Global venture capital funding saw a slowdown, including in the US, the traditional home of venture capital, in the third quarter this year while investments in Asia remained largely constant, according to a report.
Global funding fell 7% in Q3 (July-September) of 2019 to $50 billion, while US venture-backed companies raised $26 billion last quarter — a 15% decline compared with Q2. Deal volume too, fell 16% to 1,304 transactions, according to the report from market intelligence platform cbinsights, along with consultancy firm PwC.
Funding in Asia, however, stayed constant at $15 billion in each of the last two quarters, with deal volumes rising marginally to 1,271 transactions.
The slowdown in the US comes at a time when most new technology stocks are struggling in the public markets, with some such as WeWork unable to even get to a listing. 22 US VC-backed tech companies exited via IPOs in Q3’19, following a highly elevated 33 in Q2’19.
Asian funding also stayed buoyant, with its biggest markets India and China both seeing strong venture funding in the quarter. Mint reported on 30 September that Indian startups raised a record $2.5 billion in capital in the third quarter of calendar year 2019, the highest in any quarter this year.
Sector wise, internet startups continued to see outsized investor interest, raising $10 billion across 537 deals, more than double the value and triple the volume of the next most funded sectors- healthcare; and mobile and telecommunications.
Despite the slowdown in the US, the number as well as the aggregate value of unicorns- private companies valued at over a billion dollars, hit a record. At the end of the quarter, the US had 180 unicorns worth a combined $621.2 billion, the report said.
Payments firm Stripe also leapfrogged Airbnb and SpaceX to be the third most valuable US unicorn, behind e-cigarette maker Juul Labs and WeWork. However, while WeWork’s valuation stands at $47 billion according to the report, multiple media reports indicate that its failed listing has dragged its valuation down to as low as $10-15 billion.
Exits via mergers and acquisitions in the quarter declined slightly, to $163 billion, from $166 billion in the second quarter. IPO exits too declined from $33 billion to $22 billion.
Funding in US dipping and Asia remaining buoyant also marks a reversal from the previous quarter, where funding in startups fell 2% in the quarter ended 30 June from the preceding quarter, with deal activity in Asia slowing even as the US reported a record number of deals.
Investments in the US, Europe and Asia totalled $53 billion for the June quarter. The total number of deals, however, increased by 2% to 3,474 for the quarter, cbinsights said.
While Asia came close to surpassing North America’s deal activity in the third quarter of 2018, the region’s deal activity has since declined. It fell 24% in the June quarter.