Venture capital investment for startups in Asia, across all funding stages, dropped to its lowest in Q3 2022, as the private sector experiences major drawbacks in monetary support from global investors.
Amidst growing climate urgency, economic turbulence, and the persisting effects of the Covid-19 pandemic, major venture capitalists have taken a conservative approach, slowing down on distributing funding to the private sector. Alongside the recent market regression, venture capital (VC) funding in Asia has declined by over 26% from Q2 this year, and a shocking 56% from Q3 in 2021.
VC funding for Asia-based startups has plummeted by a significant amount, since last hitting its lowest in the first quarter of 2020. Early on during the global pandemic crisis, private companies in Asia managed an accumulated value of only US$19.6 billion.
While overall investments across the Asia Pacific region sank substantially, especially in Australia, Singapore, Japan, and India, China reported a slight increase in startup funding in Q3 of 2022.
Late-stage funding and growth rounds led with the most prominent drop, falling by up to 42% from Q2 this year, with only US$9.2 billion raised in capital. While the trend was much anticipated in Asia given past investment inclination, the drop exceeded by a far greater percentage compared to other funding stages.
Despite the plunge in investments, a few tech giants in the region were able to secure large-scale deals, namely Singapore’s rising e-commerce platform, Lazada Group, raising US$912.5 million in a funding round backed by Alibaba.
In response to the decline in later-stage capital growth, the early-on funding rounds witnessed a slight increase in investments in Q3, with the total raised amounting US$10.4 billion. However, early-stage deals still dropped by 28%, in comparison to last year’s Q3.
While seed funding rounds, along with angel investments, dropped by 23% to $1.6 billion from Q2 2022, the number actually rose by up to 13% from the same quarter in 2021.
Last year was proven to be fruitful for startup investments in the region with over US$175 billion invested into the robust market. While venture capital growth and late-stage funding have been rather slow around the globe, Asia experienced a much more devastating plummet in the investment sector within the region.
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