Pando

Asian venture capital in 2016: This could get ugly…

It has the farthest to fall, and the newest investors

By Sarah Lacy , written on January 21, 2016

From The Venture Capital Desk

Last week, I wrote about how European venture capital ended the year. Other than the fact that both were down, Asia shows a very different story.

In Europe, a market that didn’t climb to crazy heights means there’s not as much room to fall.

BONUS: As reported last week, European venture capital is more dominated by European VCs than ever before. This means Europe should be less vulnerable to US investors pulling capital back to the US when things get dicey as they have before. (Although there’s a paucity of later stage capital in Europe, so that could be where they get hit.)

And, while UK dominated Europe in overall deal making, Europe’s mega deals were nicely geographically spread, another sign of market maturity and diversification:

Contrast that to Asia. The overall picture there:

Yowza. As you can see, there’s far to fall even to get back to 2013 levels-- roughly where the US landed at the end of 2015.

And Asian venture capital is one third dominated by Asian corporates, versus one-quarter in the US. Many other investors are more diversified private equity and hedge fund players, or US investors doing one off deals. In other words, it’s a safe bet that some half of the deal makers aren’t full time venture capitalists doing business only in Asia’s early stage tech market…. at least in terms of dollars flowing into the market in the last year. Shit, we even saw a trend last year of heavily funded Asian startups investing in other startups.  

And let’s look at a map of mega deals:

It’s heavily concentrated in China, a market that’s worrying everyone on a macro level right now.


The point? For much of 2015, the trends were similar between Europe, the US and Asia. In 2016, it could diverge pretty radically.  

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