of Venture Funding, KPMG Private Enterprise. Data provided by PitchBook, 7/22/20. Note: Refer to
the Methodology section on page 98 to understand any possible data discrepancies between this edition and previous editions of Venture Pulse.
In the last edition of the Venture Pulse, there was much caution evident in quarterly figures, but still a healthy
trend of funding continuing to flow. With full Q2 figures in the books, it’s now clear that venture firms and
companies are taking a somewhat positive view with regard to the current and future impact of the COVID-19
pandemic, looking to fund the technologies being developed or already accelerating in usage due to the ripple
effects of policies and economic impacts
“Social awareness is increasing with a desire to do good things for communities, the environment,
customers, and employees. This already is influencing customer behavior and VC investment
decisions and the associated business model changes which are expected to have long-term
impacts on the VC ecosystem. This is the new normal.”
Jonathan Lavender
Global Head, KPMG Private Enterprise
KPMG International
Dry powder boosts figures

Global median deal size ($M) by stage
2013–2020*
$9.4 $9.3
$9.0
$7.3
$7.0 $6.9 $7.0
$5.2 $5.0
$3.9 $4.0
$3.3
$3.0 $3.0
$2.6
$2.1
$0.9 $1.0 $1.0

$0.6 $0.7 $0.7
$0.5 $0.5
2013 2014 2015 2016 2017 2018 2019 2020*
Angel/seed Early VC Later VC

Global up, flat or down rounds
2013–2020*
100%
90%
Up
80%
70%
60%
50%
Flat
40%
30%
20%
10% Down
0%
2013 2014 2015 2016 2017 2018 2019 2020*
Source: Venture Pulse, Q2’20, Global Analysis of Venture Funding, KPMG Private Enterprise. *As of 6/30/20. Data provided by PitchBook, 7/22/20.
Mild increases or plateaus

Global median deal size ($M) by series
2013–2020*
$19.6
$17.0
$15.8
$14.5
$12.0 $12.0
$10.0
$8.0
$7.0 $6.9 $7.0
$5.0 $5.5
$4.4
$3.0 $3.5
$1.0 $1.1 $1.4 $1.5 $1.7
$0.5 $0.5 $0.8
2013 2014 2015 2016 2017 2018 2019 2020*
Seed Series A Series B
$55.4 $55.0
$50.0
$36.3 $35.7
$34.3
$28.0 $29.3
$27.0
$25.7
$23.0 $22.0
$18.8
$16.0 $15.0
$12.0
2013 2014 2015 2016 2017 2018 2019 2020*
Series C Series D+
One thing that hasn’t changed for the global venture ecosystem. There is still plenty of dry powder waiting to be
dispersed from venture fund coffers. Even with the full immediate brunt of economic pain across multiple nations
now felt, or at least its early stages, any significant reshaping of the landscape in terms of median round sizes and
the negotiations between investors and startups has yet to occur.
Valuations stay as high as ever

Global median pre-money valuation ($M) by series
2013–2020*
$70.0
$64.8
$55.0
$40.0
$36.4 $35.8
$30.0
$23.9 $23.3
$18.6 $20.0
$13.8 $15.0
$10.3 $12.1
$8.3
$4.5 $4.4 $5.0 $6.0 $6.5 $6.0
$3.4 $3.7
2013 2014 2015 2016 2017 2018 2019 2020*

$475.0
$412.5
$322.5
$220.0
$198.7 $200.0
$143.9 $150.0
$140.0
$113.0
$98.8 $90.0
$75.0 $83.0
$53.9 $54.8
2013 2014 2015 2016 2017 2018 2019 2020*

Series C Series D+
Early stages hit harder

Global deal share by series Global deal share by series
2013–2020*, number of closed deals 2013–2020*, VC invested ($B)
20,000 Series D+ Series C Series B $250
Series D+
Series A Angel/seed
18,000 Series C
Series B
16,000 $200
Series A
14,000
Angel/seed
12,000 $150
10,000
8,000 $100
6,000
4,000 $50
2,000
0 $0
2013 2014 2015 2016 2017 2018 2019 2020* 2013 2014 2015 2016 2017 2018 2019 2020*
As expected, there has been not only a flight to quality but also a concentration in safer prospects on the part of
investors, at least thus far. Anecdotally, some early-stage investors are staying active as they sense opportunity
amid standout companies able to keep exhibiting robust engagement during this time. But otherwise, most volume
and dollars are concentrating at the later stages.
Pharma & biotech booms, at expense of

Consumer Goods
Global financing trends to VC-backed companies by sector
2013–2020*, number of closed deals
100%
Commercial
90% Services
Consumer Goods &
80% Recreation
Energy
70%
HC Devices &
60% Supplies
HC Services &
50% Systems
IT Hardware
40%
Media
30%
Other
20%
10% Pharma & Biotech
0% Software
2013
2014
2015
2016
2017
2018
2019
2020
*
Global financing trends to VC-backed companies by sector

2013–2020*, VC invested ($B)
100%
Commercial
90% Services
Consumer Goods &
80% Recreation
Energy
70%
HC Devices &
60% Supplies
HC Services &
50% Systems
IT Hardware
40%
30% Media
20% Other
0% Software
2013
2014
2015
2016
2017
2018
2019
2020
*
Corporates pull back in caution

Corporate VC participation in global venture deals
2013–Q2'20
$70 1,600
$60 1,400
1,200
$50
1,000
$40
800
$30
600
$20
400
$10 200
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
Deal value ($B) Deal count
Source: Venture Pulse, Q2’20, Global Analysis of Venture Funding, KPMG Private Enterprise. Data provided by PitchBook, 7/22/20.
Note: The capital invested is the sum of all the round values in which corporate venture capital investors participated, not the amount that
corporate venture capital arms invested themselves. Likewise, deal count is the number of rounds in which corporate venture firms
participated.
For this edition of Venture Pulse, the actual count of rounds in which corporates or their venture arms participated was
substituted in the stead of participation to better illustrate that they have indeed pulled back somewhat in the overall tally
of rounds in which they joined, much like the broader venture volume has subsided worldwide as of late. However, it is
also instructive that such a decline is mild. Investors are likely biding their time while being cautious.
First-time volume dives

Global first-time venture financings of companies
2013–2020*
9,009
8,453 8,352
8,052
7,860
7,490
7,293
2,439
$13.3 $15.3 $24.7 $21.6 $20.6 $37.7 $28.2 $10.2

2013 2014 2015 2016 2017 2018 2019 2020*
In the current climate, it is to be expected investors are shying away from first-time fundings given the inherent risks.
However, even if volume is down considerably by the midyear mark, it’s worth noting that $10.2 billion has still been
invested in the rounds that have closed. Investors are more cautious than ever, but they are still willing to fund the
right companies that demonstrate such potential upside or initial robust metrics that it’s worth the broader risk. Some
sectors are also seen as more insulated than others, at least for the time being.
A flight to safety
Global unicorn rounds
2013–Q2'20
$40 100
90
$35
80
$30
70
$25
60
$20 50
40
$15
30
$10
20
$5
10
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
Note: PitchBook defines a unicorn venture financing as a VC round that generates a post-money valuation of $1 billion or more. These are
not necessarily first-time unicorn financing rounds, but also include further rounds raised by existing unicorns that maintain at least that
valuation of $1 billion or more.
Unicorn financing volume has always been quite variable for obvious reasons. The last several quarters have seen a
record peak and also very sharp plunges in volume, even as aggregate VC associated stayed relatively even. During
the COVID-19 pandemic’s unfurling, investors have stayed active in backing the most mature unicorns that are viewed
as relatively safer prospects overall, especially if some terms can be at least held intact or even skewed a bit more
favorably to the investors, regarding downside protection in liquidity events in particular.
VC invested in remote enabling stays strong

Global venture financing in business/productivity software
2013–2020*
$35 4,000
3,722
3,576
3,500
$30
2,997 3,000
$25
2,655
2,599
2,500
$20
2,180
2,000
$15 1,716
1,514 1,500
$10
1,000
$5
500
$6.7 $11.5 $13.0 $13.5 $16.0 $26.9 $28.9 $14.3

$0 0
2013 2014 2015 2016 2017 2018 2019 2020*
Although it remains to be seen whether a hybrid model of central headquarters and majority-remote workforce
becomes en vogue, or things will revert more to normal than public opinion currently holds, the need for robust
remote systems that are also fully secured is readily apparent. Venture firms have doubled down on backing multiple
proven companies in the space accordingly, while also looking to invest in brand-new tech that could address the
pain points that have arisen in the era of mass remote work adoption.
Robust funding across stages

Global deal share by stage in business/productivity software
4,000
3,500 Angel/Seed
3,000
2,500
2,000 Early VC
1,500
1,000
Later VC
500
0
2013 2014 2015 2016 2017 2018 2019 2020*
Global deal share by stage in business/productivity software

2013–2020*, VC invested ($B)
$35
$30 Angel/Seed
$25
$20
Early VC
$15
$10
$5
Later VC
$0
2013 2014 2015 2016 2017 2018 2019 2020*
Capital invested has largely concentrated in late-stage opportunities given the significant cohort of
business/productivity companies that were mature and had proven solutions with widespread market adoption.
However, assessing volume, it’s clear that VCs are also interested in funding the next generation of tools, as
evidenced by new products launched for email (the Hey email service from well-known tech company Basecamp)
and workflow synchronization tools that seek to replace in-person functions such as the whiteboard.
Record revenue draws VC

Global median total operating revenue ($M) for venture-backed companies at
time of financing
2013-2020*
$35
$30 $30.0
$25
$20 $20.2
$15 $14.6
$10.8
$10 $10.0 $9.7 $9.4
$8.1
$5
$2.1 $2.1 $2.7
$1.0 $1.0 $1.1 $1.1 $1.5
$0
2013 2014 2015 2016 2017 2018 2019 2020*
Early VC Late VC
For the first time ever in the Venture Pulse, metrics on the median revenue at the time of financing for venture-
backed companies at a given stage is now available. This highly instructive dataset leads to a few intriguing
findings. First, the push toward late-stage companies with stronger revenues began to accelerate as valuations
and funding sizes rose in tandem over the past few years, understandably. Second, early-stage figures held flatter
due to the typical business scenarios for startups earlier in the capital stack. Last, records have been set in 2020
to date as investors have dialed up their caution. It is also worth noting that the rise in late-stage revenues also
testifies to the overall success of many venture-backed businesses over the past decade.
Exits plunge further

Global venture-backed exit activity
2013–Q2'20
$250 600
500
$200
400
$150
300
$100
200
$50
100
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
Exit value ($B) Exit count
Liquidity timelines in the realm of venture are protracted as a matter of necessity. The big question for investors
and their portfolio companies this year is how much the pandemic’s ripple effects may truly impact even a
prolonged timeline. From the company perspective, there are shorter to mid-term tactics to take in managing
liquidity for employees and even some earlier investors, such as secondary exchanges. From the investor
standpoint, however, it remains much a matter of waiting and seeing what transpires, as public equities remain
markedly choppy even if still strong, and M&A diligence requires much more upside.
M&A stil flowing

Global venture-backed exit activity Global venture-backed exit activity
(#) by type ($B) by type
2013–2020* 2013–2020*
2,500 $450
Strategic Acquisition Buyout IPO Strategic Acquisition Buyout IPO
$400
2,000
$350
$300
1,500
$250
$200
1,000
$150
$100
500
$50
0 $0
2013 2014 2015 2016 2017 2018 2019 2020* 2013 2014 2015 2016 2017 2018 2019 2020*
As could be expected, IPO volume has contracted considerably, but not as much as feared, while M&A is the
primary route through which venture-backed businesses have achieved liquidity. For those that did go public,
significant capital was able to be raised in the frankly nigh-inexplicable public equity market environment of the year
to date. Both corporate development teams and buyout barons are remaining cautious right now given how much is
still unknown with regard to the full economic impact and its duration from the pandemic. Accordingly, although
opportunistic buying will surely occur, a slower pace of exits is likeliest going forward.
A massive $60B committed

Global venture fundraising
2013–2020*
$140 1,000
909 900
$120 852
834
800
740 723
$100 700
693
600
$80
498 500
$60
400
$40 299 300
200
$20
100
$43 $57 $80 $85 $89 $122 $90 $60
$0 0
2013 2014 2015 2016 2017 2018 2019 2020*
Capital raised ($B) Fund count
As was noted in the last edition of Venture Pulse, fundraising was quite strong in Q1 2020, belying the waves of
negative news that spread worldwide in the closing weeks of March. Now, with midyear figures in, no less than
$60 billion has been committed to VC funds thus far in the year. It’s clear that limited partners’ appetite for
exposure to venture has not been diminished in the slightest by the pandemic thus far. If anything, the investors
with exposure to proven fund managers seem even more eager to commit to investors that can capitalize on
current market dislocations.
First-time fund volume slides

Global venture fundraising (#) by size Global first-time vs. follow-on venture
2013–2020* funds (#)
2013–2020*
800
100%
700 90%
80%
600
70%
500
60%
400
50%
300 40%
30%
200
20%
100
10%
0 0%
2013 2014 2015 2016 2017 2018 2019 2020*
2013
2014
2015
2016
2017
2018
2019
2020*
Under $50M $50M-$100M $100M-$250M

$250M-$500M $500M-$1B $1B+ First-time Follow-on
First-time funds slid somewhat in their portion of overall volume, understandably, with midyear figures in. LPs are
more comfortable committing to proven managers and/or existing relationships in the current climate. Assessing
figures by size, it’s clear they are also still backing across the capital stack when they do so, however, with a bit of
a barbell effect occurring thus far, (e.g.funds at the largest and smallest ends of the market by size are closing).
Major sector trends accelerate
78
1 9
4 9 9 5
6 2 2
Top 10 global financings in Q2'20
Waymo — $3B, Mountain View Samsara — $700M, San Francisco

1 Automotive
6 Computer hardware
Late-stage VC Series F
MGI Tech — $1B, Shenzhen Deliveroo — $575M, London

2 Biotechnology 7 Application software
Series B Series G
Didi Bike — $1B, Hangzhou N26 — $570M, Berlin

2 Application software 8 Fintech
Early-stage VC Series D
Stripe — $850M, San Francisco Palantir Technologies — $500M, Palo Alto

4 Financial software
9
Business/productivity software
Series G Corporate
Zuoyebang — $750M, Beijing

5 Didi Autonomous Driving — $500M, Shanghai
Edtech 9 Automotive
Series E
Early-stage VC
Indigo (Horticulture) — $500M, Boston

9 Agriculture
Series F
In Q2‘20 US
VC-backed
companies raised
$34.3B
across
2,197 deals
US sees solid VC investment in Q2’20 despite

COVID-19
VC investment in the US held relatively steady in Q2’20, even as VC investors and businesses juggled
the challenges of COVID-19. While Q2’20 included some deals that would have been initiated prior to
the pandemic, it also included a significant number of deals supporting companies offering ‘go-to’
solutions given the current situation.
VC investors taking a longer-term view

Despite the number of deals in the US plummeting, numerous large deals occurred during Q2’20,
including a $3 billion raise by Waymo, an $850 million raise by e-payments facilitator Stripe, and a $700
million raise by IOT and AI-powered business productivity firm Samsara.
VC investors in the US appear to be taking a longer-term view of the pandemic’s impacts. While VC
investors may have had to rethink their assumptions as to the timing of their portfolio companies to
become profitable or to hold a successful IPO, they are continuing to support the ones they expect will
be able to be successful after COVID-19 has run its course.
At the same time, the sudden impact of the pandemic has caused VC investors to further enhance their
focus on the efficiency, effectiveness, and profitability of companies. Changes that startups are making
to improve their operations and cash flow to better weather COVID-19 could have the added benefit of
helping them reach profitability sooner, a win-win for both startups and their investors.
Companies aligned with the ‘new reality’ attracting investments

While many VC investors in the US focused on managing the needs of companies within their existing
portfolios during Q2’20, they also showed interest in companies with highly relevant, scalable business
models aligned to meeting the needs of consumers and businesses within the ‘new reality’ particularly
companies focused on B2B productivity, cybersecurity, digital services, and e-commerce. In addition to
the $700 million raise by Samsara, productivity firm Palantir Technologies also raised $500 million.
Corporate investors continue to make big investments and acquisitions in Q2’20

Corporate investors made several large deals in Q2’20, although the overall pace of corporate
investment at mid-year was slower compared to 2019. During the quarter, Facebook announced it was
investing $5.7 billion in India-based Reliance Jio (now called Jio Platforms) and acquiring GIF sharing
platform Giphy for $400 million, while Microsoft acquired cloud communications provider Metaswitch
Networks4 and Apple bought VR sports company NextVR.5
The continued investment from corporates likely reflects a combination of factors, including massive
pressure to adapt their business models and the ability of startups to help them do so quickly, a desire
to improve their revenue by investing in high-growth startups, and the increasing availability of bargains
given the downward pressure on valuations.
4 https://www.cnbc.com/2020/05/14/microsoft-acquires-metaswitch-in-telecom-push.html
5 https://www.bloomberg.com/news/articles/2020-05-14/apple-acquires-startup-nextvr-to-gain-virtual-reality-content
US sees solid VC investment in Q2’20 despite

COVID-19, cont’d.
Recognition of the need for healthcare disruption growing
Life sciences and biotech solutions garnered significant attention from VC investors in the US during
Q2’20, led by a $435 million raise by gene-focused biotech Sana Biotechnology, a $390 million raise by
cancer screening company Grail, and a $200 million raise by drug developer Erasca. While these
sectors had already grown on the radar of VC investors in recent quarters, the pandemic significantly
raised the importance of the need for healthcare disruption. It opened peoples’ eyes to existing sector
challenges, from obtaining personal protective equipment and facilitating remote medical appointments
to conducting widespread testing and the long timeframes required to develop and distribute a vaccine.
Major IPO exits in the US likely delayed to 2021

Given the widespread impact of COVID-19, IPO exit activity has effectively ground to a halt in the US. With
the US presidential election scheduled for November, most planned IPO activity is expected to be pushed
back until 2021. Biotech companies will likely be the primary exception, regardless of whether they are
focused on COVID-19 treatments or on other diseases.
While mainstream IPO activity might be non-existent for the remainder of 2020, there could be increasing
M&A activity in the US over the same timeframe, particularly related to companies without the runway to delay
their exit into 2021. Given the increasing scrutiny of companies looking to IPO, startups that do not expect
their financial performance to improve considerably over the next year could also turn their attention to
pursuing buyers. Both PE firms and corporates will likely be hunting for strategic acquisition opportunities
given companies will likely be more cost effective given current market challenges.
Trends to watch for in the US

Looking ahead to Q3’20, there is expected to be an acceleration of several key trends that have been
affecting the US VC market over the past few quarters, including the scrutiny VC investors are giving to
profitability and unit economics, the prioritization of late-stage over early-stage deals, and the increasing
interest in B2B solutions, AI and data analytics, and life sciences. Given the increasing use of digital
business models and remote work arrangements, cybersecurity is also expected to see increasing
interest from VC investors in the US.
Given the ongoing travel restrictions in many jurisdictions, there will likely be a slowdown in international
investment by US-based VC firms. With several large unicorn companies laying off skilled workers,
there could also be a slowdown in investment outside of major hubs as talent becomes more readily
accessible.
Q2 shows first likely impact during pandemic

Venture financing in the US
2013–Q2'20
$50 3,500
$45
3,000
$40
$35 2,500
$30
2,000
$25
1,500
$20
$15 1,000
$10
500
$5
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
VC invested stayed very strong in the US, continuing a remarkable stretch of $30 billion+ quarterly tallies stretching
back nearly unbroken to the start of 2018. However, volume cratered overall. Bearing in mind the usual caveat that
additional financings may come to light and thus boost that volume, it is clear that caution took reign in Q2, as the full
effect of the first surge of COVID-19 in the US was seen.
The late stage slides further

Median deal size ($M) by stage in the US
2013–2020*
$10.2 $10.0
$9.3 $9.4
$8.7 $8.8
$8.5
$6.5
$6.0 $6.0 $6.0
$5.0
$4.6
$4.0
$3.5
$3.0
$1.0 $1.0 $1.1 $1.0

$0.6 $0.7 $0.8
$0.5
2013 2014 2015 2016 2017 2018 2019 2020*

Up, flat or down rounds in the US

2013–2020*
100%
90%
Up
80%
70%
60%
50%
Flat
40%
30%
20%
10% Down
0%
2013 2014 2015 2016 2017 2018 2019 2020*
Valuations hold
Median deal size ($M) by series in the US
2013–2020*
$22.1
$18.0
$16.0
$14.0
$10.9 $11.0
$9.0 $9.0
$7.5 $8.0
$7.0
$5.0 $5.6
$3.5 $4.0
$3.0
$2.0 $2.1 $2.2
$1.0 $1.4 $1.5
$0.6 $0.8
2013 2014 2015 2016 2017 2018 2019 2020*
$51.5
$50.0
$43.0
$40.0
$30.0 $30.0
$27.8
$25.0 $25.0 $25.0
$22.0
$20.0
$16.0 $16.1
$14.0
$12.0
2013 2014 2015 2016 2017 2018 2019 2020*

Series C Series D+
Note: Figures rounded in some cases for legibility.
Record valuations are intact

Median pre-money valuation ($M) by series in the US
2013–2020*
$75.0
$65.0
$55.0
$40.0
$36.8 $36.0
$30.0
$24.9 $23.5
$20.0 $21.0
$14.0 $15.0
$10.6 $12.4
$8.5 $7.0 $7.5 $7.5
$4.8 $5.2 $5.5 $6.0
$4.5
2013 2014 2015 2016 2017 2018 2019 2020*
$475.0
$365.0
$280.0
$200.0 $200.0
$165.6
$136.4 $138.9 $134.5
$98.3 $105.0
$70.0 $80.0 $80.0
$55.3 $54.4
2013 2014 2015 2016 2017 2018 2019 2020*

Series C Series D+
Note: Figures rounded in some cases for legibility.
Even as COVID-19 appeared to impact the overall volume of venture financing, valuations remained intact at
record levels across every series of stock in the US. The explanations for this steadiness are numerous, from the
vast amount of dry powder on hand for investing to the fact the economic impact of the pandemic has been
remarkably severe but short thus far. Accordingly, it still remains to be seen whether the trend shifts as we enter
the second half of the year.
Riskiest stages contract more

Deal share by series in the US Deal share by series in the US
2020*, VC invested ($B) 2019, VC invested ($B)
Angel/seed
7.5% 8.3%
Series A
31.2% 16.9% 31.3%
21.1%
Series B
Series C
24.1%
15.4%
20.3% 23.8%
Series D+
Deal share by series in the US Deal share by series in the US

2020*, number of closed deals 2019, number of closed deals
Angel/seed
4.8% 4.3%
5.4% 5.1%
10.9% Series A 10.8%
Series B
59.3% 57.9%
19.6% 21.8%
Series C
Series D+
VC floods into biotech

Venture financing by sector in the US Venture financing by sector in the US
2013–2020*, number of closed deals 2014–2020*, VC invested ($B)
100% 100%
Commercial
Services
90% 90%
Consumer
Goods &
80% Recreation 80%
Energy
70% 70%
HC Devices &
Supplies
60% 60%
HC Services &
Systems
50% 50%
IT Hardware
40% 40%
Media
30% 30%
Other
20% 20%
Pharma &
Biotech
10% 10%
Software
0% 0%
2013
2014
2015
2016
2017
2018
2019
2020*
2013
2014
2015
2016
2017
2018
2019
2020*
It may seem obvious, but the data clearly illustrates even more dollars than before were flowing into biotech
throughout the first half of 2020, from both a volume and value standpoint. Although that trend had begun prior to
the pandemic, the crisis only accelerated the flood of capital and investor interest.
CVC hits a high in VC invested

Corporate participation in venture deals in the US
2013–Q2'20
$30 600
$25 500
$20 400
$15 300
$10 200
$5 100
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
Rather than the usual trendline of participation percentage, to better illustrate the environment in 2020, the
trendline of actual deal count in which corporate players or their venture arms participated is depicted above.
The second-highest ever quarterly tally of VC invested was logged in Q2, which speaks to both a flight to caution
as well as, in tandem with the drop in volume of deals in which corporates participated, the impetus to still
maintain some exposure to more mature and relatively stable businesses.
Set for a down year

First-time venture financings of companies in the US
2013–2020*
3,798
3,663
3,593
3,265 3,228
3,034 3,060
1,194
$7.0 $8.0 $9.6 $8.1 $8.4 $13.7 $13.7 $4.6

2013 2014 2015 2016 2017 2018 2019 2020*
After a strong finish in 2019, the 2020 tallies to date for first-time funding in the US look quite grim, relatively
speaking. However, $4.6 billion invested across 1,000+ transactions is not necessarily that low relative to
many prior years, but rather signifies a concentration of dollars in the most robust prospects given the
broader business climate. That should only be accentuated in coming months as additional certainty around
the ultimate net effect of the pandemic on the US becomes clearer.
Exits nosedive even further

Venture-backed exit activity in the US
2013–Q2'20
$160 350
$140 300
$120
250
$100
200
$80
150
$60
100
$40
$20 50
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
Although opportunistic acquisitions and IPOs will still occur, hence the relatively steady tally of exit value in Q2 2020,
volume is likely to remain muted for at least some time, given the broader economic climate. Public equities may remain
puzzlingly strong given underlying fundamentals, but should they do so, some companies that were set to go public may
still decide to list — anecdotally, those that were in process are still going ahead, albeit more slowly.
“Necessity is the mother of invention and the next wave of great companies will likely come from this
global pandemic. Venture investors have plenty of capital available but are faced with the choice of
deploying it on existing investments to optimize return or choose to deploy on these newer companies.”
Conor Moore
Global Co-Leader — Emerging Giants, KPMG Private Enterprise
Partner, KPMG in the US
IPOs shrink the most

Venture-backed exit activity (#) by Venture-backed exit activity ($B)
type in the US by type in the US
2013–2020* 2013–2020*
1,200 Strategic Acquisition Buyout IPO $300 Strategic Acquisition Buyout IPO
1,000 $250
800 $200
600 $150
400 $100
200 $50
0 $0
The bevy of unicorns that went public in 2019, whatever their later troubles, propelled exit values via that route to a
new high for the decade, even outstripping Facebook’s debut in 2013. This year does not look set to repeat that in
the slightest. Even if some companies are still determined to move ahead with their debuts, it will take a more
sustained duration of robust public equities’ performance, sans significant volatility, to have most businesses that
were planning to list proceed accordingly.
A massive first half

US venture fundraising
2013–2020*
$80 700
$70
600
584
$60
499 500
485
460
$50 438
400
386
$40
300
$30 257
200
$20 165
100
$10
$20.7 $36.2 $40.2 $47.3 $40.9 $67.2 $56.3 $43.1

$0 0
2013 2014 2015 2016 2017 2018 2019 2020*
After a record haul in terms of dollars committed and volume in the past two years, one would think venture firms
may let up the pace of fundraising. However, 2020 roared off to a strong start and, at only halfway through,
already $43.1 billion has been committed to just 165 funds. Mega-funds understandably stand out, signaling that
LPs are eager to double down on exposure to proven fund managers in order to potentially capitalize on the
current environment.
Fundraising skews big

Venture fundraising (#) by size in First-time vs. follow-on venture funds
the US (#) in the US
2013–2020* 2013–2020*
100% 700
90%
600
80%
70% 500
60%
400
50%
300
40%
30% 200
20%
100
10%
0% 0
2013
2014
2015
2016
2017
2018
2019
2020*
2013 2014 2015 2016 2017 2018 2019 2020*
Under $50M $50M-$100M $100M-$250M

First-time Follow-on
$250M-$500M $500M-$1B $1B+
As is clear from the breakdown of funds closed in count by size range, the biggest only got bigger, with the
firms that had multi-billion-dollar pools of capital in the market still being able to close, pandemic or no.
Other proven managers had a similar experience. It was emerging fund managers or those striking out on
their own for the first time that truly had to do extra legwork to take their vehicles to a close, though it’s
worth noting some were able to do so.
Mega-funds dominate
Venture fundraising ($B) by size in First-time vs. follow-on funds ($B)
the US in the US
2013–2020* 2013–2020*
100% 100%
90% 90%
80%
80%
70%
70%
60%
60%
50%
50%
40%
40%
30%
30%
20%
20%
10%
0% 10%
2013
2014
2015
2016
2017
2018
2019
2020*
0%
Under $50M $50M-$100M $100M-$250M 2013 2014 2015 2016 2017 2018 2019 2020*
$250M-$500M $500M-$1B $1B+ Follow-on First-time
In Q2’20 VC-backed
companies in the
Americas raised
$35.6B
across
2,354 deals
VC investment in Americas dominated by US as

other jurisdictions see deal activity fall
VC investment in the Americas dipped slightly in Q2’20; while the US managed to attract solid
investment, other jurisdictions within the region saw both the number of VC deals and total VC
investment drop. The VC market in Latin America was particularly hard hit, given widespread travel
restrictions, coupled with its major reliance on international investors.
Early-stage deals take hit as VC investors double down on proven companies

Caution was the dominant decision-making strategy for VC investors in the Americas in Q2’20.
Despite the substantial amount of dry powder at their fingertips, certain VC investors were hesitant to make
new investments in order to ensure they have the resources to support their existing portfolio companies.
When making deals, profitability and efficient operations continued to be top priorities for VC investors, a
trend that began in 2019; COVID-19 only enhanced the focus of VC investors on matters like cash
management, unit economics, and the ability of companies to become cash flow positive.
US accounts for large majority of VC funding in the Americas

The US accounted for the vast majority of VC investment in the Americas during Q2’20. While the
US saw the number of VC deals plummet, total VC investment in the US remained solid, led by a
$3 billion Waymo round. A number of sectors remained hot in the eyes of VC investors in the US,
primarily due to their ability to address the rapidly evolving needs of consumers and businesses during
the pandemic. B2B solutions providers were a particularly hot ticket for VC investors, accounting for
several $100 million+ mega-deals, including productivity solutions provider Samsara
($700 million),productivity firm Palantir Technologies ($500 million), data management firm Cohesity
($250 million), and enterprise and event streaming company Confluent ($250 million).
Canadian biotech and edtech companies shine in Q2’20

After a significant decline in Q1’20, VC investment in Canada held almost steady quarter-over-quarter
Q2’20. Many VC investors in Canada hit the pause button on potential deals in mid-March. VC deal
activity started to rebound in May as VC investors began to embrace alternative mechanisms to
conduct deal-making activities, such as video conferencing and digital document sharing.
The strength of Canada’s biotech industry was on display in Q2’20, with Vancouver-based antibody-
focused treatment company AbCellera raising a $105 million round to help it scale operations.
AbCellera.6 The large Series B round closely followed on the heels of AbCellera’s announcement that
the Government of Canada’s Strategic Innovation Fund would provide up to $175 million to support its
development of antibody therapies for COVID-19 and other pandemic threats.7 Montreal-based Ventus
Therapeutics also raised $60 million during Q2’20.
6 https://www.forbes.com/sites/alexknapp/2020/05/27/abcellera-raises-105-million-to-boost-drug-discovery-
against- coronavirus-and-other-diseases/#7dd987572a6c
7 https://www.abcellera.com/news/2020-05-03
VC investment in Americas dominated by US as

other jurisdictions see deals activity fall cont’d.
Edtech also received a strong boost in Canada during Q2’20, with Kitchener-based student recruitment
platform ApplyBoard raising $71 million8 in a deal that helped the company achieve coveted unicorn
status. Calgary-based debt management and analytics firm Symend also raised $52 million in the
quarter in order to meet rising demand. The geographic diversity of Canada’s largest deals during
Q2’20 highlights the strong innovation ecosystem the country has developed.
VC investment drops in Brazil — fintech remains big bet

VC investment in Brazil fell sharply in Q2’20, driven primarily by deal-making challenges due to
COVID-19. The delivery sector was one exception, with mature fintech CargoX raising a $80 million
Series E funding round. Fintech also remained a hot area of interest in Brazil. During Q2’20, the
Central Bank of Brazil and the National Monetary Council released a resolution related to open
banking, which the country plans to introduce in phases beginning in Q4’20 and into 2021.9
Trends to watch for in the Americas

Looking forward, VC investment in the US is expected to remain the strongest in the region given both
the diversity of US companies able to attract investment and the focus of US investors on the domestic
market given the challenges related to international deal-making.
While Canada typically sees a slowdown in deals activity over the summer, the country could see an
increasing number of transactions in Q3’20 as VC investors work to complete deals that were paused
due to COVID-19. VC investment in Latin America is expected to remain very soft in Q3’20 given the
limited access to US and other international investors and the time required to attract investors and
conduct deals remotely.
Across the Americas, early-stage businesses will likely continue to struggle to attract investment over
the next quarter as investors remain focused on late-stage deals. This could cause significant
challenges for early-stage companies without the cash reserves to weather the COVID-19 crisis. From
a sector perspective, biotech and healthtech, fintech, edtech and delivery and logistics are expected to
remain key areas of investment across the Americas, along with B2B solutions.
8 https://www.thetechie.de/2020/05/applyboard-nabs-71-million-in-new.html
9 https://www.forbes.com/sites/angelicamarideoliveira/2020/05/08/the-brazil-tech-and-innovation-round-up-
brazil-kicks-off-open-banking-venture-capital-investments-grow-e-commerce-sales-increase/#3da16b89181a
A COVID-19 divergence
Venture financing in the Americas
2013–Q2'20
$60 4,000
3,500
$50
3,000
$40
2,500
$30 2,000
1,500
$20
1,000
$10
500
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
As has been stated in previous editions of the Venture Pulse, inevitable lags in private markets data collection or
clarification can result in penultimate quarter tallies adjusting upward. However, the steepness of the decline in
this instance does point to a rush of caution causing a plunge in financing volume in Q2 2020. What remains to be
seen is how long that plunge persists.
Mild slides in deal sizes

Median deal size ($M) by stage in the Americas
2013–2020*
$10.0 $10.0
$9.0 $9.0 $8.8
$8.3 $8.5
$6.4
$6.0
$5.6
$5.0 $5.3
$4.3
$4.0
$3.5
$3.0
$0.8 $1.0 $1.0 $1.1 $1.0

$0.5 $0.6 $0.7
2013 2014 2015 2016 2017 2018 2019 2020*

Up, flat or down rounds in the Americas

2013–2020*
100%
90%
80% Up
70%
60%
50%
Flat
40%
30%
20%
10%
Down
0%
2013 2014 2015 2016 2017 2018 2019 2020*
Most metrics hold steady

Median deal size ($M) by series in the Americas
2013–2020*
$22.1
$18.4
$15.5
$13.6
$11.0 $10.7
$9.0 $9.0
$8.0
$7.0 $7.3
$5.0 $5.5
$3.5 $4.0
$3.0
$1.5 $1.8 $2.0 $2.0
$1.0 $1.3
$0.5 $0.7
2013 2014 2015 2016 2017 2018 2019 2020*
$51.8 $52.0
$43.0
$40.0
$30.0 $30.0
$27.5
$25.0 $25.0 $25.0
$20.0 $21.0
$16.0 $16.1
$14.0
$12.0
2013 2014 2015 2016 2017 2018 2019 2020*
Series C Series D+
Records remain intact

Median pre-money valuation ($M) by series in the Americas
2013–2020*
$75.0
$65.0
$55.0
$40.0
$36.8 $35.6
$30.5
$24.8 $23.8
$20.0 $21.0
$14.0 $15.0
$10.6 $12.2
$8.5 $7.0 $7.5 $7.4
$4.1 $4.7 $5.1 $5.5 $6.0
2013 2014 2015 2016 2017 2018 2019 2020*
$475.0
$400.0
$280.0
$200.0 $200.0
$166.2
$136.9 $138.8 $134.5
$108.0
$98.3
$80.0 $79.9
$70.0
$55.3 $54.2
2013 2014 2015 2016 2017 2018 2019 2020*
Series C Series D+
VC invested skewing towards later-stage

Deal share by series in the Americas
12,000
Series D+
10,000
Series C
8,000
6,000
Series B
4,000
Series A
2,000
Angel/seed
0
2013 2014 2015 2016 2017 2018 2019 2020*
Deal share by series in the Americas

2013–2020*, VC invested ($B)
$140
Series D+
$120
$100
Series C
$80
$60 Series B
$40
Series A
$20
$0 Angel/seed
2013 2014 2015 2016 2017 2018 2019 2020*
Biotech booms even further

Venture financing of VC-backed companies by sector in the Americas
2013–2020*, # of closed deals
100%
Commercial
90% Services
Consumer Goods &
80% Recreation
Energy
70%
HC Devices &
60% Supplies
HC Services &
50% Systems
IT Hardware
40%
Media
30%
Other
20%
0% Software
2013
2014
2015
2016
2017
2018
2019
2020
*
Venture financing of VC-backed companies by sector in the Americas

2013–2020*, VC invested ($B)
100%
Commercial
90% Services
Consumer Goods &
80% Recreation
Energy
70%
HC Devices &
60% Supplies
HC Services &
50% Systems
IT Hardware
40%
Media
30%
Other
20%
0% Software
2013
2014
2015
2016
2017
2018
2019
2020
*
Deal value holds steady

Venture financing in Canada
2013–Q2'20
$1,800 250
$1,600
200
$1,400
$1,200
150
$1,000
$800
100
$600
$400
50
$200
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
Deal value ($M) Deal count
The back half of 2019 set records in terms of VC invested for the Canadian startup ecosystem, with several late-
stage fundings helping significantly. Since then, the decline in the volume of completed financings shouldn’t be
viewed as overly troubling given that investors overall are understandably nervous around the prospective health
of the entire economy. What is telling is that VC invested is still robust. Companies are still able to close deals, it
just takes more.
“Fundraising in Canada continues to be strong, in part because Canadian companies play in a lot of
sectors that are critical right now such as, healthtech, biotech, fintech and edtech. These sectors are
going to be very important to the Canadian economy for the next few quarters.”
Sunil Mistry
Partner, KPMG Private Enterprise, Technology, Media and Telecommunications,
KPMG in Canada
Mexico hits a downturn

Venture financing in Mexico
2013–Q2'20
$250 40
35
$200
30
25
$150
20
$100
15
10
$50
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
As noted before, the emerging nature of the Mexican venture ecosystem will likely result in significant variability
across quarters. That variability has been well exhibited in recent years, including a record tally for VC invested
just in 2019 at its close. However, the decline now is potentially more of a problem, should the economy sustain
more of a lengthy hit than it already has. It remains to be seen if investors based in the US in particular begin to
look abroad as they become more comfortable with remote fundings.
The decline sharpens more

Venture financing in Brazil
2013–Q2'20
$1,200 80
70
$1,000
60
$800
50
$600 40
30
$400
20
$200
10
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
As the pandemic truly took hold in Brazil throughout Q2, like every other affected nation that had difficulty in
addressing it promptly, significant caution led to a plunge in the tally of completed venture financings. The duration
and depth of the economic impact remains to be seen, which is the biggest factor for investors looking to
potentially deploy additional capital in the ecosystem, given the knock-on effects for the consumer-focused
fintechs that have dominated Brazilian fundraising thus far.
Investors stay at the late stage

6
8
2 7
31 4 4
10 9
10
Top 10 financings in Q2'20 in Americas

Waymo — $3B, Mountain View Sana Biotechnology — $435M, Seattle
1 Automotive
6 Drug discovery
Late-stage VC Series B
Stripe — $850M, San Francisco Robinhood — $430.3M, Menlo Park

Series G Series F
Samsara — $700M, San Francisco DoorDash — $400M, San Francisco

3 Computer hardware
8 Application software
Series F Series H
Palantir Technologies — $500M, Palo Alto GRAIL — $390M, Menlo Park

4 Business/productivity software 9 Biotechnology
Corporate Series D
Fundbox — $350M, San Francisco
4 Indigo (Horticulture) — $500M, Boston 10 Financial software
Agriculture
Series C
Series F
Magic Leap — $350M, Plantation
Source: Venture Pulse, Q2’20, Global Analysis of Venture Funding, 10 Electronics (B2C)
KPMG Private Enterprise. Data provided by PitchBook, 7/22/20.
Late-stage VC
In Q2’20 European
VC-backed
companies raised
$10.1B
across
1,062 deals
Momentum in Europe helping VC market to

remain strong
VC investment in Europe remained relatively robust compared to historical trends in Q2, driven in part
by the momentum the region experienced prior to the pandemic, including a strong pipeline of
in-progress VC deals. While Europe showed resilience this quarter, there is growing concern that the
VC market in Europe could see large impacts in Q3’20 given the widespread effect of COVID-19 on the
economy, ongoing potential impact of Brexit, and the challenges associated with international
deal-making in the current business environment.
Digital trends accelerating in Europe

The global pandemic has shifted consumer behaviors sharply in Europe, accelerating a number of
digital trends, including the use of online food delivery, e-commerce, contactless payments, and digital
payments. This is having a resonating impact on the VC market. In April, for example, UK-based
Deliveroo got provisional approval from the CMA for a $575 million funding round backed by Amazon
in part due to the impact of COVID-19.10 Other sectors benefitting from this acceleration in digital trends
include fintech, B2B solutions, data analytics and cybersecurity.
VC investors in Europe focusing on existing portfolios

Many VC investors in Europe spent more time on the day-to-day management of their portfolio
companies in Q2’20 given that even their robust companies were affected by the pandemic.
VC investors focused on assessing how the pandemic has changed companies’ strategic plans,
identifying how best to support companies so they can survive, and providing bridge financing rounds to
cover potential gaps. Also, angel investors across Europe took a more hands-on role in providing
operational support to their startups.
Early-stage companies struggling to attract investment

Early-stage companies in Europe have struggled in recent quarters to attract funding given the focus
of VC investors on late-stage deals, a trend that continued into Q2’20. The major exceptions included
companies tackling key challenges driven by COVID-19, such as health and biotech companies and
B2B productivity companies. In Ireland, for example, LetsGetChecked, a company that provides
at-home ailment test kits, raised $71 million to accelerate development of a Coronavirus test kit, while11
GloFox12 a gym management solution that has pivoted to help gyms to provide services
online, raised $20 million.
Declining cross-border deals activity as investors focus locally

International VC investment in parts of Europe took a hit in Q2’20 as cross-border investments slowed
considerably due to travel restrictions, the inability to meet with international investors face-to-face, and
the complexities associated with conducting remote due diligence and other transaction work. If the
trend continues, growth-stage companies that did not have a solid financial runway before COVID-19 hit
could quickly find themselves at risk of running out of cash.
10 https://www.theverge.com/2020/4/17/21225099/amazon-deliveroo-investment-funding-food-delivery-restaurant-industry
11 https://venturebeat.com/2020/05/05/letsgetchecked-raises-71-million-for-at-home-coronavirus-test-kits/
12 https://www.glofox.com/blog/glofox-raises-10m-additional-funding/

remain strong, cont’d.
Government incentives expected to play big role in recovery
Both the European Union and individual countries and territories in Europe are providing supports to
help improve economic recovery. The European Union introduced a multi-year €750 billion fund to help
member countries recover from COVID-19. The EU funding includes a requirement to support climate-
friendly activities, which could propel additional funding in related sectors.13
Most countries across Europe are also providing funding to support businesses affected by the
pandemic, such as the UK, through its recently extended Future Fund,14 and Finland, through its bridge
loan program for growth stage startups and a number of grant programs for earlier stage companies.
Many of these programs are evolving day-by-day as governments gain an improved understanding of
the needs of businesses in the current situation.
UK sees strong VC investment in Q2’20

VC investment in the UK remained strong in Q2’20, due in part to the strength of its VC ecosystem
leading into 2020. Companies that raised solid funding rounds in recent quarters, combined with well-
capitalized VC funds able to support their portfolio companies, has given much of the UK innovation
ecosystem more runway to address the challenges associated with COVID-19. Investors doubled down
on companies expected to do very well in the short-term due to the impact of the pandemic, including
those focused on e-commerce, healthtech, and remote education. Much like Q1’2020, a significant
portion of total investment came from the largest of deals again this quarter, including 6 mega deals
representing $1.4 billion invested.
Germany-based VC investment grows in Q2’20

VC investment strengthened in Germany during Q2’20, driven by a $570 million raise by digital bank
N26 and a $275 million raise by air taxi company Lilium. VC investors in the country were cautious,
focused on using their dry powder to support their biggest bets, companies with strong capabilities
given the current business environment, and companies with the ability to pivot their business models to
better align with current circumstances. Corporate investment was quite strong in Germany in Q2’20 as
the pandemic acted as a catalyst for traditional companies to invest, particularly those in financial
services where companies have been historically slow to innovate.
Health and biotech big winners in France

In France, health and biotech were strong investment areas during the quarter, as evidenced by clinical-
stage drug developer Dynacure raising $55 million. B2B services and marketing and retail technologies
were also of interest. The country’s radical COVID-19 containment measures had a big impact on deals
activity in Q2’20, with some companies postponing their roadshows for several months. This delay
could bring investment levels down in the second half of the year.
13 https://www.climatechangenews.com/2020/05/27/eu-e750-billion-covid-recovery-fund-comes-green-conditions/
14 https://www.gov.uk/government/news/future-fund-launches-today

remain strong, cont’d.
Trends to watch for in Europe
There is a significant amount of caution for the European VC market heading into Q3’20. Investors have
slowed the pace of deal-making considerably, taking more time to conduct due diligence and commit
funds, which will likely have an impact on both the number of VC deals and the level of investment in the
region. Given current challenges, there is expected to be continued downward pressure on valuations, which
could prompt some opportunistic investors to look for good deals.
Over the next quarter, VC investors in Europe will continue to assess how consumer behaviors are changing
and how these changes will affect the viability of different products, services, and business models in the
future. Some sectors could see a fall in investment or significant consolidation as a result.
Looking ahead, big bets in Europe will continue to revolve around healthtech, biotech, fintech and
B2B solutions. Cybersecurity and data analytics are also expected to see additional VC investment, due
in part to the rapid increase in remote work. We expect to see Corporate investment increase as
companies begin to mobilize in the Environmental Governance space and European companies that
have not emphasized innovation in the past move to accelerate their digital capabilities.
A complex environment
Venture financing in Europe
2013–Q2'20
$14 2,500
$12
2,000
$10
1,500
$8
$6
1,000
$4
500
$2
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
As must be reiterated, especially in a complex venture ecosystem like Europe, private markets data can
experience lags. However, VC invested’s robustness in tandem with the continued decline in volume speaks to
the maturity of select ecosystems across the continent, as well as a cohort of late-stage companies that continue
to reliably draw investor capital to expand their market share.
“While the VC market in Europe has been resilient, we can expect a mixed, and potentially divergent
road, for the rest of 2020. A suppression of consumer and business spending, and a general slowdown
in the global economy will impact investor sentiment. However, this may well be countered by rising
investment in key sectors such as healthcare, fintech, cybersecurity and enterprise software as well as
a potential lift in corporate investment in areas such as digitization and innovation.”
Kevin Smith
Head of KPMG Private Enterprise in EMA, Global Co-Leader — Emerging Giants,
KPMG Private Enterprise, KPMG International, Partner, KPMG in the UK
Metrics stay at record highs

Median deal size ($M) by stage in Europe
2013–2020*
$6.3
$4.8
$3.7
$3.3
$3.0 $2.9 $3.0
$2.8
$2.6
$1.8 $2.0
$1.3 $1.2 $1.3 $1.4
$1.1 $1.1
$0.8
$0.5 $0.5 $0.6
$0.3 $0.3 $0.4
2013 2014 2015 2016 2017 2018 2019 2020*
Up, flat or down rounds in Europe

2013–2020*
100%
90%
Up
80%
70%
60%
50% Flat
40%
30%
20%
Down
10%
0%
2013 2014 2015 2016 2017 2018 2019 2020*
Highs stay steady

Median deal size ($M) by series in Europe
2013–2020*
$19.9
$19.3
$15.8
$11.0
$10.3
$8.9
$7.0 $6.8
$6.5
$5.2 $5.4 $5.5
$3.8 $4.3
$2.8 $3.0
$0.9 $1.1 $1.4
$0.3 $0.3 $0.6 $0.6 $0.7
2013 2014 2015 2016 2017 2018 2019 2020*
$77.3
$55.0
$50.4
$35.9 $35.8 $36.0

$32.2
$29.7
$26.7 $25.0
$16.5 $18.2
$16.2
$10.2 $12.1
$8.8
2013 2014 2015 2016 2017 2018 2019 2020*
Series C Series D+
Capital shifts to safety

Deal share by series in Europe
4,000
Series D+
3,500
3,000
Series C
2,500
2,000
Series B
1,500
1,000 Series A
500
Angel/seed
0
2013 2014 2015 2016 2017 2018 2019 2020*
Deal share by series in Europe

2013–2020*, VC invested ($B)
$30
Series D+
$25
Series C
$20
$15
Series B
$10
Series A
$5
Angel/seed
$0
2012 2013 2014 2015 2016 2017 2018 2019 2020*
Software inches upward

European venture financings by sector
100%
Commercial
90% Services
Consumer Goods &
80% Recreation
Energy
70%
HC Devices &
60% Supplies
HC Services &
50% Systems
IT Hardware
40%
Media
30%
Other
20%
0% Software
2013
2014
2015
2016
2017
2018
2019
2020
*
European venture financings by sector

2013–2020*, VC invested ($B)
100%
Commercial
90% Services
Consumer Goods &
80% Recreation
Energy
70%
HC Devices &
60% Supplies
HC Services &
50% Systems
IT Hardware
40%
Media
30%
Other
20%
0% Software
2013
2014
2015
2016
2017
2018
2019
2020*
CVCs remain active

Corporate VC participation in venture deals in Europe
2013–Q2'20
$6 400
350
$5
300
$4
250
$3 200
150
$2
100
$1
50
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
The rise in quarterly VC invested tallies with corporate participation was stark last year and has culminated in the
third-highest aggregate for participating deal value in the most recent full quarter. However, the count of total
deals in which corporates participated declined in what could potentially be a short-term slide; once again, what
remains to be seen is the full duration and depth of the economic impact across Europe to the majority of
corporations, as any non-essential spend is likely to be redirected if need be.
First-time funding slides

First-time venture financings of companies in Europe
2013–2020*
2,512
2,207 2,230
2,099
1,986 1,975
1,738
538
$3.1 $2.5 $3.2 $3.0 $3.1 $4.4 $3.1 $1.4

2013 2014 2015 2016 2017 2018 2019 2020*
Once again, a caveat must be noted: In a complex environment such as Europe, first-time fundings may take
longer to note in general. That said, it is clear that 2020 is likely to be a down year in many ways for fledgling
enterprises. However, what’s intriguing and also seen in other regions is the fact that of the companies able to
secure first-time funds, significant sums are still available, as evidenced by the $1.4 billion invested by the
midpoint of 2020.
2020 sees volume slide again

Venture-backed exit activity in Europe
2013–Q2'20
$45 200
$40 180
160
$35
140
$30
120
$25
100
$20
80
$15
60
$10
40
$5 20
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
After a slump in Q1, exit value perked back up somewhat despite an even steeper drop in overall volume. It
remains to be seen if opportunistic acquisitions on the part of strategic acquirers plus more stable public markets
will be able to bolster volume at all in the remainder of the year, but as it stands, that is still uncertain. Value may
still be skewed by outlier acquisitions or mergers, however.
M&A propels exit volume

Venture-backed exit activity (#) by type Venture-backed exit activity ($B) by type
in Europe in Europe
2013–2020* 2013–2020*
$70
700
600 $60
500 $50
400 $40
300 $30
200 $20
100 $10
0 $0
Fundraising surges
European venture fundraising
2013–2020*
$18 200
$16 180
173 175
167 166
160
$14
146
140 140
$12
127
120
$10
100
$8
80 80
$6
60
$4
40
$2 20
$8.9 $10.3 $10.8 $15.9 $12.3 $15.9 $14.4 $8.9
$0 0
2013 2014 2015 2016 2017 2018 2019 2020*
An oft-repeated narrative in venture is that the best companies are founded in downturns. Consequently, the best
investment opportunities are also to be found in similar periods. Judging by fundraising tallies, that has been
embraced wholeheartedly in Europe fundraising thus far, with the 80 funds that amassed close to $9 billion in
commitments thus far already putting the year at a healthy total. Regardless of whether that trend reverses, there
will be plenty of dry powder for disbursing going forward.
Mega-funds skew tallies

Venture fundraising (#) by size in Europe
2013–2020*
100%
Under $50M
90%
80%
$50M-$100M
70%
60%
$100M-$250M
50%
40% $250M-$500M
30%
20% $500M-$1B
10%
0% $1B+
2013 2014 2015 2016 2017 2018 2019 2020*
First-time vs. follow-on venture funds (#) in Europe

2013–2020*
200
180
160
Follow-on
140
120
100
80
60
40 First-time
20
0
2013 2014 2015 2016 2017 2018 2019 2020*
Q2 sees robust VC invested

Venture financing in the United Kingdom
2013–Q2'20
$4.5 700
$4.0
600
$3.5
500
$3.0
$2.5 400
$2.0 300
$1.5
200
$1.0
100
$0.5
$0.0 0
2013 2014 2015 2016 2017 2018 2019 2020
“The UK has been resilient in the current crisis. This is driven by the strength that has been built over
a number of years. With bigger rounds and funds being delivered in the past 18 months, both
entrepreneurs and investors had the capacity to work through the impacts of COVID 19. With large
amounts of dry powder still on the books I'd expect this to continue in H2 2020.”
Tim Kay
Director, KPMG Private Enterprise
KPMG in the UK
London rebounds
Venture financing in London
2013–Q2'20
$4.0 400
$3.5 350
$3.0 300
$2.5 250
$2.0 200
$1.5 150
$1.0 100
$0.5 50
$0.0 0
2013 2014 2015 2016 2017 2018 2019 2020
The resurgence in VC invested in Q1 2020 was followed by yet another, even as volume once again slid.
Investors are not so much fleeing for safety, as instead the safest opportunities are attracting extant VCs with
mandates to disburse some of the significant sums of dry powder that lie committed to their funds.
Ireland VC rebounds
Venture financing in Ireland
2013–Q2'20
$400 120
$350
100
$300
80
$250
$200 60
$150
40
$100
20
$50
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
The Irish venture ecosystem once again saw significant variability in both venture volume and capital invested,
but VC invested rebounded significantly in Q2 thanks to a handful of large fundings, including LetsGetChecked’s
Series C financing in early May.
“Ireland has seen very robust investment in Q2’20, where many Irish companies have found a real
relevance in this new normal. Some are making a significant difference in the current crisis, like
LetsGetChecked, a medical health testing platform. SoapBox Labs, is helping to accelerate
children’s literacy with its digital speech recognition technology. Whereas, Evervault, is focussed on
making the internet more secure with its privacy interface. Timing is everything and it feels like these
companies were ripe for investment.”
Anna Scally
Partner, Head of Technology and Fintech Lead,
KPMG in Ireland
Mega-deals show up in Q2
Venture financing in Germany
2013–Q2'20
$2,500 200
180
$2,000 160
140
$1,500 120
100
$1,000 80
60
$500 40
20
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
The German venture ecosystem was quite stable over the four quarters prior to Q2 2020, at least in terms of
volume; the decline in Q2 2020 may well be due to a lag in private markets data collection as noted elsewhere, but
VC invested is once again testament to the standout companies the nation has produced, e.g. N26, among others.
“While the pandemic has caused significant harm to the economy, it has also acted as a catalyst for
change. In Germany, many businesses and consumers have been slow to embrace digitization
historically. Over the past few months, there has been a major shift in both consumer behaviors and
the use of digital business models. These changes will have ramifications long-term and will likely
drive new innovation and new VC investments as the pandemic wanes.”
Tim Dümichen
Partner
KPMG in Germany
Volume stays subdued

Venture financing in Berlin
2013–Q2'20
$1,400 90
80
$1,200
70
$1,000
60
$800 50
$600 40
30
$400
20
$200
10
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
Venture volume may even out somewhat when all is said and done between the past three quarters, with
mega-deals like that of N26’s latest funding skewing VC invested tallies to new heights for the Berlin ecosystem.
What that could portend for the future is a recycling of capital into the Berlin ecosystem from N26 employees and
former investors should it achieve a substantial liquidity event in the future.
“Deal processes are quite slow right now. Investors are looking at everything twice and more
critically. They try to keep money in their pockets because of the uncertainty to the future and
whether there will be a second wave that shuts everything down again. Every investment is being
scrutinized very carefully but surely, investors do want to invest and find their right target.”
Dr. Ashkan Kalantary

Partner, Deal Advisory Venture Services
KPMG in Germany
VC invested resurges in Q2
Venture financing in Spain
2013–Q2'20
$500 120
$450
100
$400
$350
80
$300
$250 60
$200
40
$150
$100
20
$50
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
Although one of the hardest-hit nations in the early stretches of the pandemic, Spain may yet see sooner
resurgence due to its efforts to combat the virus, including in investors’ willingness to pour capital into its more
mature, safer private companies.
VC invested stays strong

Venture financing in France
2013–Q2'20
$1,600 300
$1,400
250
$1,200
200
$1,000
$800 150
$600
100
$400
50
$200
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
The past two years have seen a boom in VC invested for France as a bevy of companies matured and continued to
rake in large late-stage rounds. Despite another decline in volume once again potentially subject to revision upward
as additional data comes to light the aggregate of VC invested stayed robust, signaling that investors are still willing
to deploy capital for the companies that are sufficiently prepared to demonstrate viability no matter what.
Paris figures remain resilient

Venture financing in Paris
2013–Q2'20
$1,200 140
120
$1,000
100
$800
80
$600
60
$400
40
$200
20
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
Volume continues drop

Venture financing in the Nordics
2013–Q2'20
$2,500 300
250
$2,000
200
$1,500
150
$1,000
100
$500
50
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
The Nordics venture ecosystem turned in some intriguing results for 2019, with mega-rounds bolstering VC
invested totals even as volume collapsed. Both trends have held steady into the first half of 2020, with volume
hitting a low unseen in some time based on numbers as of this writing, even as VC invested held relatively steady.
“For companies that operate across boarders, the different issues in each country, as a result of
COVID-19 makes scaling and fundraising harder. The Nordic ecosystem is reaching a stage where
there are constantly more and more growth stage companies that need international later-stage
funding and the connections that those investors can provide to help them scale globally. Given the
pandemic, this a problem the Nordic market has now and it’s one the governments together with
local VC’s are working to tackle through specific funding programs.”
Jussi Paski
Head of Startup Services
KPMG in Finland
Israel notches another high

Venture financing in Israel
2013–Q2'20
$1,400 140
$1,200 120
$1,000 100
$800 80
$600 60
$400 40
$200 20
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
“In Israel, we’re really seeing a return to the core business. Corporate investors in particular don’t
see this as a time to expand or to really look at interdisciplinary offerings. They are looking for
technologies they can onboard quickly that can enhance the profitability of their core business or
help them address the challenges of doing business in the current environment.”
Dina Pasca-Raz
Partner,
KPMG in Israel
Fintech & remote stand out
10 7
9 16 2
5
3
4
Top 10 financings in Q2'20 in Europe
Deliveroo — $575M, London Cazoo — $156.1M, London

6 Automotive
Series G Early-stage VC
N26 — $570M, Berlin Checkout.com — $150M, London

2 Fintech
Series D Series B
Lilium — $275M, Wessling BioCatch — $145M, Tel Aviv

3 Air
8 Network management software
Series C Series E
Arvelle Therapeutics — $207.8M, Zug Starling Bank — $123.1M, London

4 Biotechnology 9 Commercial banks
Series A Late-stage VC
ContentSquare — $189.1M, Paris Freeline — $120M, Stevenage

5 Business/productivity software
10 Drug discovery
Series D Series C
Note: Due to disclosure requirements, a transaction that ranked in the top 10 in Q2 2020 is not included in this list but is reflected in the
underlying datasets.
In Q2‘20 VC-backed
companies in the Asia
region raised
$16.9B
across
1,011 deals
Soft VC investment in Asia during Q2’20, yet

cautious optimism for future
VC investment in Asia was severely impacted by Covid-19 in Q1’20 due to its early exposure to Covid-19.
While VC investment in Asia remained suppressed in Q2’20, the VC market did see some early signs of
recovery. In China, for example, both deal volume and VC investment rose slightly compared to Q1’20.
While the pandemic is still having a major impact in jurisdictions such as India, the increasing focus on
recovery in others is creating cautious optimism in the overarching Asia market heading into Q3’20.
Digital business models attracting significant attention

Despite VC investment in many sectors remaining suppressed in Q2’20, several sectors continued to thrive
due to their applicability in the current business environment. Digital platform businesses focused on meeting
consumer needs, such as edtech, home delivery, and online gaming, remained very attractive, in addition to
healthtechs. With the employees of many corporations in Asia working from home, B2B digital solutions
enabling employees to work remotely also attracted substantial investor attention.
Corporates looking for potential opportunities

At mid-year, corporate VC investment was only slightly off the pace set last year, a sign that corporates
remain confident in opportunities in the Asia region. In China, the large platform companies began to
resume investment activity in April. These and other large corporate investors in Asia are looking to see
what companies have the agility, versatility, and strong management needed to survive. They are also
looking for opportunities to make investments given the downward pressure on valuations.
Cybersecurity, AI, and data analytics remain hot in Asia

Given the rise in digital business models due to the pandemic, digital payments, e-commerce, and
cybersecurity continued to be hot areas of investment. VC investors were also interested in AI, data analytics,
and cybersecurity solutions able to assist with monitoring the spread of COVID-19 and with tracking, tracing,
and isolating individuals. China’s central government was a key driving force behind leveraging technology to
support track and trace models due to the sensitive personal information being collected.
VC investors focusing on existing portfolios, putting early-stage companies at higher risk

Given the heightened levels of uncertainty, VC investors in Asia continued to focus heavily on the needs
of their existing portfolio companies, primarily late-stage companies, in order to ensure they would be
able to weather the effects of COVID-19 rather than on making investments in new startups. This drove
increasing concern for smaller companies without the cash reserves or liquidity to survive the protracted
decline in demand. The focus on late-stage companies could drive consolidation in maturing sectors as
smaller competitors lose market share to their nimble, better capitalized competitors.
The early-stage companies in Asia able to attract investments in Q2’20 typically showed very strong
paths to profitability. Investors in Asia are only growing increasingly wary of companies with high burn
rates, preferring more efficient companies with a focus on profitability.
Soft VC investment in Asia during Q2’20, yet

cautious optimism for future, cont’d.
VC investors in China taking very cautious approach
China accounted for the five largest deals in Asia during Q2’20, including $1 billion raises by biotech
MGI Tech and Didi Bike, a $$750 million raise by edtech Zuoyebang, a $500 million raise by Didi
Autonomous Driving, and a $400 million raise by produce delivery company Xingsheng Selected.
Growing investor confidence in China’s economic recovery, combined with ongoing international travel
restrictions and concerns related to US-China trade relations, led many VC investors in China to focus
on domestic investment in Q2’20. VC investors in China — including traditional VC investors, private
equity firms, and family offices — are starting to look for opportunities to invest due to the unexpected
downward pressure on valuations. Given the significant amount of dry powder in the VC market, VC
investment in China could rise heading into Q3’20.
India sees ongoing interest from investors despite Q2’20 dip in VC investment
After outperforming China in terms of VC investment in fintech in Q1’20,15 fintech continued to be the
strongest area of focus for VC investors in India in Q2’20, led by the $397 million raise by lending
company Navi Technologies. Despite the slowdown in VC funding, India remains a key market for
investors. In April, Facebook announced a massive $5.7 billion equity investment in Reliance Jio, India’s
largest telecom operator.16 During Q2’20, Reliance Jio launched both JioMart17 a direct
e-commerce platform and a JioMart Whatsapp-based platform.18 The ongoing interest in India is
expected to help keep VC deals occurring in the country, if at a slower rate. While Q3 results may also
be soft, investment is expected to rebound by the end of 2020.
Hong Kong Stock Exchange continues to attract secondary listings

Despite the impact and ongoing uncertainty related to COVID-19, the Hong Kong Stock Exchange saw solid
performance during Q2’20, attracting two secondary listings from large Chinese companies JD.com and
NetEase. NetEase raised $2.7 billion from its listing, with shares gaining 8 percent on their first day of trading.
JD.com, meanwhile, raised almost $4 billion, with its shares gaining 5 percent on the first day.19
In Q2’20, the Nasdaq issued a delisting notice to China-based Luckin Coffee following a massive fraud
uncovered by the company,20 which has intensified the push for stronger investor protections and
changes by the SEC. This, combined with an increasing focus on domestic opportunities, other tensions
and trade disputes with the US, and a fairly strong domestic IPO market could encourage China-based
companies to focus their sights on domestic IPOs over the near-term.
Trends to watch for in Asia

Despite short-term challenges, the outlook for the VC market in Asia remains relatively optimistic as the
region continues with its recovery from COVID-19. There will likely be continued downward pressure on
valuations over the next quarter, however, along with increasing consolidation in sectors particularly
hard hit by the economic downturn caused by the pandemic.
In China, there continues to be concern regarding the ongoing trade dispute with the US, which could
affect investment. VC investors in China will likely remain very interested in areas like 5G, smart cities,
IoT, and health care innovation. VC investment in India is expected to remain muted in Q3’20, with the
exception of fintech, healthtech, agritech, and gaming.
15 https://www.scmp.com/tech/venture-capital/article/3086117/india-tops-china-fintech-funding-first-quarter-pandemic-us
16 https://techcrunch.com/2020/04/21/facebook-reliance-jio/
17 https://thetechportal.com/2020/05/24/reliance-jio-jiomart-ecommerce-platform-launch/
18 https://thetechportal.com/2020/04/26/jiomart-has-reportedly-gone-live-after-receiving-its-official-whatsapp-number/
19 https://www.bbc.com/news/business-53049177
20 https://fortune.com/2020/05/20/luckin-coffee-stock-delisting-nasdaq-china-ipo/
VC activity evens out

Venture financing in Asia
2013–Q2'20
$60 2,500
$50
2,000
$40
1,500
$30
1,000
$20
500
$10
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
As it was first hit, the Asia-Pacific ecosystem saw the impact of the pandemic on venture activity first of any
region. Thus, activity evening out in both volume and VC invested is a promising sign that at minimum a plateau
may have been established, rather than another dip expected.
“COVID-19’s impact on travel and global supply chains combined with the ongoing political tension
between China and the US is causing many investors to refocus on local market opportunities. This
could lead to an upswell in domestic VC investment over the next quarter.”
Egidio Zarrella
Head of Clients and Innovation Partner
KPMG China
Figures hold largely steady

Median deal size ($M) by stage in Asia
2013–2020*
$15.5
$14.8
$14.3
$12.9 $13.1
$12.5
$12.0
$8.2
$6.0
$4.8 $5.0 $4.7
$4.5 $4.5
$3.5
$2.8
$0.7 $1.0 $1.0 $1.0

$0.4 $0.5 $0.6 $0.5
2013 2014 2015 2016 2017 2018 2019 2020*
The decline in median financing size at the latest stage is minimal, while an increase or plateau elsewhere
continues to show that investors are mainly pressing pause as opposed to retreating. Both VCs and entrepreneurs
are in it for the long haul, and, thus are still moving forward, albeit with more caution.
Late stage predominates

Deal share by series in Asia
5,000
4,500 Series D+
4,000
3,500 Series C
3,000
2,500
Series B
2,000
1,500
Series A
1,000
500
Angel/seed
0
2013 2014 2015 2016 2017 2018 2019 2020*
Deal share by series in Asia

2013–2020*, VC invested ($B)
$120
Series D+
$100
Series C
$80
$60
Series B
$40
Series A
$20
Angel/seed
$0
2013 2014 2015 2016 2017 2018 2019 2020*
Biotech roars at record pace

Asia venture financings by sector
100%
Commercial
90% Services
Consumer Goods &
80% Recreation
Energy
70%
HC Devices &
60% Supplies
HC Services &
50% Systems
IT Hardware
40%
Media
30%
Other
20%
0% Software
2013
2014
2015
2016
2017
2018
2019
2020
*
Asia venture financings by sector

2013–2020*, VC invested ($B)
100%
Commercial
90% Services
Consumer Goods &
80% Recreation
Energy
70%
HC Devices &
60% Supplies
HC Services &
50% Systems
IT Hardware
40%
Media
30%
Other
20%
0% Software
2013
2014
2015
2016
2017
2018
2019
2020*
Corporates dial back in

Corporate participation in venture deals in Asia
2013–Q2'20
$45 600
$40
500
$35
$30 400
$25
300
$20
$15 200
$10
100
$5
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
Corporations and their venture arms have been a mainstay of the Asia venture ecosystem for years, their
temporary dip proved to be just that, as they engaged in far more deals in Q2 than to start off the year. This is a
highly positive sign for the entire ecosystem.
Exits stil in temporary slump

Venture-backed exit activity in Asia
2013–Q2'20
$160 120
$140
100
$120
80
$100
$80 60
$60
40
$40
20
$20
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
Exits slid in volume but, relative to historical norms, still recorded a robust tally of exit value in Q1 2020. Another
quarter-over-quarter decline still isn’t sustained long enough to prove dire for the regional ecosystem, but it is
worth keeping an eye on for potential issues with liquidity going forward.
“We have seen very positive activity despite the current situation with several successful IPOs and
secondary listings. The strong momentum and sentiment in Hong Kong SAR and mainland China’s
capital markets in Q2 is expected to continue into the second half of 2020. I expect VC and PE
activities in the region to pick up in the coming quarters as China will not only continue its economic
recovery from the pandemic but focus on investing in new infrastructure to support the digital
transformation of the economy.”
Irene Chu
Partner, Head of New Economy and Life Sciences, Hong Kong Region,
KPMG Hong Kong (SAR)/China
IPOs and M&A power volume

Venture-backed exit activity (#) Venture-backed exit activity ($B) by type
by type in Asia in Asia
2013–2020* 2013–2020*
400 $250
350
$200
300
250
$150
200
$100
150
100
$50
50
0 $0
Select large funds can close

Venture fundraising in Asia
2013–2020*
$35 160
150
140
$30
128 126
122 120
$25
108
100
96
$20
80
$15
62 60
$10
40
29
$5
20
$9.7 $9.5 $26.1 $19.6 $32.3 $22.1 $15.1 $6.3

$0 0
2013 2014 2015 2016 2017 2018 2019 2020*
Fundraising is quite choppy on a quarterly basis for even established ecosystems, hence the focus on yearly
charting only. However, volume for the region is off to quite a slow start for the year, even if the handful of vehicles
that have closed have been able to boost VC committed tallies to decent levels. Extant dry powder continues to
propel deal making forward.
First-time funds tick up

Venture fundraising (#) by size in Asia
2013–2020*
100%
Under $50M
90%
80%
$50M-$100M
70%
60%
$100M-$250M
50%
40%
$250M-$500M
30%
20% $500M-$1B
10%
0% $1B+
2013 2014 2015 2016 2017 2018 2019 2020*
First-time vs. follow-on venture funds (#) in Asia

2013–2020*
100%
90%
80%
First-time
70%
60%
50%
40%
30%
20% Follow-on
10%
0%
2013 2014 2015 2016 2017 2018 2019 2020*
India records decline

Venture financing in India
2013–Q2'20
$7,000 400
$6,000 350
300
$5,000
250
$4,000
200
$3,000
150
$2,000
100
$1,000 50
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
After steadily rising throughout 2019, India saw a record quarter to close off the year. That has since reversed
inevitably given the impact of the pandemic. It remains to be seen how long the slump will persist, or even its
true depth, although deals are still able to get done if need be, as evidenced by the mega-round of Navi
Technologies in Q2 2020.
“India is a very attractive market for VC investors. While funding is likely going to be muted again in
Q3’20 due to the impact of COVID-19, investment is expected to pick up again by the end of the
year. Fintech remains one of India’s most attractive sectors for investment, in addition to healthtech,
medtech, and gaming. Over the longer-term, agritech is well-positioned to see increasing
investment as well.”
Nitish Poddar
Partner and National Leader, Private Equity
KPMG in India
China sees slight resurgence

Venture financing in China
2013–Q2'20
$60 1,600
1,400
$50
1,200
$40
1,000
$30 800
600
$20
400
$10
200
$0 0
2013 2014 2015 2016 2017 2018 2019 2020

The first nation hit by the pandemic, China also may now be the first nation to lead the way toward a recovery,
however gradual. Venture funding followed a similar path, with VC invested and volume both rebounding in Q2 to
still-low but somewhat brighter levels.
"Digital business models were a hot area of investment in China during Q2'20 — particularly in
areas of digital payments, e-commerce, remote office solutions, cybersecurity, digital health, and
track-and-trace solutions for managing disease spread. These sectors will likely remain attractive
for VC investors heading into Q3'20 — with digital health innovation expected to be a long term
investment trend given the increasing challenges in the space.”
Philip Ng
Partner, Head of Technology
KPMG China
Australia holds steady

Venture financing in Australia
2013–Q2'20
$600 90
80
$500
70
$400 60
50
$300
40
$200 30
20
$100
10
$0 0
2013 2014 2015 2016 2017 2018 2019 2020
The pandemic undoubtedly contributed to the slide in volume between Q1 and Q2 2020 for Australia, and yet
the robustness of VC invested implies that this downturn may yet be temporary depending on how the
economic fallout may fully impact the nation although, again, it is worth noting many of VC’s favored sectors
are somewhat more insulated from the immediate effects of any policies such as stay-home orders.
A diverse array of sectors

38
14
5 10
71
6
Top 10 financings in Q2'20 in Asia-Pacific
MGI Tech — $1B, Shenzhen Navi Technologies — $397.9M, Bengaluru

1 Biotechnology 6 Fintech
Series B Angel
Didi Bike — $1B, Hangzhou Royole — $300M, Shenzhen

7 Electronics (B2C)
Early-stage VC Series F
Zuoyebang — $750M, Beijing Eswin — $281M, Beijing

3 Edtech
8 Semiconductors
Series E Series B
Didi Autonomous Driving — $500M,
Ninja Van — $279M, Singapore
4 Shanghai
9 Logistics
Automotive
Series D
Early-stage VC
Xingsheng Selected — $400M, Changsha Mabwell — $278.4M, Shanghai
5 Internet retail
10 Biotechnology
Early-stage VC Series A
KPMG Private Enterprise Emerging Giants

Network. From seed to speed, we’re here
throughout your journey
(jurisdiction)
(SAR)
Contact us:
Conor Moore Kevin Smith

Co-Leader, KPMG Private Enterprise Co-Leader, KPMG Private Enterprise
Emerging Giants Network Emerging Giants Network
E: [email protected] E: [email protected]
About KPMG Private Enterprise

About KPMG Private Enterprise
You know KPMG, you might not know KPMG Private Enterprise. KPMG Private Enterprise advisers in
member firms around the world are dedicated to working with you and your business, no matter where you
are in your growth journey — whether you’re looking to reach new heights, embrace technology, plan for
an exit, or manage the transition of wealth or your business to the next generation. You gain access to
KPMG’s global resources through a single point of contact — a trusted adviser to your company. It is a
local touch with a global reach.
The KPMG Private Enterprise Global Network for Emerging Giants has extensive knowledge and
experience working with the startup ecosystem. Whether you are looking to establish your operations,
raise capital, expand abroad, or simply comply with regulatory requirements — we can help. From seed
to speed, we’re here throughout your journey.
Acknowledgements
We acknowledge the contribution of the following individuals who assisted in the
development of this publication:
Jonathan Lavender, Global Head, KPMG Private Enterprise, KPMG International
Conor Moore, Global Co-Leader — Emerging Giants, KPMG Private Enterprise, Partner, KPMG in the US
Kevin Smith, Head of KPMG Private Enterprise in EMA, Global Co-Leader — Emerging Giants, KPMG
Private Enterprise, KPMG International, Partner, KPMG in the UK
Anna Scally, Partner, Head of Technology and Media and Fintech Lead, KPMG in Ireland
Dr. Ashkan Kalantary, Partner, Deal Advisory Venture, KPMG in Germany Services
Dina Pasca-Raz, Partner, KPMG in Israel
Egidio Zarrella, Head of Clients and Innovation Partner, KPMG China
Irene Chu, Head of New Economy and Life Sciences, KPMG Hong Kong (SAR)/China
Lindsay Hull, Director — Emerging Giants Global Network, KPMG Private Enterprise, KPMG International
Melany Eli, Director, Marketing and Communications, KPMG Private Enterprise, KPMG International
Nitish Poddar, Partner and National Leader, Private Equity, KPMG in India
Philip Ng, Partner, Head of Technology, KPMG China
Sunil Mistry, Partner, KPMG Private Enterprise, Technology, Media and Telecommunications, KPMG in
Canada
Tim Dümichen, Partner, KPMG in Germany
Tim Kay, Director, KPMG in the UK
Methodology
KPMG uses PitchBook as the provider of venture data for the Venture Pulse report.
Please note that the MESA and Africa regions are NOT broken out in this report. Accordingly, if you add up
the Americas, Asia-Pacific and Europe regional totals, they will not match the global total, as the global
total considers those other regions. Those specific regions were not highlighted in this report due to a
paucity of datasets and verifiable trends.
In addition, particularly within the European region, the Venture Pulse does not contain any transactions
that are tracked as private equity growth by PitchBook. As such rounds are often conflated with late-stage
venture capital in media coverage, there can be confusion regarding specific rounds of financing. The key
difference is that PitchBook defines a PE growth round as a financial investment occurring when a PE
investor acquires a minority stake in a privately held corporation. Thus, if the investor is classified as PE by
PitchBook, and it is the sole participant in the recipient company’s financing, then such a round will usually
be classified as PE growth, and not included in the Venture Pulse datasets.
Also, if a company is tagged with any PitchBook vertical, excepting manufacturing and infrastructure, it is
kept. Otherwise, the following industries are excluded from growth equity financing calculations: buildings
and property, thrifts and mortgage finance, real estate investment trusts, and oil & gas equipment, utilities,
exploration, production and refining. Lastly, the company in question must not have had an M&A event,
buyout, or IPO completed prior to the round in question.
Fundraising
PitchBook defines venture capital funds as pools of capital raised for the purpose of investing in the equity of
startup companies. In addition to funds raised by traditional venture capital firms, PitchBook also includes
funds raised by any institution with the primary intent stated above. Funds identified as growth-stage vehicles
are classified as PE funds and are not included in this report. A fund’s location is determined by the country in
which the fund is domiciled, if that information is not explicitly known, the HQ country of the fund’s general
partner is used. Only funds based in the US that have held their final close are included in the fundraising
numbers. The entirety of a fund’s committed capital is attributed to the year of the final close of the fund.
Interim close amounts are not recorded in the year of the interim close.
Deals
PitchBook includes equity investments into startup companies from an outside source. Investment does
not necessarily have to be taken from an institutional investor. This can include investment from individual
angel investors, angel groups, seed funds, venture capital firms, corporate venture firms and corporate
investors. Investments received as part of an accelerator program are not included, however, if the
accelerator continues to invest in follow-on rounds, those further financings are included. All financings are
of companies headquartered in the US. The impact of initial coin offerings on early-stage venture financing
as of yet remains indefinite. Furthermore, as classification and characterization of ICOs, particularly given
their security concerns, remains crucial to render accurately, we have not detailed such activity in this
publication until a sufficiently robust methodology and underlying store of datasets have been reached.
Angel/seed: PitchBook defines financings as angel rounds if there are no PE or VC firms involved in the
company to date and it cannot determine if any PE or VC firms are participating. In addition, if there is a
press release that states the round is an angel round, it is classified as such. If angels are the only
investors, then a round is only marked as seed if it is explicitly stated.
Methodology, cont’d.
Early-stage: Rounds are generally classified as Series A or B (which PitchBook typically aggregates
together as early-stage) either by the series of stock issued in the financing or, if that information is
unavailable, by a series of factors including: the age of the company, prior financing history, company
status, participating investors and more.
Late-stage: Rounds are generally classified as Series C or D or later (which PitchBook typically
aggregates together as late-stage) either by the series of stock issued in the financing or, if that
information is unavailable, by a series of factors including: the age of the company, prior financing history,
company status, participating investors, and more.
Corporate: Corporate rounds of funding for currently venture-backed startups that meet the criteria for
other PitchBook venture financings are included in the Venture Pulse as of March 2018.
Corporate venture capital: Financings classified as corporate venture capital include rounds that saw both
firms investing via established CVC arms or corporations making equity investments off balance sheets or
whatever other non-CVC method actually employed.
Exits
PitchBook includes the first majority liquidity event for holders of equity securities of venture-backed
companies. This includes events where there is a public market for the shares (IPO) or the acquisition of
the majority of the equity by another entity (corporate or financial acquisition). This does not include
secondary sales, further sales after the initial liquidity event, or bankruptcies. M&A value is based on
reported or disclosed figures, with no estimation used to assess the value of transactions for which the
actual deal size is unknown.
In the edition of the KPMG Venture Pulse covering Q1 2019, PitchBook’s methodology regarding
aggregate exit values changed. Instead of utilizing the size of an IPO as the exit value, instead the
prevaluation of an IPO, based upon ordinary shares outstanding, was utilized. This has led to a significant
change in aggregate exit values since, yet is more reflective of how the industry views the true size of an
exit via public markets.
To connect with a KPMG Private Enterprise adviser in your region
email [email protected]
home.kpmg/venturepulse [website]
@kpmg [Twitter]
The information contained herein is of a general nature and is not intended to address the
circumstances of any particular individual or entity. Although we endeavor to provide accurate
and timely information, there can be no guarantee that such information is accurate as of the
date it is received or that it will continue to be accurate in the future. No one should act on such
information without appropriate professional advice after a thorough examination of the
particular situation.
©2020 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms
of the KPMG network of independent firms are affiliated with KPMG International. KPMG
International provides no client services. No member firm has any authority to obligate or bind
KPMG International or any other member firm vis-à-vis third parties, nor does KPMG
International have any such authority to obligate or bind any member firm. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.

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Venture

Venture Capital investment continued to show some resilience compared

Despite decrease in deals, VC investment

US and Europe continue to attract VC investment

Fundraising remains strong, as investors focus on longer term

Valuations starting to see some downward pressure

Despite decrease in deals, VC investment

Corporate VC slows as investors focus on their core

Early-stage companies feeling pressure as VC investors focus on late-stage deals

Trends to watch for globally

A storm has yet to come

Deal value ($B) Deal count Angel/Seed Early VC Later VC

Dry powder boosts figures

$0.9 $1.0 $1.0

2013 2014 2015 2016 2017 2018 2019 2020*

Angel/seed Early VC Later VC

Mild increases or plateaus

Seed Series A Series B

2013 2014 2015 2016 2017 2018 2019 2020*

Valuations stay as high as ever

2013 2014 2015 2016 2017 2018 2019 2020*

2013 2014 2015 2016 2017 2018 2019 2020*

Early stages hit harder

Pharma & biotech booms, at expense of

10% Pharma & Biotech

Global financing trends to VC-backed companies by sector

10% Pharma & Biotech

Corporates pull back in caution

Deal value ($B) Deal count

First-time volume dives

$13.3 $15.3 $24.7 $21.6 $20.6 $37.7 $28.2 $10.2

Deal value ($B) Deal count

Deal value ($B) Deal count

VC invested in remote enabling stays strong

$6.7 $11.5 $13.0 $13.5 $16.0 $26.9 $28.9 $14.3

Robust funding across stages

Global deal share by stage in business/productivity software

Record revenue draws VC

Exits plunge further

Exit value ($B) Exit count

M&A stil flowing

A massive $60B committed

$40 299 300

Capital raised ($B) Fund count

First-time fund volume slides

Under $50M $50M-$100M $100M-$250M

Major sector trends accelerate

Top 10 global financings in Q2'20

Waymo — $3B, Mountain View Samsara — $700M, San Francisco

MGI Tech — $1B, Shenzhen Deliveroo — $575M, London

Didi Bike — $1B, Hangzhou N26 — $570M, Berlin

Stripe — $850M, San Francisco Palantir Technologies — $500M, Palo Alto

Zuoyebang — $750M, Beijing

Indigo (Horticulture) — $500M, Boston

US sees solid VC investment in Q2’20 despite

VC investors taking a longer-term view

Companies aligned with the ‘new reality’ attracting investments

Corporate investors continue to make big investments and acquisitions in Q2’20

US sees solid VC investment in Q2’20 despite