Asian Startups: Bulging Bubble or Just The Beginning?
According to recent data released by both KPMG and CB Insights, VC investments in Asian startups rose 45 percent from Q2 2014 to Q2 2015. That year-on-year growth puts quarterly investment in Asia at USD $10.1 billion. This is an impressive figure, which represents triple that of Europe, though it still lags the $19 billion investment in the USA by a wide margin.
These rapidly increasing figures prompted CNBC’s Michelle Loh to ask if Asia’s newfound funding popularity was a sign of an impending bubble.
While this growth is incredible, at G3 Partners we think that this is just the beginning.
Here are three simple reasons why:
1.) Larger Addressable Markets and Rising Local Stars: Most of Asia’s economies are still developing (many at rapid pace). Many Asian countries are seeing rapid rural-to-urban migration. Rising salaries and access to the internet, often through portable smart devices, means that Asian populations can now much more easily be targeted by new technology products and services. Startups in South East Asia and China are only now beginning to realize the full potential of their home markets, let alone the potential of the pan-Asian or global markets.
2.) Going Global: Asian startups are only now beginning to go global. Only a handful of Asian startups have exposure beyond their home markets, due to barriers in language and culture. However, these barriers are quickly being eroded thanks to a number of factors. Asian entrepreneurs are now more prepared for global growth. Many Asian entrepreneurs have spent time in Silicon Valley, learning from the pros how to build and scale globally and are implementing those strategies from their home nations.
As regional startups begin to rise, there has also been a marked increase in a range of professional support for startups, aimed at helping them bridge to overseas markets. This includes a number of global-focused accelerators, such as JFDI in Singapore, HAXLR8R in Shenzhen and Sparklabs in Seoul. In addition marketing and PR agencies are springing up, helping Asian startups take their first confident steps abroad.
3.) Mega Markets Attracting Mega (foreign) Bucks: Asia is home to 60 percent of the world’s population. About 4.3 billion people live in Asia out of a global population of 7.2 billion people. This means that as the continent continues to develop economically, local startups will continue to increase in number. At the same time being in a position that their domestic are growing. This is a great recipe for VC success.
The numbers quoted above demonstrate that VC money is already flowing into and around the region. This is only likely to increase as startups begin to capitalize on the ‘mega opportunities’ emerging across the region, in some of the world’s most populous nations. Savvy US investors have already started betting big in Asia. These investors are already enjoying more favorable valuations and lower competition for deals in Asia, than in the US. As a ‘real bubble’ begins to emerge in the Silicon Valley ecosystem, opportunities further afield are becoming increasingly alluring.
Read Loh’s full article on your own for more interesting insights: