The FINANCIAL — The US and China remain the most preferred investment destinations for venture capital (VC) investors globally. High value VC investments (>=US$100m) also remain concentrated in the US and China with both countries collectively accounting for around 70% of volume of such deals and capital raised though these deals in the fourth quarter (Q4) of 2019, according to GlobalData, a leading data and analytics company.
The US witnessed 42 high value deals and remained the largest recipient of high value deals in volume terms during Q4 2019, followed by China with 28 such deals. However, China surpassed the US in total VC investments raised through these high value deals.
Some of the notable high value VC funding raised by American firms during Q4 2019 included US$635m raised by Bright Health, US$500m raised by 1debit (Chime) and US$400m each raised by Databricks and Convoy.
On the other hand, funding raised by Chinese firms were also much higher in value compared to American firms. Some of the notable high value VC funding raised by Chinese firms during Q4 2019 included US$3.7bn raised by Tenglong Holdings and US$3bn raised by Kuaishou Technology.
Aurojyoti Bose, Financial Deals Analyst at GlobalData, says: “Asia-Pacific is undergoing an evolution with countries in the region closing in on the gap with the US, signaling significant VC investors’ traction despite slowing economy in some of the key markets, geo-political tensions and trade dispute with other nations. The trend suggests VC investors, though cautious, are showcasing confidence in start-ups in the region.”
High value VC deals
Asia-Pacific countries other than China that made it to the list of top ten countries by high value deals included India, Hong Kong and South Korea. These four countries collectively witnessed more than 40 high value deals worth ~US$15bn during Q4 2019, which is much higher compared to its European counterparts.
Germany, France and the UK, the three European countries to feature in the list of top ten countries, collectively raised less than US$2bn across seven high value deals during Q4 2019.
Within Europe, Germany surpassed the UK in terms of high value deals volume as well as the capital raised through these deals during Q4 2019. France, despite relatively lower number of high value deals, also outpaced the UK in terms of capital raised through high value deals during the quarter.
Bose concludes: “The high value VC funding activity is likely to continue and remain strong in the US in future. Moreover, with improving conditions and built-up investor confidence, Asia-Pacific countries such as China and India are likely to witness a surge in VC funding activity and high value deals. Going forward, we may see more companies like Alibaba emerging from the region.”
