Will Venture Capital Slowdown Hit Asia in 2016?
Asia has been a growing market for startup companies and venture capital deal for the last decade. However, as U.S. venture capital is experiencing slowdown due to exaggerated valuation, will Asia also experience the same?
Forbes quoted the CB Insight report regarding a 30% decrease of Asia's venture capital deal in Q4 of 2015. A third quarter venture funding that reached $14.2 billion was declined to $9.7 billion in the fourth quarter. According to Forbes, the figures indicate a potential slowdown in venture deal activity for Asia.
In the fourth quarter, according to CB Insight, ten of the largest venture funding round in Asia accumulated more than $5.9 billion in funding. That equal to 60% of total $9.7 billion venture funding in fourth quarter.
Among the top ten are $275 million of Series F funding to Olacabs, the India's ride-sharing company and $300 million Series D for Dada, the Chinese e-retail deliverry service. Olacabs received its investment in November, while Dada received it a month later.
According to Forbes, Asian markets have developed a healthy appetite for venture capital deal. The sentiment is Asia is growing strong in the last decade, as large sovereign wealth funds, family offices, angel networks and corporate venture arms also involved in the Asian market, not only venture capital firms.
Singapore and its government funding programs has the advantage of all Asian cities. The city-state is also supported by strong capital pools from local venture funds and private equity firms.
In a larger scale, the fundamentals of Asia market still have untap potential, with growing population of consumers and increasing mobile user which related to the low Internet penetration.
Japan has also hold a huge potential for venture capital. As the other region experienced a slowdown in fourth quarter of 2015, but Nikkei Asian Review reported that Japan has a 10% increase of venture capital fund. According to Japan Venture Research, Japanese venture companies was raising more than 140 billion yen ($1.23 billion) in 2015.
Along with Japan and Singapore, China is also the powerhouse in tech startup companies and venture capital. A founder of Geek Founders Capital and also a chairman of Beijing-based mobile and online game developer Wang Feng told Bloomberg, "Fast technological innovations have created waves of opportunities. As long as you're smart, you're going to make money."
Wang and his venture capital fims has raised 300 million yuan ($45.7 million) in three financing rounds in just five years, and invested in more than 60 companies. Wang and former Huawei executive Zhang Xiaowei launched a China-owned game console maker and raised $60 million in 2015.
As there are many untapped possibiliy in the region, Asia still have a huge potential for venture capital investment. Although a slight slowdown may occur in Q4 2015, but overall the huge potential is waiting to be cultivated.