21 May 2020
Posted in Business Fundamentals
COVID-19 impacts global VC funding with high-value deals remaining mostly non-existent
Global venture capital (VC) investment activity showcased a declining trend (for deals with disclosed funding value) during the COVID-19 hit first quarter (Q1) of 2020 with high-value deals remaining mostly non-existent and low-value deals equal to or less than US$10m continuing to account for the majority of the VC investment volume during the quarter, according to GlobalData, a leading data and analytics company.
An analysis of GlobalData’s Financial Deals Database reveals that globally VC investment volume (with disclosed funding value) decreased from 1,327 in January to 1,235 in February, and 1,167 in March 2020.
The share of low-value deals as a percentage of the total deal volume was more than 70% in Q1 2020. In contrast, the share of deals valued more than US$100m stood at just 2.4% while those worth equal to or greater than $1bn were mostly non-existent.
Aurojyoti Bose, Lead Analyst at GlobalData, comments: “The subdued activity could be attributed to uncertainty prevailing due to the COVID-19 outbreak, which has also made VC investors cautious when committing to big-ticket investments. Moreover, with deal activity remaining sluggish in April 2020, the impact of COVID-19 is likely to be carried over into Q2.”
A total of 1,327 deals (with disclosed deal value) were announced in January 2020 and low-value deals as a percentage of the total deal volume stood at 73.2% during the month. The share of deals valued more than US$100m stood at 2.3% while no billion-dollar deals were announced.
Deal volume declined by 6.9% during February 2020 compared to the previous month. Share of low-value deals as a percentage of the total deal volume stood at 74.3%. The share of deals valued more than US$100m stood at 1.9% while the month also did not witness announcement of any billion-dollar deal.
Deal volume declined by 5.5% during March 2020 compared to the previous month. Share of low value deals as a percentage of the total deal volume stood at 74.6%. The month witnessed the highest number of deals valued more than US$100m among all the three months with the corresponding share standing at 2.9%. March was also the only month to witness billion-dollar deal.