Pandemic hit appetite for investing in start-ups, data shows

The global pandemic has had a profound impact on the appetite to invest in new start-ups, according to data compiled by global data analytics specialist GlobalData.

The British-based data research firm found that big-ticket, billion-dollar deals were mostly non-existent during the October-December quarter of last year.

Of the quarter's 3,603 global deals that disclosed deal value, 66.2 per cent were low-value deals, with US$10 million (S$13 million) or less in investment value, while deals valued at more than US$100 million stood at just 4.2 per cent.

GlobalData lead analyst Aurojyoti Bose cited investor caution as the main reason for the fall in investment quantum.

He said: "With tough market conditions and an uncertain business environment, cautiousness prevails among investors when committing to big-ticket investments."

Venture capital (VC) investment volume (deals with disclosed deal value) decreased by 14.7 per cent from 1,357 deals in October to 1,158 in November, and further shrank by 6 per cent to 1,088 last month.

In October, low-value deals stood at 69.1 per cent of the total deal volume, while the share of deals valued at more than US$100 million stood at just 3.8 per cent. No deals valued at over US$1 billion were announced that month.

Similarly, in November and December, low-value deals accounted for 66.7 per cent and 62 per cent, respectively, of the total deal volume, while the share of deals valued at more than US$100 million stood at 3.7 per cent and 5.3 per cent, respectively. There was one deal valued at over US$1 billion announced in each of the two months.

With the Covid-19 vaccine roll-out under way worldwide, however, there is potential for a pickup in VC investment numbers by the middle of the year, analysts reckon.