Hong Kong’s vc hits record US$1.14B

Singapore Business Review - - FINANCIAL INSIGHT: VENTURE CAPITAL - Sources: Hong Kong Ven­ture Cap­i­tal As­so­ci­a­tion

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.”

Tech­nol­ogy-driven mo­men­tum

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

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