JERUSALEM/NEW YORK – October 26, 2020 – OurCrowd, Israel’s most active venture investor, and SALT, a global thought leadership forum and networking platform encompassing finance, technology and geopolitics, will broadcast the SALT Talks: Pandemic Venture Investment Series online starting October 29.
Read more here.
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The COVID-19 pandemic has thrown many businesses off their anticipated tracks. Despite an environment of uncertainty and political-economic tensions, global VC investment rose for the second straight quarter – reaching $ 73.2B (approx €62B) in Q3’20, according to the Q3’20 edition of Venture Pulse – a quarterly report published by KPMG Private Enterprise on global VC trends.
VC investment in Europe reached new record
VC investment in Europe reached a new record high of $ 12.1B (approx €10.2B) across 1,024 deals in Q3’20, led by a $ 650M (approx €550M) raise by Sweden-based Klarna, a $ 633M (approx €535M) raise by Germany-based CureVac, a $ 600M (approx €508M) raise by Northvolt in Sweden, and a $ 580M (approx €537M) raise by Revolut in the UK.
The Nordic region (€1.8B), Germany (€1.7B), and Israel (€1.3B) all saw record levels of VC investment this quarter. Despite a quarter-over-quarter decline from $ 3.8B (approx €3.2B) in Q2’20 to $ 3B (approx €2.5B) in Q3’20, the UK continued to account for the largest share of VC investment in Europe.
Investment up in Q3
As per the report, Americas attracted $ 40B (approx €34B) in investment, with the US accounting for the vast majority ($ 37.8B). VC investment in the Asia-Pacific region continued to rebound, with the region attracting $ 21.1B (approx €18B) in Q3’20 – up from $ 17.2B (approx €14.5B) in Q2’20.
Exit activity surged to almost €221B
VC-backed exit activity in 2020 has surged to almost $ 250B (approx €221B), with Q3’20 alone driving $ 155.7B (approx €132B) close to the previous record set during Q2’19 (€144B), driven by successful IPOs, including Snowflake, JFrog, and Unity Software.
“After several quiet quarters, the IPO market for VC-backed companies rocketed into high gear in Q3’20, with a number of high-profile unicorns making successful exits,” says Conor Moore, Co-Leader, KPMG Private Enterprise Emerging Giants Network KPMG International . “Given the recent filings by several other unicorns, coupled with the explosion of SPAC transactions, Q4’20 looks on-track to continue the record-setting pace.”
Expected to remain steady in Q4
VC investment in pharma and biotech remained very hot in Q3’20, led by a $ 600M (approx €508B) raise by Germany-based CureVac; at the end of the quarter, total year-to-date investment in the sector was $ 31 billion – already well above the total of $ 27.1B (approx €23B)seen during all of 2019.
VC investment is expected to remain quite steady heading into Q4’20. Late stage deals are expected to remain a top priority for VC investors, which will likely continue to make it difficult for early stage companies to attract investment. On a sector basis, fintech, business productivity, edtech, healthtech and biotech are all expected to remain very attractive.
“While overall VC investment has remained surprisingly resilient given the number of diverse challenges being faced around the globe, the extended decline in funding for early stage companies causes some concern,” says Kevin Smith, Co-Leader, KPMG Private Enterprise Emerging Giants Network, KPMG International.
“With many seed and early stage companies finding it difficult to attract funding, there could be a serious longer-term impact on the VC pipeline, slowing advances and innovation into new ideas and areas of the economy,” he adds.
Main image credits: Gorodenkoff/Shutterstock
Jon Medved, CEO of Israel’s investment platform OurCrowd, said in an interview that the normalisation of relations between the UAE and Israel following the signing of the peace agreement, known as Abraham Accord, would be “an unbelievable game-changer” in the two-way investment sphere.
Read more here.
The post [OurCrowd in Khaleej Times] UAE-Israel private sector investment to exceed $ 10b appeared first on OurCrowd Blog.
The name “investment bank” somehow always sounded like a place where I could deposit my investments, and maybe even earn a little interest. Then I learned that these banks really negotiate investments and collect fees on the transactions, sort of like commercial banks do with loans to businesses. None normally work for or provide funds for early-stage startups.
Many investment banks even call themselves “boutiques.” As near as I can tell these are smaller ones, who don’t sell clothes, but typically sell companies and securities in a particular set of industries. All investment banks have to be staffed by licensed specialists, called broker-dealers. Very confusing.
None of these investment banks offer traditional banking services, as you would expect from one of the following:
- Retail banks
- Commercial banks
- Credit unions
- Savings and loans
As startup founders, you first need to deal with one of these traditional banks, probably a commercial bank. Commercial banking is also known as business banking. That would be almost any bank that provides checking accounts, savings accounts, and money market accounts to businesses, and also makes loans to businesses. It may be the same physical bank that you deal with for your personal account, except in the personal context it is called a retail bank.
Most retail and commercial banks offer investment services to their customers, but these services have nothing to do with investing in your business. Typically, their service is to help you invest in stocks, bonds, or mutual funds, much like independent financial advisors.
A few, like Silicon Valley Bank (SVB), actually do provide management services to startups, invest in startups, or provide early-stage venture capital, but that is not called an investment service and is part of a function called Emerging Technologies, or sometimes Private Equity.
So unless your business is well established, and ready to sell or go public (Initial Public Offering – IPO), you should steer clear of investment banks. Officially, the investment banks mission is to raise money for companies by issuing and selling securities in the capital markets, and providing advice on transactions such as mergers and acquisitions.
Investment banks normally charge fees consisting of three components. There is an upfront or monthly retainer, and maybe a closing fee, of at least several thousand dollars. In addition, they will likely take between 3% and 10% of any capital raised. For these fees, they will develop a business plan, solicit investors, and negotiate term sheets to a closing.
Another service of investment banks is the buying and selling of “derivatives,” which many believe to be some arcane financial products to dodge government regulators, encourage foreign currency speculation by pension and mutual funds, disguise risky gambles with AAA Standard & Poor’s ratings, and avoid capital gains taxes for wealthy individuals.
After a banking fiasco surfaced a decade or so ago, resulting in the failures of Bear Stearns and Lehman Brothers, investment banks seem to most of us more like a place to avoid, rather than a place to entrust with the keys to our investment livelihood. I’m not sure whether derivatives per se were the problem, or the fact that they were often backed by worthless subprime mortgages.
Startups looking for an angel investor, or a Venture Capital investment usually realize that neither of these sources of funds normally has any connection with a bank. Yet every business needs to have a good relationship with a bank, for day to day operations. I guess it’s no wonder that banks are struggling these days with their public image. Their message and mission is confusing, even to professionals. As your business evolves, don’t let that happen to your own message.
Startup Professionals Musings