Indian Venture Capital market poised to be on a high growth trajectory in Q2’2017

2016 has been a good year with uncertainty waning in the US. According to Venture Pulse, a quarterly report on global VC trends published by KPMG, there are signs of optimism in the venture capital (VC) market as total investment in the first quarter of 2017 by US VC-backed companies reached $17.3B across 1,809 deals.

Q1’2017 edition of KPMG’s Venture Pulse Report, gives an insight into some of the key events in the first quarter and projects trends and opportunities in venture capital investing for the year ahead.

The first quarter saw a continued focus on safer bets, resulting in longer decision cycles and increased attention on late-stage deals in most markets worldwide. In a related trend, Q1 has seen a continued concentration of capital in a smaller number of large VC funds, especially in the US and Europe, as investors reduce their risk exposure by focusing on a broader range of investments over a long fund lifespan. Angel and seed investment remained down in most global markets, with new startups needing to demonstrate more than a visionary idea to gain investor backing.

There was a general caution with regards to investor activity throughout Q1, a trend which has continued from Q4’16. Global investor activity remained steady, though, there was a decline when compared with the highs it had witnessed in 2015 and 2016, on account of large deals in the US and Asian markets. But, the number of deals have been on a decline since Q4’16.

Investors in Asia remained cautious in Q1’17, with the number of VC deals plunging for the second straight quarter. Despite the declining number of deals, investment in the region grew slightly, helped by six $250 million+ mega deals. A number of unicorns also appeared during the quarter, each surpassing the billion dollar valuation mark during Q1’17. Corporate VC continued to be a strong component of VC investment in Asia during the quarter, as more and more traditional corporates recognized the growing imperative to innovate.