According to Preqin’s Venture Deals Analyst database on Private Equity Online, there have been 2,293 venture capital financings in the consumer discretionary industry since 2007 worth an aggregate $13.8bn. Although the sector represents only 3% of the number of deals and 2% of the aggregate deal value of the total venture capital market, recent years have seen the number of deals in the consumer discretionary sector rise, as shown in the chart below. Deal activity has increased each year since 2009, bar a 9% decrease in number and 14% decrease in aggregate value in 2013. Both the number and aggregate value of venture capital deals in the sector reached record levels in 2015, rising from 137 and $781mn in 2009 to 390 and $3.4bn respectively.
North America has seen the most venture capital deal activity in the consumer discretionary sector since 2007, accounting for 44% of all deals to date. European venture capital financings, which once accounted for 34% of consumer discretionary deals in 2007, have seen fluctuating activity since, with the proportion dropping to just 13% in 2015. India, however, has seen a steady increase in the proportion of deals in recent years compared to other regions, accounting for 7% of the number of financings in 2011 and rising to almost a quarter in 2015, the second largest proportion in the consumer discretionary sector after North America.
Since 2012, angel/seed deals have been the most prevalent, accounting for 42% of the number of deals in the sector, while series A deals represented a fifth of transactions. Despite the large volume of angel/seed deals, due to smaller average deal sizes they contributed only 5% of the aggregate value over the same time period; whereas series A deals accounted for 25% of the value. The average value of series A deals in the industry decreased by 18% from $8.8mn in 2014 to $7.2mn in 2015; however, the average value of series B, C and D deals increased by 32%, 88% and 35% respectively in the same period.
Within the consumer discretionary sector, the education/training industry accounted for 28% of the number of deals and 24% of aggregate value in 2015. The consumer services industry accounted for 24% and 27% of the number of deals and aggregate value in 2015 respectively, and has seen a steady increase since 2012, witnessing a rise of 59% and 82% respectively in the number of deals and aggregate value from 2014 (49 deals for $230mn) to 2015 (78 deals for $419mn). All other industries (excluding consumer products) within the consumer discretionary sector, including entertainment, leisure, restaurants and retail, also saw significant rises in aggregate value from 2014 to 2015.
The consumer discretionary sector has witnessed greater activity in terms of both the number and aggregate value of venture capital deals in recent years, and with 67 deals worth an aggregate $400mn already seen in 2016 so far, the industry could be set for another strong year.