VC investment stays strong amid pandemic

By Pete Settles

Despite the plummeting number of venture capital backed deals in the U.S. during Q2’, VC investment remained relatively solid at $34.3 billion. 

Numerous large deals occurred during the quarter, including a $3 billion raise by autonomous driving company Waymo, an $850 million raise by e-payments facilitator Stripe, and a $700 million raise by IOT and AI-powered business productivity firm Samsara.

The U.S. investment represents more than half of the global VC investment of $62.9 billion for the quarter, according to KPMG Private Enterprise’s Q2’ 20 Venture Pulse report.

Conor Moore, national leader for Private Enterprise in the U.S. and a co-author of the report, says the solid quarter was a surprise to some. While Q2’20 included some deals that would have been initiated prior to the pandemic, he explains, it also included a significant number of deals supporting companies offering ‘go-to’ solutions given the current situation. 

Access the report

Moore believes there will be some companies that come out of COVID-19 much stronger than they were before.

He expects we’ll see a shift in investment dollars to companies that promote remote working solutions, collaboration and edtech.  

He also says CFOs are hoping that the cost cutting they have had to do could get them to profitability sooner.

Some of the key highlights from the Q2’ 2020 Venture Pulse report include:

  • The Biotech sector received a massive uptick in VC investment.
  • Fintech and B2B companies were also attractive for U.S.-based investors with Stripe, Samsara, and Robinhood raising $850 million, $700 million, and $280 million respectively.
  • Corporate deal value outperformed 2019
  • Fundraising is on pace for a record year, reaching $43 billion for first half of 2020.
  • VC investors in the U.S. appear to be taking a longer-term view of the pandemic’s impacts.
  • The sudden impact of COVID-19 has caused VC investors to further enhance their focus on the efficiency, effectiveness, and profitability of companies.
  • Many VC investors in the U.S. 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.
  • Life sciences and biotech solutions garnered significant attention from VC investors in the U.S. 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.
  • Given the widespread impact of COVID-19, IPO exit activity has slowed considerably in the U.S. With the U.S. presidential election scheduled for November, most planned IPO activity is expected to be pushed back until 2021.

To learn more about what’s ahead for the Venture Capital market in 2020 and beyond, please take a listen to the Q2’ 2020 podcast with Conor Moore.  If you would like to set up an interview with Conor to discuss the report in more detail, please contact Pete Settles @pgsettles or psettles@kpmg.com.

Biography

Conor Moore

Conor Moore

Partner, National Leader, KPMG Private Enterprise, KPMG US

+1 415-335-8401

 

 

Pete Settles

Pete Settles

Director, Corp. Comm., Financial Services, KPMG US

+1 201-505-6065

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