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VC investment in Asia remained subdued in Q3’19, amid growing concerns surrounding the US-China trade war and the slowdown in China’s economy. Many VC investors across the region have become more cautious, focusing their investments on late stage companies with proven technologies and business models, large sales, or well-defined paths to profitability.

VC investment in China fell significantly in the first three quarters of 2019 compared to 2018, with only two deals above the $1 billion mark – neither in Q3’19. During Q3’19, the largest deals in China included a $600 million investment by Toyota into Didi Chuxing, a $530 million funding round by CHJ Automotive, and a $434 million raise by Q&A platform company Zhihu. Despite the decline in VC funding overall, organizations in key sectors continued attract VC investment. During Q3’19, the automotive and mobility sectors were particularly hot – with China-based automotive and mobility-focused companies.

Trends to watch for in Asia

Looking forward to Q4’19, VC investment in Asia is expected to remain moderate at best – particularly in China, where the economic and geopolitical tensions are expected to continue. China’s Central Government is not standing still, however. It is forging ahead with policy reforms aimed at improving and modernizing regulations for a wide range of industries, including insurance, finance, capital markets, and healthcare. While the private sector is still working to understand how these changes will affect them, over time, these changes will likely have a positive effect on the VC market in China.

VC investment in India is expected to remain strong in Q4’19 and into Q1’19, however, given the current credit squeeze it might not be as robust as it has been over the past two quarters.

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Venture Pulse Q3'19 - Asia quote by Irene Chu
Venture Pulse Q3'19 - Asia infographic