Quickly rising to become one of the most popular SlideShares of the week with 15,000 views in the first 48 hours, Arnaud Bonzom‘s Startintx Index: APAC Venture Capital Top Trends of Q1 2015 paints a picture of an aggressively expanding startup funding landscape in Asia-Pacific so far this year.
Bonzom tells e27, “Most of the data has been collected via the Asia Funding / M&A Newsletter. I have previously published the Singapore startup ecosystem and entrepreneur toolbox, [which had] 21,000+ views in nine months and 1,200+ social shares. I’m currently working on another publication for this month. Please note that there is no company behind this and it’s only to share knowledge with the startup community in APAC.”
At the broadest level, the report found that the region captured US$9.4 billion in venture capital funding across a total of 436 investments. Key findings from Q1 include:
— E-commerce and marketplace captured 53 per cent of the investments in value
— Out of the 11 biggest funds launched, four have been set up by a corporation
— Nine out of the 10 biggest deals have been done in China
— 67 per cent more deals have been done in India than in China
— The 10 most active VCs have closed 29 per cent of the deals
Thirty VC funds worth a total of US$4.44 billion were closed (raised), with the largest standing at US$910 million. The largest single round was into Dianping.com at US$850 million, and nine out of 10 biggest deals have been done in China.
“It’s very interesting… The only one in India — One97 Communications, a payment finance company — was an investment of Alibaba, a Chinese company. Meaning, of the top 10 everything is linked to China in a way,” Bonzom said in an interview. Beyond this, 21 out of the top 25 deals were done in China.
While seed-stage deals stood at just US$60 million (three per cent, 109 startups) according to available data, it is likely that many were not reported or disclosed and may fall into the Others category that was worth US$2.24 billion (24 per cent, 146 startups). US$1.7 billion (11 per cent, 96 startups) went into Series A deals; US$790 million (eight per cent, 45 startups) into Series B; US$1.27 billion (13 per cent, 23 startups) into Series C; and US$4.03 billion (43 per cent, 17 startups) into late-stage deals at Series D and beyond.
“I suspect some countries like India have pretty good coverage in terms of seed, whereas in China there’s not so much coverage — maybe because there’s already too many large deals. Maybe it’s not reported in English, or there’s already so much reporting on the largest [deals] that people are not willing to cover the smaller ones,” Bonzom said.
While China had a good spread of investments across the different stages of the funding cycle from early to late, Singapore, for example, saw mainly investments at seed stage, Series A and Others. This suggests Singapore’s ecosystem is still less mature than China’s, not yet generating enough companies at the later funding stages. It goes without saying that the market sizes are incomparable.
India saw 67 per cent more deals than China, but China’s were worth 3.9 times more in terms of value: China is the Jupiter to India’s Uranus from this perspective.
“It may show that India is a bit more early-stage even if there are already a couple of giants, but they don’t have so much compared to China. In China you have the Baidus, Tencents, Alibabas — all those guys are giant tech companies that started like 15-18 years ago. Except Xiaomi, which was three to five years ago. India there’s not so much: you have Snapdeal, Flipkart, Zomato, but a lot more early-stage. China started a bit before and already has a clear pipeline of deals,” Bonzom said.
Bonzom cautioned readers to remember that this data represents just one quarter, so a huge deal can skew the data and create misleading trends. Deals in Japan and South Korea also fell largely into the Others category, suggesting many are not disclosed or reported in English-language media. While most startups in Japan are still based in Tokyo, the few exceptions include biotech or university-affiliated companies.
Japan’s biggest investment in Q1 was US$91.6 million into Wakawaku, with deals in total for the country reaching US$269.3 million. The main industries were enterprise, media and e-commerce/marketplaces, and the top investors were Gree Ventures, B Dash Ventures and SMBC Venture Capital.
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Of the 11 biggest funds launched, four have been set up by corporations. “All those guys want to invest in early-stage companies now, and it’s quite interesting to see that. There’s a lot of money coming from corporations, and those guys are not pure VC… I don’t know it if it’s really driving innovation, but they want to play a bigger role and put more skin in the game… Some people compare Google Ventures to other VCs, and they are good but not necessarily great,” Bonzom said.
“The challenge with VCs is it takes them at least 10 years to die, because they have money for [that long]. It’s not like startups that after one or two years are dead; a bad VC may take 10 years before something really happens,” he added, suggesting Microsoft’s model is perhaps the best and most complete among corporate by having different touch-points within the startup ecosystem (Imagine Cup, BizSpark, Microsoft Accelerator, and Microsoft Ventures).
Sequoia Capital came in as the most active VC in the region with 32 deals, dwarfing even second player IDG Ventures with 20, and East Ventures with 15. Matrix Partners came in fourth with 13 deals, and Tiger Global Management came fifth with 11. Beyond that in running order was Mumbai Angels, 500 Startups, Gree Ventures, SAIF Partners and Helion Venture Partners.
“The early-stage ones like East Ventures and 500 Startups are really doing investments in the full region… Sequoia is almost 50/50 split between India and China. Matrix, Tiger and IDG are more focussed in one country like India or China… But what is interesting is that all the large [VCs] are very focussed on India and China, not so much on Southeast Asia markets. Sequoia has done just one or two investments in Singapore. It’s quite early-stage for those guys,” Bonzom said.
“East Ventures is interesting because it’s one of the top three most active, but also has one of the biggest splits in terms of countries. They did around 15 investments, with three in Indonesia, three in Japan, three in Singapore, two in Malaysia — a bit everywhere,” he added. It also invested twice in Thailand, once in Hong Kong and once in India.