Asia VC investment clocks high of $15.6B

Region's venture capital investment sees six-quarter high in fourth quarter 2017, fuelled by two US$4 billion mega deals to China's Didi-Chuxing and Meituan-Dianping.

Companies in Asia raised US$15.6 billion in venture capital for the fourth quarter of 2017, which saw 245 deals and pushed the year's funds to a total of US$48 billion.

The quarter was the region's highest in the last six and saw two US$4 billion funding rounds secured by China's ride-sharing operator Didi Chuxing and group discount site Meituan-Dianping. Three others in China also snagged VC deals worth more than US$1 billion each for the quarter, according to KPMG's latest Venture Pulse report.

China led Asia VC industry for the fourth quarter, generating US$13.9 billion, while India saw a dip over the previous quarter to US$523 million but closed the year "reasonably robust" with seven US$100 million deals, the report noted.

Singapore finished the year with VCs committing US$1.2 billion across 112 deals. Some US$205 million was raised in the fourth quarter, which saw 17 deals inked, up 39.6 percent from the previous quarter and 57.2 percent year-on-year.

Second quarter 2017, however, was the strongest for Singapore with US$724.3 million invested across 33 deals. The year also saw eight exits, with exit value of investments hitting US$1.6 billion. The bulk of this was secured in fourth quarter, when the exit value of investment was US$984.4 million.

Worldwide, VC investment hit a decade-high of US$155 billion, fuelled by a robust fourth quarter, which recorded U$46 billion, according to KPMG. The volume of deals, though, dipped again to 2,662 VC deals globally in the quarter, the lowest since fourth-quarter 2011.

"The decline in deal volume only emphasised the increasing importance of mega-deals in the health of the global VC market," stated the report, which pointed to automotive-focused companies as the big winners for the fourth quarter including Lyft, and electric car manufacturers Nio and Faraday Future joining Didi-Chuxing in raising rounds worth more than US$1 billion.

The Americas again contributed the largest amount of quarterly investment at US$24.5 billion raised across 1,858 deals, with the US accounting for US$23.75 billion.

Across the board, artificial intelligence and machine learning generated US$4.1 billion in investment for the fourth quarter, compared to US$3.1 billion in the previous quarter. For the year, funding in both technology areas doubled from US$6 billion last year to US$12 billion in 2017.

Globally, the median deal value climbed for every funding stage. Angel and seed deals increased to US$1 million from US$800,000, while early-stage funding grew to US$5 million from US$3.7 million, and later-stage deals hit US$10.8 million from US$9.5 million.

The KPMG report projected that 2018 would continue to Asia's VC market would continue to see robust growth, including industries such as healthtech, biotech, and autotech, but falling number of deals would create challenges in the future.

Chia Teck Yew, head of financial services advisory for KPMG in Singapore, said: "Globally and in Singapore, we can expect to see cross-industry solutions being a key focus of VC investors heading into the next few quarters. The applicability of innovative technologies, whether AI and machine learning or blockchain, to different sectors will likely keep investors focused and investment high regardless of any pauses among specific industries. The tech sector will also continue to take a lion's share of overall investments."

He added that Singapore would see more private and seed or Series A corporate VC funds.

"Along with VCs that are regrouping to focus on Series B to D deals, we can expect deal activity in Singapore to remain robust in 2018," Chia noted. "Late-stage transactions will also continue, with investors placing larger, but safer bets on companies with proven business models and the strongest path to profitability."

"Looking ahead, Singapore companies are also likely to be more aggressive in seeking earlier and larger rounds of funding from the local, US, China, and overseas markets."