- In the last quarter of September, VC deals were worth $2.7 billion.
- The value of this quarter’s VC deal is much lower than the third quarter of 2021, where it peaked to $15.9 billion.
Fintech investmentstayed against the trend, as seen in many big deals, says KPMG.
VC investmentdropped to a low since the second quarter of 2020.
- KPMG expects these challenges to continue into the fourth quarter and that deals will also take longer to close.
For the June-September quarter of this year, the total deal value of VC investments was $2.7 billion. This is significantly lower than the same period last year at $15.9 billion. However, the deal value peaked in the third quarter of 2021 and has been declining since then. But the value of the Q3 deal in 2022 fell sharply compared to sequentially – from $7.4 billion in the second quarter.
However, there is a silver lining. “UK investment in India has declined in most verticals this quarter. However, fintech investments have bucked this trend and received significant investor attention as evidenced by the number of major deals,” said Nitish Poddar, partner and national leader of private equity at KPMG India.
The largest deal of the quarter was a $210 million investment in edtech UpGrad and a $165 million investment in glasses prescription company Lenskart.
Neo-banking platform Niyo also raised $130 million in the quarter. “Fintech was one of the most attractive investment sectors in India this quarter. In addition to Niyo, online auto insurance company InsuranceDekho has raised $100 million and digital lender EarlySalary $97 million,” the report said.
Despite the slowdown, India is one of the few countries where VC activity is still resilient, along with China and Japan, the report said.
Every region had at least one mega-deal worth more than $1 billion
Global VC investment fell to a low not seen since the second quarter of 2020 – in the midst of the pandemic. This is despite mega deals seen in every region such as $1.9 billion raised by SpaceX in the US, $1.4 billion raised by Celonis in Germany and $1.2 billion raised by Sunwoda EVB from China.
Total VC funding for the quarter was $87 billion for the third quarter globally, down from $136 billion in the second quarter. On an annual basis, the decline is even greater than $190 billion in the third quarter of 2021.
This quarter also saw many rounds of downside raising funds at lower valuations, the report said.
“High-rated companies will have to work hard to keep them. On the positive side, there is a lot of dry powder on the market. The strong and resilient companies will continue to attract funding and thrive,” said Jonathan Lavender, global head of KPMG.
According to the report, the energy, healthcare and biotech sectors continued to witness good VC activity, while consumer-oriented companies lost traction due to high inflation, interest rates and mounting arguments for a global recession.
KPMG expects these challenges to continue in the fourth quarter. “Deals will take longer to complete as investors conduct thorough due diligence, especially on forecasting. While the IPO door is expected to remain firmly closed, there could be an uptick in M&A activity as companies consider alternative exit plans,” the report said.
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