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Asia's Venture Capital Eclipse: a Preqin and Vertex ASIA’S VENTURE CAPITAL ECLIPSE: A PREQIN AND VERTEX VENTURES STUDY October 2018 | CONTENTS 4 A WORD FROM 24 ASIAN VENTURE PREQIN’S CEO CAPITAL FUND MANAGER ACTIVITY 5 AT A GLANCE 25 CAN SOUTHEAST ASIA 6 A WORD FROM VERTEX EMULATE CHINA? VENTURES’ CEO 31 IN FOCUS: ASEAN 8 CHINA: INNOVATIVE FUTURE 32 ASIAN VENTURE CAPITAL PERFORMANCE 13 IN FOCUS: GREATER CHINA 33 IN FOCUS: NORTHEAST ASIA 14 VENTURE CAPITAL FUNDRAISING IN ASIA 34 ASIAN VENTURE CAPITAL DEALS 17 INDIA: THE GROWING ENTERPRISE MARKET 42 INVESTORS 23 IN FOCUS: SOUTH ASIA All rights reserved. The entire contents of Asia’s Venture Capital Eclipse: A Preqin and Vertex Ventures Study, October 2018 are the Copyright of Preqin Ltd. No part of this publication or any information contained in it may be copied, transmitted by any electronic means, or stored in any electronic or other data storage medium, or printed or published in any document, report or publication, without the express prior written approval of Preqin Ltd. The information presented in Asia’s Venture Capital Eclipse: A Preqin and Vertex Ventures Study, October 2018 is for information purposes only and does not constitute and should not be construed as a solicitation or other offer, or recommendation to acquire or dispose of any investment or to engage in any other transaction, or as advice of any nature whatsoever. If the reader seeks advice rather than information then he should seek an independent financial advisor and hereby agrees that he will not hold Preqin Ltd. responsible in law or equity for any decisions of whatever nature the reader makes or refrains from making following its use of Asia’s Venture Capital Eclipse: A Preqin and Vertex Ventures Study, October 2018. While reasonable efforts have been made to obtain information from sources that are believed to be accurate, and to confirm the accuracy of such information wherever possible, Preqin Ltd. does not make any representation or warranty that the information or opinions contained in Asia’s Venture Capital Eclipse: A Preqin and Vertex Ventures Study, October 2018 are accurate, reliable, up-to-date or complete. Although every reasonable effort has been made to ensure the accuracy of this publication Preqin Ltd. does not accept any responsibility for any errors or omissions within Asia’s Venture Capital Eclipse: A Preqin and Vertex Ventures Study, October 2018 or for any expense or other loss alleged to have arisen in any way with a reader’s use of this publication. | 1 ASIA’S VENTURE CAPITAL ECLIPSE: A PREQIN AND VERTEX VENTURES STUDY A WORD FROM PREQIN’S CEO elcome to our new report, “Asia’s Venture Capital Eclipse: A Preqin and Vertex Ventures Study”, that we are proud to present alongside our partners in the project, Vertex WVentures, a leading global venture capital investor, and part of Singapore’s Temasek group. ‘Eclipse’ is a strong word, but it has been chosen carefully. We are all accustomed to using superlatives when describing the scale and pace of growth in MARK O’HARE Asia-Pacific economies, and nowhere is this more CEO, Preqin evident than in the venture capital industry: Asia- focused venture capital assets under management have more than doubled since December 2014 An important aspect of venture capital in Asia is the ($88bn in 2014 vs. $221bn in 2017), highlighting extent to which investors from around the globe are the remarkable growth in the industry, which now participating in the opportunity. Asia-based investors rivals that of the US for its scale and diversity. This account for approximately 28% of the interest that investment has driven significant success: according Preqin has seen in Asian venture capital, but North to the Global Startup Ecosystem Report 2018, about America leads with 53% of all investor interest in one in three unicorns globally now come from China, Asia, while Europe accounts for a further 15%. The comparing favourably with 41% in the US. market opportunities and the portfolio companies may be Asian, but the investment opportunities are The pace of growth may have taken many by truly global, and they are benefitting all investors. surprise, but with hindsight it was entirely to be expected. The industry’s growth reflects the This connectedness runs through the entire venture confluence of several factors: rapid economic capital ecosystem, and many leading players have growth, young and well-educated populations, high positioned themselves to maximum advantage – levels of online activity (800 million internet users firms like Vertex Ventures that operate as a network in China), distinct regional and local nuances to of venture firms focused on their individual regional peoples’ habits and requirements, and an astute markets within Asia, but benefit from the network global ecosystem of investors capable of spotting the advantages of being local in many places. opportunities that this brings. It is a very exciting – and challenging! – time to be The result is a vibrant venture capital ecosystem at the forefront of venture capital investing in Asia. capable of driving innovation at pace and scale; Preqin is committed to investing in our research Preqin’s online platform now tracks over 2,600 and product to bring you the best possible data to ‘institutional-quality’ venture capital firms in Asia. help you chart your course through the exciting Although China accounts for the largest portion of opportunities ahead. Together with Vertex Ventures these firms, significant clusters of venture capital we hope that you will find this study and report to be activity also exist throughout Asia. The dynamics of a helpful guide. each sub-region differ, and the following pages delve into some of the details. Happy investing! 4 ©Preqin Ltd. | www.preqin.com DOWNLOAD DATA PACK: www.preqin.com/avce18 AT A GLANCE Location of Asia-Based Venture Capital Fund Managers and Institutional Investors 1,063 255 84 73 110 137 South Japan China Korea 134 74 45 42 India Hong Kong 65 36 Singapore Fund Managers Investors Source: Preqin Pro | 5 ASIA’S VENTURE CAPITAL ECLIPSE: A PREQIN AND VERTEX VENTURES STUDY A WORD FROM VERTEX VENTURES’ CEO ertex Ventures was started with the keen sense that technologies would be a critical differentiator in an increasingly competitive world. More than ever, accelerating technological advances and innovation will Vbring even greater disruptions to economies and the world. Focused on our mission to seek out promising disruptive, transformational leaders from around the CHUA KEE LOCK world and nurturing them into prospective global champions, Vertex today is organized as a global CEO, Vertex Holdings network of independently managed and localized Managing Partner, Vertex Ventures SEA & India VC funds. Our global VC franchise comprises four early-stage, IT-focused funds across China, Israel, the US, Southeast Asia and India, as well as a global representing an impressive array of investor- healthcare fund. Vertex also has a growth-stage- operator competencies and experience. focused fund that looks at follow-on opportunities from its portfolio of early-stage companies. We are proud to have built many great technology companies that improve people’s lives and transform At Vertex, we believe that innovation comes from all businesses. If we look to the answer as to why over the world, requiring in-depth, local knowledge we have achieved so much over the years, it was and networks to access the best investment because we unleashed the energy and individual opportunities. At the same time, markets for genius of entrepreneurs driven by the sole objective innovative products and services are global. Our of identifying, investing and supporting global global-local structure enables our professional, champions. In doing so, we have also delivered localized investment teams to be deeply connected outsized returns to our investors. with the innovation markets and ecosystems they operate in. This is important from both deal-sourcing Building on the foundations of our unique parentage or portfolio-support perspectives, while having the and support from Temasek, deep operating unique advantage of proprietary support from the experience and credible track record, Vertex is global Vertex network. Across Vertex today, we have looking ahead towards building a differentiated and a deep, global bench of over 40 VC professionals, enduring Global Venture Capital Platform. 6 ©Preqin Ltd. | www.preqin.com ASIA’S VENTURE CAPITAL ECLIPSE: A PREQIN AND VERTEX VENTURES STUDY CHINA: INNOVATIVE FUTURE How has China’s tech landscape evolved over the years and how do you see it developing? Over the years, China’s vast population has shown a willingness to embrace new technologies. Smartphone shipments have increased from 212 million in 2012 to 468 million in 2017. The Chinese also use online services for gaming, social media and shopping, registering online sales of $650bn, spawning a $22bn online gaming industry as well as increased social media use – as evidenced by WeChat’s monthly active users rising from 100 TAY CHOON CHONG million in 2012 to over 1 billion in early 2018. Managing Partner, Vertex Ventures China China is also one of the world’s leading players in digital payments, with mobile payments exceeding sustain that advantage – giving it a fair chance of $12tn for the first 10 months of 2017, nearly 40% surpassing the rest of the world in innovation. more than 2016. In urban areas, China has practically gone cashless. What do you think is unique about China’s innovation model? In 2000, there were less than 10 million internet China has a vibrant ecosystem with no shortage of users in China, now there are 800 million internet funding. It also has a rising middle class that is open users. The market has grown over 80x. Its market to new business models, services and products like potential is at least 5x larger than that of the US; DJI’s drones.
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