Corporate participation continues rise to record proportions One of the ongoing trends that signifies how the venture industry has slowly been maturing and changing is the slow but steady rise in the proportion of VC rounds in which corporations or corporate venture arms participate. Standing at 17.6% for Q2'17, this percentage speaks to the maturation of the key drivers behind corporate investing strategies when it comes to exposure to innovation or rapid growth. Whether pure-play financial or strategic or a blend of both, such motivators continue to impel growing corporate involvement, particularly as certain key technical areas such as artificial intelligence continue to showcase more and more useful business applications. Glut of dry powder to continue transforming industry Although not the highest figure recorded for a given quarter in the past seven and a half years, and certainly skewed by mega-funds such as New Enterprise Associates’ $3.3 billion vehicle, the $17.15 billion in capital commitments collected in Q2'17 is highly significant. For one, it exemplifies how the venture industry still has more than enough funds to support a healthy rate of investing for some time, even in a relatively pricey climate, and two, it illustrates not only limited partners’ desire for exposure to the VC asset class but also the perception of considerable opportunities remaining in key, emergent technologies and geographic areas. Exits continue down what is likely more of a cyclical, temporal decline Quarterly exit volume exhibits a distinct lessening of momentum since a peak in the first quarter of 2015, even though exit values have remained either within pre-2014 norms or somewhat elevated. Similarly to the investment side, such coincident trends are cyclical, tied to the recent investing boom and in particular corporate acquirers’ appetites. Strategic M&A will likely continue at a decent clip, but especially given the boom in such activity for the past few years, there is likely to be a period of internal regrouping and digestion of recent buys, while the pipeline of venture-backed exit-ready companies refills. Will first-time funds make somewhat of a comeback? Over the past few years, the proportion of first-time funds to the whole has either held steady or, on a regional basis, diminished somewhat. However, so far in 2017, 26 such vehicles have closed worldwide, relative to 35 in 2015 and 39 in 2016. Thereby on pace for a potential increase in volume, first-time fundraising can serve as a barometer of sorts of LP willingness and sentiment regarding the asset class on the whole. At $2.55 billion in capital commitments to first-time pools of capital, already exceeding any year from 2012 to 2014, it is clear certain first-time fund managers can still rake in more- than-healthy sums from investors, which underlines the perception of opportunities still available within the venture realm. All currency amounts are in USD, unless otherwise specified, data provided by PitchBook. © 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