While the US experienced a relatively strong quarter of investment in Q2’17, other countries within the Americas fell behind pace compared to previous quarters. In Canada, for example, while VC investment increased deal volume saw a decrease. VC activity in Latin America also remained relatively weak. Due diligence lengthening deal time Q2’17 saw VC investors across the Americas taking more time to evaluate potential deals and conduct related due diligence. While deals continue to get completed, the runway required to make a deal has been extended. This has likely contributed to the decline in deals activity during the quarter. However, the lack of deals activity does not necessarily reflect waning VC market deal volume outside of the US. High investment volume still exist as they relate to specific sectors and segments, including fintech or healthtech. Changing market conditions have simply extended the time required to get deals completed successfully. early-stage funding gap grows In Q2’17, there was a plateau in VC funding for early-stage deals — particularly those that fit between the typical characteristics of seed stage and early-stage deals. While numerous programs exist to provide seed stage funding and support to startups across the Americas, a noticeable funding gap has appeared for slightly more mature companies looking for funding. The challenge relates to the changing characteristics of VC investors given the still-turbulent geopolitical and economic environment across much of the Americas. Many VC investors have slowed down or stopped making broad investments in early-stage companies, preferring to focus specifically on companies well positioned to achieve success. This has led to companies struggling to obtain small rounds of funding because they are unable to entice enough interest from VC investors. This struggle could have long-term ramifications for the VC market over time, should the trend continue. Healthtech remains key priority in Canada In Canada, healthtech remains a key area of VC interest and attention, a trend expected to continue for the foreseeable future. Both federal and provincial governments have been making significant investments in the health sector, including providing funding for new hospitals. These investments will likely spur investment in related technologies as hospitals vie to become the most technologically advanced in the country. Brazil evolving into Latin America innovation hub In Q2’17, Brazil continued its evolution into a strong Latin America innovation hub. In recent quarters, San Paulo in particular has seen an increase in the number of global companies setting up shop locally, while incubator models (e.g. plug.co, CUBO) and accelerator models (ACE) have started to thrive there. Brazil has also seen an increase in the availability of VC funds locally, and a growing interest among VC investors for using Brazil as a platform for growth in Latin America. During Q2’17, KaszeK Ventures closed a fund focused on Latin America valued at US$200 million, its third and largest fund to date. KaszeKVentures stated that the purpose of this fund will be on continuing to grow the tech ecosystem 6 in Latin America. 6 https://lavca.org/2017/06/02/kaszek-ventures-closes-us200m-latin-america-tech-fund/ © 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated. #Q2VC