Low-value deals dominated Asia-Pacific VC at close of 2019

Asia

Low value deals dominated the Asia-Pacific venture capital funding landscape at the end of 2019 thanks to trade tensions and an economic slowdown in the region, new research shows.

Investments of less than $10m made up the lion’s share of VC activity in the region in Q4 according to the latest report from data and analytics business GlobalData.

Despite that, the top 20 deals announced during the quarter accounted for more than 50 per cent of total deal value in 2019, the research showed.

Some of the notable deals announced during Q4 2019 included $3.7bn of funding in Tenglong Holdings, $3bn raised by Beijing Kuaishou Technology and $1.5bn funding in Oravel Stays (OYO Rooms).  

GlobalData said VC investment volume (with disclosed deal value) and value increased by 36.9 per cent and 17.9 per cent respectively in Q4 2019 compared to Q4 2018.

The share of low value deals as a percentage of the total deal volume increased from 60.8 per cent in Q4 2018 to 67.5 per cent in Q4 2019.

The share of low value deals across all the funding size ranges increased in the quarter compared to the same period in 2018. Within the low value deals, the highest number of deals was announced in the range of $1m to $5m, the report showed.

The top five countries by deal activity – China, India, Japan, South Korea and Australia – collectively accounted for around 90 per cent of total VC investment volume, including VC investments with disclosed funding value only, and value, with China occupying the top position distantly followed by India.

However, India witnessed a major leap in funding activity in Q4 2019 with the investment volume and value increasing by 57.1 per cent and 181.6 per cent, respectively, compared to the previous quarter.

Deal activity remained relatively sluggish in China, with its deal value remaining mostly unchanged/flat in Q4 2019 compared to Q4 2018 and deal volume growing by 20.2 per cent.

Aurojyoti Bose, financial deals analyst at GlobalData, said, “Investors still have lot of interest in China but trade tensions, slowdown and mounting debt made investors cautious and kept investors away from committing big ticket investments.”

He added, “However, the US signing trade deal with China on 15 January 2020 is expected to ease some of the investor concerns and fuel funding activity in the country.”

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