Venture capital is the most favoured fund type among private equity investors based in Asia-Pacific: 59% of institutions profiled on Preqin’s Private Equity Online have stated a preference for, or have previously invested in, venture capital funds, much more than for growth (42%) and buyout (39%) investments. This blog provides insight on Asia-Pacific-based institutional investors interested in venture capital vehicles.
In terms of geographical preference, Asia-Pacific-based investors as a whole tend to have a domestic bias: 94% of institutions seek to make venture capital fund investments domestically. Forty-two percent of these investors favour North America, 36% have a global outlook, while 29% are interested in the European venture capital market. Hong Kong-based Novel Investments is an example of an active investor in venture capital, employing a global approach with a focus on Asia-Pacific. The investment company typically commits between $10mn and $20mn per private equity vehicle.
As shown in the chart above, two countries within Asia-Pacific stand out in the venture capital investor universe: Japan and China account for nearly half of venture capital investors, although India, Australia and South Korea also represent notable proportions.
Furthermore, with many sophisticated institutional investors, Japan has high participation rates in the venture capital industry: 67% of LPs in the country have a preference for venture capital fund investments, more than for growth (42%) and buyout (39%) strategies. Interestingly, with burgeoning start-up markets, China and India also have high levels of investor engagement with venture capital vehicles when compared to growth and buyout vehicles: 84% and 62% of institutions in India and China target venture capital funds respectively, far above the levels seen for growth (44% and 40%) and buyout (34% and 19%) vehicles.