VC fundrais­ing hits US$2.28B in 2018 thanks to boost from home­grown tech star­tups

Singapore Business Review - - FINANCIAL INSIGHT: VENTURE CAPITAL -

The big­gest deal was the US$1.2B in­vest­ment in fa­cial recog­ni­tion tech com­pany Sense­time.

The num­ber of venture cap­i­tal (VC), and tech­nol­ogy deals in Hong Kong re­mained un­changed in 2018 at 42 deals in to­tal, but their com­bined value jumped 81%, pow­ered by what an­a­lysts noted as a “break­out” class of home­grown star­tups, pri­mar­ily in the tech­nol­ogy space. VC and tech­nol­ogy in­vest­ments in Hong Kong hit US$2.287B in 2018 from US$1.262B in 2017, ac­cord­ing to data from the Hong Kong Venture Cap­i­tal and Pri­vate Eq­uity As­so­ci­a­tion (HKVCA).

Of the VC and tech­nol­ogy trans­ac­tions in 2018, the big­gest by far was the US$1.2B in­vest­ment in fa­cial­recog­ni­tion tech­nol­ogy com­pany Sense­time by high-pro­file in­vestors in­clud­ing Alibaba In­vest­ment, Te­masek, Hopu Cap­i­tal, Sil­ver Lake and Tiger Global. The sec­ond-largest deal was the US$300M in­vest­ment in Tink Labs by an undis­closed group of in­vest­ment funds and strate­gic in­vestors in a deal that val­ues the de­vel­oper of smart­phones for ho­tel room guests at about US$1.5B. On­line lo­gis­tics plat­form Go­go­van at­tracted US$250M from In­no­vi­sion Cap­i­tal, Hon­grun Cap­i­tal and the Rus­sia-china In­vest­ment Fund, amongst other in­vestors, in what marked as the third­biggest VC and tech­nol­ogy trans­ac­tion in 2018.

The tech­nol­ogy, me­dia and tele­com sec­tor ac­counted for a dom­i­nant 89% of all VC and tech­nol­ogy deals by vol­ume in 2018, ac­cord­ing to HKVCA, with the health­care, con­sumer & re­tail and busi­ness ser­vices split­ting the re­main­der at 6%, 3% and 2%, re­spec­tively. The tech­nol­ogy sec­tor will con­tinue to to draw in VC funds look­ing to com­pete for higher-qual­ity targets in 2019. “You are start­ing to see a very in­ter­est­ing devel­op­ment in the emer­gence of break­out com­pa­nies com­ing out of HK. I would say these are still iso­lated in­ci­dents; they haven’t cre­ated a clus­ter ef­fect yet. But I think quite soon in other en­tre­pre­neur­ial clus­ters you will start to see some break­out ex­am­ples,” said De­nis Tse, chair, re­search com­mit­tee of HKVCA.

“AI is go­ing to be one of the key fo­cus ar­eas in the HK mar­ket go­ing for­ward,” said Alyssa Aaron, di­rec­tor of in­vest­ments at Nest Ven­tures. “In the wake of the Chi­nese govern­ment’s am­bi­tion to be a world leader in AI by 2030, in­vestors are pour­ing bil­lions into AI star­tups sim­i­lar to Sense­time.”

Deal #1: Fa­cial recog­ni­tion uni­corn Sense­time scored a bil­lion-dol­lar in­vest­ment from alibaba

Deal #2: Tink Labs, which de­vel­ops smart­phones for ho­tel guests, is val­ued at about US$1.5B

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