Venture Capital in Asia: Landscape Overview

BFP Silver is a VC fund of funds investing in early-stage VC funds globally. You can find some notes below on why investing in Greater China and South-East Asia is an important part of BFP Silver’s asset allocation.

State of Venture Capital in Asia

Long-term growth and strong returns in VC investing despite decline since the market correction in 2015

• 162 VC Funds currently raising money in Asia
• VC performance in Asia has been consistently strong recently, with median net IRRs of ≈15% for 2011–2013 vintage funds outperforming North America and Europe-focused funds

Greater China — Second Largest VC Market Globally

• Second largest economy in the world (after the US) with 1.3bn mobile users
• Some of largest global internet companies (e.g. Alibaba, Baidu) and VC deals (e.g. Didi, Ele.me)
• Beijing as global number 2 in terms of VC funding with $1.9bn in Q3 ’16 (San Francisco with $3.3bn)
• According to OECD, China will surpass US by 2019 to become №1 in R&D spending globally

South-East Asia — The Next China?

• Large population with strong consumer demographics leads to great opportunities

• 260m internet users, estimated to grow to ≈480m by 2020 (≈3.8m / month)
• SE Asia’s internet economy of $30bn expected to grow to $200bn by 2025

Selected Players in the Ecosystem

Drivers for VC Firms

• Reasonable entry valuations compared to other regions like the US
• Greater interest from deep-pocket investors in later stages facilitate follow-on financing rounds
• Subsidies from governmental organizations
• Due to growing entrepreneurial culture in China and Singapore start-up scene attracts more and more talent
• Massive amounts of R&D spending in China leads to technological advantages versus other regions globally

Vertical Trends