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Preqin Investor Network is a complimentary platform available only to accredited investors, qualified purchasers, and their alternative investment consultants. This database allows all eligible investors to analyze past fund performance and create benchmarks, as well as the ability to search and view free profiles for all funds open to investment across the following asset classes: private equity and venture capital, real estate, infrastructure, and hedge funds.
Venture capital is a mainstay of private equity globally, often grouped separately from the wider asset class due to its unique characteristics and appeal. In the last few years, venture capital funds have been a prominent part of the Asia-based private equity fundraising pool by number, reaching a peak of 93 such funds closing in 2011. To-date in 2013, only 19 Asia-focused venture capital funds have reached a final close, collecting only $1.3bn in aggregate commitments, at an average size of $87mn per fund. In this blog, we take a look at the LPs who are interested in this space and discover that there is still marked investor interest in the strategy from within Asia.
Preqin’s Investor Intelligence tracks a total of 338 Asia-based investors that are actively seeking commitments to or have previously invested in venture capital vehicles. Of these Asia-based investors, 97% are interested in venture capital vehicles generally, and have no particular stage focus. These venture funds range from seed investments to expansion/late-stage funding. Comparatively, only 3% of the group will commit to venture vehicles at a specific investment stage.
In term of investor type, corporate investors are the most common investor group amongst Asia-based Investors with a Preference for Venture Capital Vehicles, representing 21% of the corpus. Banks represent the next most significant group of investors in this pool at 14%, while government agencies make up 12% and investment companied, insurance companies and funds of funds managers each represent 8%. Pension funds (public and private) are responsible for 6% of the corpus, 5% are private equity firms, and 4% are wealth managers and family offices (single and multi) respectively. The remaining 10% is a mix of other investor types, including sovereign wealth funds, asset managers and foundations.
Two of the largest Asian economies, China and Japan are home to almost half of all Asia-based investors with a preference for venture capital funds, representing 25% and 23% respectively. This is followed by those that call South Korea home (14 %) and those headquartered in India (13%). Taiwan (7%), Singapore (6%) and Hong Kong (6%), share a fairly equal distribution in this investor pool. The remaining 6% of these investors are LPs that are located in Brunei, Indonesia, Kazakhstan, Malaysia, Philippines, Thailand and Vietnam.
In terms of geographic preference, within Asia, a sizeable 46% of Asia-based investors with a preference for venture capital funds have a geographic preference for Greater China. Besides investing in Asia, Asia-based investors also look outside the borders of Asia when committing to venture capital vehicles. Thirty percent target North America as an investment destination and Europe remains attractive to 18% of these Asia-based investors. Twenty-one percent of the group will target opportunities in a range of emerging markets.
Lastly, with regards to fund manager specifics, 42% of Asia-based investors with a preference for venture capital funds will invest in first-time funds. Twenty percent will consider such managers and 7% will invest in spin-off teams. Only 31% of the corpus will not invest in first-time funds at all. In terms of investing prior to a fund holding a first-close, more than half of these investors, 61%, are willing to commit to a suitable vehicles first-close investor, and a further 18% will consider doing so. The remaining 21% will not commit as a first close investor. Sixty-three percent of these investors will look to co-invest alongside GPs and a further 7% of the corpus will consider doing so. The remaining 30% are not interested in co-investment opportunities.