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