Asia venture capital-backed (VC) companies raised $12.3 billion in investment, largely due to mega-rounds in China, according to KPMG’s Venture Pulse Q3 2017 report.
China continues to dominate the Asia market, with 10 out of the top 12 deals garnering a $10.2 billion share of $12.3 billion worth of investment this quarter.
Corporate VC participation remains high in Asia as Chinese powerhouses Alibaba, Tencent and JD.com are all actively investing in promising startups, particularly in Southeast Asia.
Southeast Asian countries, such as Indonesia, for instance, has been a hotspot for VC funding rounds from China’s technology giants, which surge into the country.
Some of the recent VC funding examples include Chinese e-commerce giant Alibaba’s 1.1 billion investment into Tokopedia in the middle of August. The Chinese company also owns an 83% stake in Lazada, the Southeast Asian e-commerce group.
Furthermore, another Chinese tech giant Tencent is an investor in Garena, an online gaming and services company, which has an e-commerce subsidiary, Shopee, in Indonesia.
Chinese e-commerce company JD.com and Alibaba’s Ant Financial, have also been making plays into Indonesia over the past year, with the e-commerce marketplace forecast to hit $130 billion by 2020.
‘Indonesia is a very sweet spot. The biggest driver of e-commerce in Indonesia is connectivity,’ S.K. Selvan, portfolio manager of LionGlobal Disruptive Innovative fund at Lion Global Investors told Citywire Asia.
In fact, investors can get exposure to the e-commerce sector in Indonesia through those Chinese giants, added Sundeep Gantori, UBS Wealth Management’s global technology analyst.
‘With lack of direct exposure, we indirectly play Indonesia e-commerce market through the Chinese internet companies, who are the dominant players; and telecom operators, who stand to benefit from increased data usage,’ he said.
Indonesia’s Ministry of Communication and Informatics forecasts that the country will have 100 million active mobile phone users by 2020. As mobile penetration increases, and mobile payments become more widely used, e-commerce will grow in step.
Besides Southeast Asia region, the KPMG report also said that Chinese technology giants prefer to invest in promising start-ups India and Europe.