The venture capital industry has been gradually developing in the Asia-Pacific region and, as reported in the 2016 Preqin Global Private Equity & Venture Capital Report, the proportion of both the number and aggregate value of venture capital deals in Greater China and India has increased year-on-year since 2013. A previous blog has already analyzed the 10 largest global fund managers pursuing a venture capital strategy in terms of funds raised over the past decade and estimated dry powder. This blog, however, will take a closer look at the 10 largest venture capital fund managers targeting investments specifically in the Asia-Pacific region.
Preqin’s Private Equity Online currently tracks 857 Asia-Pacific-based venture capital fund managers. As seen in the tables above, DST Global has raised the most capital over the past decade, having accumulated $7.2bn from seven venture capital funds. The Hong Kong-based venture capital firm also has the largest estimated amount ($3.9bn) of dry powder available. DST Global primarily focuses on expansion/late stage investments in the internet and technology sectors on a global scale, with an emphasis on investment in Asia, particularly China. The firm’s fifth and most recent fund, DST Global V, reached a final close in July 2015 on $1.7bn.
All other Asia-Pacific-based venture capital firms in Fig. 1 are headquartered in China. China-based fund managers also secured nine of the 10 top spots in the dry powder league table. Unsurprisingly, given the rate at which the venture capital industry is expanding in China, 90 China-focused venture capital funds have already reached a final close in 2016 (as at 13 April 2016) compared with 39 in 2015 and just 14 in 2014.
Most Asia-Pacific-based fund managers target investment in information technology. China-focused venture capital funds which include IT in their investment focus have raised an aggregate $38bn over the past 10 years. This is a significant amount compared with Hong Kong ($10bn) and Japan ($4bn).
Overall, venture capital in the Asia-Pacific region still falls behind other regions in regards to transparency and regulatory reforms; however, there are increasing efforts to address these issues. For example, the Indonesian Financial Services Authority has recently introduced a regulation that makes it more attractive for venture capital firms to be established in the country. It will be interesting to see how the venture capital industry in the region evolves in the near future.