The global numbers of Venture Capital transactions continue to fall, according to KPMG's Venture Pulse study, with data from the third quarter of 2023, which shows that the segment continues to decline. To put the situation into perspective, global transaction volume has fallen to a level not seen since the fourth quarter of 2018. Global Venture Capital investment has fallen from ＄81.4 billion in 9,563 transactions in the second quarter of 2023 to ＄77 .05 billion in 7,434 transactions in the third quarter of this year, a drop of 5,35% in value and 23% in number of transactions.
In addition to the global macroeconomic situation, the reason for this drop, which has already been felt since previous editions, is the increase in investor caution when choosing to invest in a company. “Startup selection and decision-making processes have been more extensive, due to greater investor selectivity and deeper analyzes in search of profitability in business models”, says Rodrigo Guedes, lead partner of Equity Capital Markets Advisory of KPMG in Brazil.
Although Brazil also recorded a quarter with fewer transactions compared to the previous quarter, from 123 to 71 transactions, it presented a turnover 7.0% higher with US＄466.4 million and continues to be among the main emerging markets for Venture Capital attractive to investors. Brazil also had the highlight of a transaction worth U＄100 million in a proptech, alongside the United Arab Emirates with one worth U＄400 million and Japan, which had two large transactions worth U＄170 million and U＄101 million. “Investors continued to show interest in the rapidly maturing market. The increase in the diversity of segments that attract large investors highlights the evolution of the Brazilian market. In this sense, Brazil has strong growth potential, with fintechs being the most attractive startups for investment in the country”, says Daniel Malandrin, Lead Partner of Venture Capital & Innovation at KPMG in Brazil.
Europe is the continent that expressed a reaction to the global decline, going from ＄16.4 billion in the second quarter to ＄17.3 in the third quarter, but its volume of transactions fell from 2,454 to 1,671. The Americas fell to ＄38.6 billion — the lowest level since the fourth quarter of 2019 and the Asia-Pacific region also fell to ＄20.3 billion, the lowest level since the first quarter of 2017.
However, amid all this decrease, the KPMG publication also showed some increases and positive points: global corporate venture capital investment grew a little, going from ＄39.1 billion in the second quarter of 2023 to ＄40.4 billion in the third quarter of 2023 and the value of output increased from ＄53.3 billion in the second quarter of 2022 to ＄82.8 billion in the third quarter of 2023. The clean technology (cleantech), Artificial Intelligence (AI) and energy continue to attract investors. Cleantech companies accounted for more than half of the largest Venture Capital transactions in the third quarter of 2023. In Brazil, investors also continued to show interest in the clean energy sector, mainly in solutions related to solar energy, whether in production, commercialization or financing.
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