Hong Kong’s vc hits record US$1.14B
When venture capital investment in Hong Kong more than doubled year-over-year in 2017, analysts took note that the island is starting to follow in the footsteps of Singapore and is poised to have its own funding boom, helped along by strong government support for local startups and robust dealmaking in the technology and logistics sectors.
Venture capital investment in Hong Kong reached a record US$1.14 billion in 2017, continuing a rapid growth trend over the past three years, data from the Hong
Kong Venture Capital and Private Equity Association, or HKVCA, showed. This amount was more than double from US$547.4 billion in 2016 and up sevenfold from US$159.1 million in 2014. Average deal size in 2017 climbed to US$42.4 million, also more than doubling from US$19.6 million and up more than tenfold from US$3.9 million in 2014.
The recent growth in venture capital investment has been underpinned by Hong Kong’s favourable startup environment, said Dennis Plomp, principal at Nest
Ventures, citing the rise in new coworking spaces and venture builders setting up shop in the island to help incubate startups. Plomp reckoned another key driver to the venture capital investment momentum is the steady improvement in funding availability over the past two years. “The funding does not only come from local investors, but also from Chinese and Southeast Asian capital providers. Active local investors include Alibaba Entrepreneurs Fund and the Hong Kong X Technology Fund,” he said. “Furthermore, the pool of angel investor capital has grown considerably.”
Hong Kong’s venture capital scene is “flourishing” with a focus on new technologies such as AI, blockchain, fintech, and healthtech, said Lap Man, co-founder and managing partner at Beyond Ventures, a Hong Kong-focused venture capital fund. In April 2018, one of the most notable deals was Sensetime raising US$600 million in its Series C round of funding, with Chinese technology behemoth Alibaba Group taking the lead role and Temasek and Suning, among others participating. Man, whose company Beyond Ventures is one of the shareholders before this round, reckoned this was regarded as the biggest round of funding in an AI company and the largest technology startup funding so far. Plomp said Sensetime’s Series C round placed the firm’s valuation at US$4.5B.
Venture capital investment in Hong Kong