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Venture-backed firms take record US$32b in Q2, mostly in mega-deals

[FRANKFURT] Venture capital-backed firms globally raised a record US$32.5 billion in the second quarter, up 19 per cent from the first three months of 2015, but this eye-watering figure disguises a disquieting fixation on mega-deals at the expense of start-ups.

The quarter saw 61 mega-rounds, defined as investments of US$100 million or more, taking in more than US$16 billion - half of all venture funding - as wavering confidence in public markets fed the rise of private IPOs, a report out on Thursday said.

The Global Venture Capital Activity Report published by KPMG and global venture capital tracker CB Insights said the volume of deals declined globally for the third straight quarter to 1,819, down 5 per cent from a peak in last year's third quarter.

Low interest rates are driving more corporate investors, hedge funds, mutual funds and sovereign wealth authorities to seek greater rates of return from late-stage private firms instead of taking chances in public markets, the study showed.