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Number of Software & Related Venture Capital Financings Growing in Asia – December 2015

by Anthony Leung

  • 09 Dec 2015
  • PE
  • VC

In recent years, the internet industry has been the driving force behind rising aggregate deal value in venture capital, with the healthcare and software & related industries vying for second place. The software & related industry has seen the total value of its transactions rise year on year from $4.1bn in 2009 to $16.5bn in 2014 and higher once more to $17.2bn in 2015 YTD, as shown in the chart below. It is interesting to note that the growing aggregate deal value observed in this industry has occurred despite the number of completed deals falling since 2013, resulting in an 85% increase in the average value of software & related financings from $7.3mn in 2013 to $13.4mn in 2015 YTD.

Preqin’s Venture Deals Analyst module on Private Equity Online shows that North America has, since 2007, always recorded the greatest number of financings in the software & related sector, accounting for 983 of the 1,532 deals in 2015 YTD (64%). However, the proportion of global transactions accounted for by North America has been in decline since 2012, when it accounted for 72% of deals. Conversely, Greater China and India have seen an increase in their market share since 2010. Greater China doubled its global market share in terms of the number of deals completed from 4% in 2010 to 8% in 2015 YTD, while India saw its share of global deals increase by three percentage points from 1% in 2010 to 4% for 2015 so far.

Israel, which has a burgeoning venture capital scene, secured one of the largest financing rounds in the sector for 2015 YTD, when TPG completed a $150m Series B financing in Infinidat – an enterprise storage solutions provider. Other than this, all the remaining deals that would make up a list of the top 10 largest this year took place in the US, with six of the portfolio companies headquartered in California.

Software & Related – 2015 at a glance:

  • Largest deal: $500mn Series C round investment in Zenefits by an investor consortium co-led by TPG and Fidelity Management & Research Company in May.
  • 2015 is already experiencing a record year in terms of aggregate deal value for software & related companies, currently at $17.2bn.
  • 29% of 2015 financings have been at the Angel/Seed stage, with Series A picking up a 28% share.
  • As in the wider venture capital industry, this sector has seen a shift in geographical focus from North America to Asia in recent years, with North America’s share of deals falling from 74% in 2010 to 64% in 2015 YTD, and Asia’s share growing from 6% in 2010 to 16% in 2015 YTD.

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