ASIA PACIFIC VENTURE CAPITAL MARKET - TRENDS, INDUSTRY COMPETITIVENESS & FORECASTS (2022-2027)

The Asia Pacific Venture Capital Market is Segmented by Country (China, India, Japan, South Korea, Indonesia, Malaysia, and Others), By the Industry or Sector Invested in (Fintech, Logistics or LogiTech, Healthcare, IT, Education & EdTech, and Others), and By Stage ( Early Stage, Growth & Expansion Stage, and Late Stage)

Market Snapshot

APAC VC 5.png
Study Period: 2018-2027
Base Year: 2021
CAGR: >5 %

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Market Overview

VC funding activity in the APAC region remained inconsistent during the COVID-19 pandemic in the second quarter of 2020. While VC deal volume, after decreasing from 621 in April to 463 in May rebounded marginally to 476 in June, deal value registered consistent decrease from US$8.5bn in April to US$7.6bn in May and US$6.6bn in June.

Edtech and online grocery retail are areas, which have been gaining significance with enhanced use of online platforms during COVID-19. Companies active in healthcare and medical systems space are also gaining attention. China continued to top the venture capital (VC) funding activity both in terms of volume as well as value and was way ahead of its peer countries in the Asia-Pacific (APAC) region during the second quarter (Q2) of 2020.

China continued to maintain its dominance with the country accounting for close to 50% of the total VC deal volume in Q2. China’s share as a proportion of total deal value was also above the 70% mark during all the three months of Q2. Some of the notable deals announced in China during Q2 included USD 1 billion raised by COVID-19 testing equipment maker MGI Tech; USD 750 million raised by online learning platform Zuoyebang; and USD 500 million raised by online grocery start-up MissFresh.

India, Japan, South Korea and Singapore were the other top four markets by deal volume while India, Singapore, Japan and Australia were the other top four markets in terms of value. Most of the countries in the region showcased some recovery signs in June but are yet to touch April levels.

Scope of the Report

Venture capital in Asia has played a significant economic role in the region’s development and is expected to play an even more significant role in the future. Asia’s start-up scene is presenting increased investment potential as the pandemic has shifted dynamics for the long term, one of the region’s leading venture capital firms said. The Asia Pacific Venture Capital Market can be segmented by the various countries in the region ( China, India, Japan, South Korea, Indonesia, Malaysia and others), by the Industry or sector invested in ( fintech, logistics or LogiTech, healthcare, IT, education & EdTech, and others), and by stage ( early stage, growth & expansion stage, and late stage).

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Key Market Trends

Asia’s booming Internet & Fintech economy

The current pandemic is leading to increased access to (and need for) digital banking services. As many as 50% of APAC’s consumers are unbanked; 70% are either underbanked or unbanked. 70% of SME merchants accept only cash in 2019. The Covid-19 outbreak has drastically accelerated APAC’s shift to a cashless world, with unprecedented growth in the number of e-payment transactions amid a sharp decrease in cash withdrawals and deposits. Banking, digital payments and loan-financing services greatly propelled the economic wheel forward throughout the lockdown. Since many fintech firms are startups, their agility to pivot their operations to provide specialized services as customers needed them strengthened the industry.

Despite the pandemic-induced disruptions, venture capital funds pumped $2.7 billion into domestic fintech companies in 2020, the second-highest fund infusion into the sector since 2019 when it had peaked at $3.5 billion. Payments remained the hottest area of investment, followed by tech-driven insurance firms and tech-driven wealth managers. Competition in the insurance space started to heat up as incumbent insurers enhanced their digital focus due to the pandemic and niche payments players worked to expand into insurance. In addition to payments and platform models, B2B solutions, including embedded finance and 'buy now, pay later' solutions, will likely be a hot investment area in 2021. That apart blockchain is also expected to gain traction as blockchain-based solutions and digital asset offerings become more mainstream.

Value Of Fintech

India’s Growing VC Investments

The year 2020 was truly extraordinary for India, with the significant impact of Covid-19 on the economy and healthcare systems in the country. Covid-19 played an important role in accelerating digital trends across sectors dramatically, which is reflected in venture capital (VC) money flows and emergence of new, digitally founded business models across sectors. 2020 saw a strong deal flow, with close to $10 billion in VC investments—higher than in all previous years except 2019.

Significant fundraising activity with $3 billion raised by India-focused funds in 2020, 40% higher than in 2019—marquee funds including Sequoia, Elevation Partners, Falcon Edge, and Lightspeed, all closed new funds for India investments in 2020, despite the pandemic. In terms of key sectors receiving investments, consumer tech, SaaS, and fintech continued to lead the way, accounting for 75% of VC investments in 2020. Key subsectors receiving investments included edtech, foodtech, gaming, and media and entertainment in consumer tech; verticalised solutions within SaaS; and payments within fintech.

In total, 22 start-ups raised over $100 million in 2020 from VC and growth equity investors, with the majority concentrated in consumer tech. Outlook for VC investments looks strong going forward with investment activity recovering to pre-Covid levels in the second half of the year, after a ~60% drop in deal value during April through June compared to January through March 2020.

Number Of VC Investments (Deals) in India

Competitive Landscape

Asia pacific venture capital market is highly competitive, with the presence of both international and domestic players. The market studied presents opportunities for growth during the forecast period, which is expected to further drive the market competition. With multiple players holding significant shares, the market studied is competitive.

Recent Development

  • March 2022, the China-based XPeng led an investment into a new fund of around USD 200 million. The fund is focused on backing up frontier technology startups and electric vehicle production. The fund is named as Rockets Capital and includes capital investors such as eGarden, IDG Capital, 5Y Capital, Sequioa China, and GGV Capital.
  • December 2021, the India-based Razorpay Software Private Limited, raised USD 375 million in the largest funding round to date. The payment gateway company was valued at USD 7.5 billion. The funding round was led by Lone Pine Capital LLC, TCV, and Alkeon Capital Management. Existing investors of the company include Tiger Global Management, Y Combinator, Sequoia Capital, Ribbit Capital, and GIC. 

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Deliverables

    2. 1.2 Study Assumptions

    3. 1.3 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET DYNAMICS

    1. 4.1 Market Overview

      1. 4.1.1 Development of Asia VC

      2. 4.1.2 Pulse of Various Rounds of VC

      3. 4.1.3 Tech VCs Domination in the Region

      4. 4.1.4 Differences in Investment Dynamics

      5. 4.1.5 Regulatory Requirements across the Region

      6. 4.1.6 Impact of Individual VCs and VC Firms

    2. 4.2 Market Drivers

    3. 4.3 Market Restraints

    4. 4.4 Value Chain / Supply Chain Analysis

    5. 4.5 Porters 5 Force Analysis

      1. 4.5.1 Threat of New Entrants

      2. 4.5.2 Bargaining Power of Buyers/Consumers

      3. 4.5.3 Bargaining Power of Suppliers

      4. 4.5.4 Threat of Substitute Products

      5. 4.5.5 Intensity of Competitive Rivalry

    6. 4.6 Impact of Covid 19 on the Industry

  5. 5. MARKET SEGMENTATION

    1. 5.1 By Country

      1. 5.1.1 China

      2. 5.1.2 India

      3. 5.1.3 Japan

      4. 5.1.4 South Korea

      5. 5.1.5 Indonesia

      6. 5.1.6 Malaysia

      7. 5.1.7 Others

    2. 5.2 By Industry/ Sector

      1. 5.2.1 Fintech

      2. 5.2.2 Logistics and Logitech

      3. 5.2.3 Healthcare

      4. 5.2.4 IT

      5. 5.2.5 Education and Edtech

      6. 5.2.6 Others

    3. 5.3 By stage

      1. 5.3.1 Early Stage

      2. 5.3.2 Growth and Expansion

      3. 5.3.3 Late Stage

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Company Profiles

      1. 6.1.1 East Ventures

      2. 6.1.2 500 Durian

      3. 6.1.3 SG INNOVATE

      4. 6.1.4 Sequoia Capital

      5. 6.1.5 Insignia Ventures Partners

      6. 6.1.6 Wavemaker Partners

      7. 6.1.7 Global Founders Capital

      8. 6.1.8 SEEDS Capital*

    2. *List Not Exhaustive
  7. 7. Future Of The Market

  8. 8. Disclaimer

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Frequently Asked Questions

The ASIA PACIFIC VENTURE CAPITAL MARKET market is studied from 2018 - 2027.

The ASIA PACIFIC VENTURE CAPITAL MARKET is growing at a CAGR of >5% over the next 5 years.

East Ventures, 500 Durian, SG INNOVATE, Sequoia Capital, Insignia Ventures Partners, Wavemaker Partners, Global Founders Capital, SEEDS Capital are the major companies operating in ASIA PACIFIC VENTURE CAPITAL MARKET.

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