Venture Capital, Tech and Start-ups – the Funding Frenzy in Asia

In recent years, Asia has seen a tremendous expansion in venture capital activity, with the aggregate value of venture capital deals in Asia reaching $67 billion, a staggering increase when compared to the 2013 figure of $11 billion. The latest, largest, history-making fund raised to date, SoftBank’s $93 billion Vision Fund, is like no other and proves that appetite in investing in tech and start-ups is continually growing.

It is interesting to note, however, that while the aggregate value of venture capital deals in Asia is increasing, Asia-based venture capital fundraising has been decreasing over the previous two years. Bain & Company, in its 2017 report on private equity and venture capital funds in Asia, noted that after allocating $115 billion to funds focused on the Asia-Pacific region over the previous two years, total funds raised in the region dropped almost 16% from a year earlier to $43 billion and slipped to 9% of the global total from 11% in 2015, which is unsurprising as results from the 2017 Bain Private Equity Survey indicate that general partners (“GPs”) sitting on a mountain of dry powder may not have been giving fund-raising their full attention during the year, prioritising instead the buying of companies and working on their existing portfolios. However, in the coming year, while deals and portfolio management will continue to be priorities, many GPs indicated in the 2017 Bain Private Equity Survey that they will be refocusing on fund-raising as well. Close to 70% said they will launch a new fund in the next 12 to 24 months.

In China and Southeast Asia, the investment in tech and start-ups is on the rise, with an emphasis on social media, payments, e-commerce, ride hailing apps, online travel or pure technology. The general sentiment is that opportunity for growth in the Southeast Asian markets remains high.

 

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Amelia HallPartnerT +852 2596 3359amelia.hall@walkersglobal.com

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Laura RogersPartnerT +65 6595 4675laura.rogers@walkersglobal.com