Venture Capital Deals in China And India Grows In 1Q16 by Preqin

Venture Capital Investment in China and India Grows in Opening Quarter of 2016

Number of global deals and aggregate deal value higher than in Q4 2015

The latest update from Preqin shows that 2,403 venture capital deals worth a combined $34bn were concluded globally in the first quarter of 2016*. This represents an increase in the number of deals and aggregate deal value compared to Q4 2015, which recorded 2,366 deals globally, worth a total of $27bn. Q1 2016’s level of activity has also surpassed the first quarter of last year, which saw venture capital deals worth $30bn, but is yet to approach the record $42bn of deals seen in Q3 2015.

Venture Capital Deals

The number of venture capital deals fell slightly across all regions except India and Europe while aggregate deal values fell in Europe by 4% from Q4 2015, but rose across all other regions. The value of deals in India rose from $1.1bn in Q4 2015 to $1.6bn in Q1 2016, an increase of 47%, while deal value in China rose by 51% to stand at $12.2bn for the quarter. Despite the slight quarterly decrease, the number of deals in Greater China in Q1 2016 is 33% up compared to the first quarter of last year, while in India it is 71% higher.

Venture Capital Deals

Other Key Venture Capital Deals and Exits Facts:

  • Deals by Stage: Angel/seed stage deals remained the most prevalent in Q1 2016, accounting for 29% of the total number of deals. Series D and later round financings represented 5% of the number of deals, while venture debt accounted for 8%.
  • Average Deal Size: The average size of angel/seed stage in Q1 was $1.8mn, the highest average value since 2007. Conversely, the average value of Series D and later stage deals fell from $97mn in 2015 to $86mn in the first quarter of 2016.
  • Biggest Deals: The biggest venture capital deal in Q1 was the $3.3bn financing of Meituan-Dianping in an unspecified round. The four largest deals in the quarter were in China, with the region also seeing 6 of the top ten deals; the other four were concluded in the US.
  • Exit Environment: Q1 2016 saw 265 venture capital-backed exits worth a combined $17bn. This represents a significant decrease from the $28bn recorded by 304 exits in Q4 2015.
  • Biggest Exits: The largest venture capital-backed exit in the quarter was the $3.5bn sale of Legend Pictures LLC to the Dalian Wanda Group in January. Seven of the ten largest exits in Q1 2016 were from US-based companies.

Venture Capital Deals

Comment:

“Although 2015 was a record year for venture capital deal activity overall, the last quarter of the year saw a sharp drop in the total value of investments globally. The first quarter of 2016 seems to have rebounded from those fears, and aggregate venture capital deal value is close to that seen in the first quarter of 2015. With the number of deals also increasing, 2016 will be another landmark year for the industry if this level of activity continues.

In particular, it is very encouraging to see the total value of deals in India and China continues to grow. Despite concerns about volatility and uncertainty in emerging markets, these regions have continued to attract significant capital, and the rate of quarterly increases in aggregate deal value is a mark of investors’ confidence. If this level of financing continues, then the regions could be on course to see another record-breaking year of venture capital activity.”

Felice Egidio – Head of Venture Capital Products, Preqin