VC investment in Asia was severely impacted by COVID-19 in Q1’20 due to its early exposure to COVID-19. In Q2’20, the VC market began to see some recovery, particularly in China. While the pandemic is still having a major impact in jurisdictions like India, the increasing focus on recovery in others is creating cautious optimism in the overarching Asia market heading into Q3’20.
At mid-year, corporate VC investment was only slightly off the pace set last year, a sign that corporates remain confident in opportunities in the Asia region. In China, the large platform companies began to resume investment activity in April. These and other large corporate investors in Asia are looking to see what companies have the agility, versatility, and strong management needed to survive. They are also looking for opportunities to make investments given the downward pressure on valuations.
After outperforming China in terms of VC investment in fintech in Q1’20, fintech continued to be the strongest area of focus for VC investors in India in Q2’20, led by the $397 million raise by lending company Navi Technologies.
Despite the slowdown in VC funding, India remains a key market for investors. In April, Facebook announced a massive $5.7 billion equity investment in Reliance Jio — India’s largest telecom operator.2 During Q2’20, Reliance Jio launched both JioMart — a direct e-commerce platform and a JioMart Whatsapp-based platform.4 The strength of India’s VC.
After outperforming China in terms of VC investment in fintech in Q1’20, fintech continued to be the strongest area of focus for VC investors in India in Q2’20, led by the $397 million raise by lending company Navi Technologies. Despite the slowdown in VC funding, India remains a key market for investors. In April, Facebook announced a massive $5.7 billion equity investment in Reliance Jio — India’s largest telecom operator.2 During Q2’20, Reliance Jio launched both JioMart3 — a direct e-commerce platform and a JioMart Whatsapp-based platform.4 The strength of India’s VC.
Trends to watch for in Asia
Despite short-term challenges, the outlook for the VC market in Asia remains relatively optimistic as the region continues with its recovery from COVID-19. There will likely be continued downward pressure on valuations over the next quarter, however, along with increasing consolidation in sectors particularly hard hit by the economic downturn caused by the pandemic.
In China, there continues to be concern regarding the ongoing trade dispute with the US, which could affect investment. VC investors in China will likely remain very interested in areas like 5G, smart cities, IoT, and health care innovation. VC investment in India is expected to remain muted in Q3’20, with the exception of fintech, healthtech, agritech, and gaming.
