APAC leads total global venture capital investments in Q3

Grab accounted for the largest deal in the region with a $2b raise.

Global venture capital (VC) investments reached US$52b in Q3 thanks to VC-backed companies in the Asia-Pacific region accounting for over US$17.6b across 391 deals, according to KPMG Enterprise’s Venture Pulse report.

Whilst total VC investment dropped QoQ, results remained strong compared to other quarters, the report stated. Total VC investment in Asia which mainly went into initial public offering (IPO) markets remained strong with US$77b YTD. It surpassed Asia’s annual total of US$63b in 2017, KPMG noted.

“With one quarter still remaining in 2018, VC investment globally surpassed the record US$171b raised during all of 2017,” the report said. “Globally, VC investors continued to focus on late-stage deals, although there continued to be some stabilization of activity at the seed and angel deal stages - in Asia and the US.”

Whilst China and US accounted for many of the biggest deals in Q3, Singapore’s ride hailing company Grab attracted the largest funding with a US$2b raise in August. This was followed by a $1b raise seen at bitcoin mining company Bitmain which led activity in China, and India’s hotel booking company Oyo Rooms.

Although the three deals in Asia pale in comparison to Chinese fintech company Ant Financial’s US$14b raise in Q2, they highlight the ongoing strength of the VC market in APAC, the report noted.

Hong Kong’s IPO market also remained strong according to the report, as new listing rules allowed pre-revenue biotech firms and companies to list on the Hong Kong Stock Exchange (HKSE).

Meanwhile, the number of new ‘unicorns’, or companies with $1b in valuation, globally continued to see a bounce-back in Q3 following a resurgence which began earlier in 2018. Whilst many of the new unicorns came from China and US, other new unicorns came from a wide mix of countries including Hong Kong’s Klook and Singapore’s Trax.

Whilst the report noted of the trade tensions between US and China, VC investors continue to look at expanding into newer technology hubs to broaden their portfolios overseas.

“Asia will continue to see a lot of VC investment over the next few quarters. Of all the areas of investment, artificial intelligence (AI) stands out as the most prominent in the eyes of VC investors,” Egidio Zarella, head of clients and innovation partner at KPMG China, said. “Not only is it applicable across many sectors and industries - from healthtech to manufacturing, but it is seen as particularly critical for the future of financial services - helping to avoid money laundering and prevent fraud.”

KPMG also highlighted how urban mobility, across everything from autonomous vehicles to scooters, is expected to attract significant VC investment whilst ride hailing companies will continue to attract interest although this will mainly be targeted at existing leaders in the market.