Asia Venture Funding Hits 10-Year Low In Q3
Venture funding in Asia continues to sink — hitting its lowest total in nearly a decade last quarter.
Total venture dollars to Asia-based startups fell to $13.2 billion — its smallest total since it hit $13 billion in Q1 2015 — according to Crunchbase data.
The number also represents a 13% decline from Q2 and a massive 44% drop from last year when that total hit $23.8 billion.
Deal flow also continued to plummet, with only 1,509 deals announced in Q3, an 8% decrease from Q2 and a 23% drop from last year.
Not even the AI craze could save the venture numbers for Q3, as AI-related startups in Asia raised only $2.1 billion, down 20% from Q2 and the same as last year.
Late-stage rounds struggle
The biggest culprit to Asia’s sinking venture funding fortunes remains late-stage growth rounds. Such rounds totaled only $5.8 billion, down 30% from Q2 and a decline of 62% from the $15.3 billion raised by late-stage startups last year.
The number also represents the lowest total for late-stage funding in Asia since before 2015.
Big rounds were few and far between, but did include:
- China-based AI startup Baichuan Intelligence raised a $390 million Series A.
- China-based automotive-grade chip manufacturing company XLMEC raised a nearly $344 million round.
- India-based e-grocery startup Zepto raised a $340 million Series G.
- China-based AI firm Moonshot AI raised a $300 million round.
Deal flow remained consistent with Q2 with 139 rounds announced, but that did represent a 17% dropoff from Q3 last year.
Early stage stagnant
Good early-stage numbers do not make up for late-stage rounds crashing, and Asia’s numbers here were even less than good from a venture capital perspective.
Numbers were down — but not as dramatically as late stage. Early-stage startups raised $5.6 billion last quarter — a 12% bump from Q2, but a 17% falloff from the $6.8 billion raised last year.
Deal flow was relatively stagnant with Q2, as 508 deals were consummated. However, that was a 22% drop from the same quarter last year.
Deal volume, however, was significantly down for the quarter. Only 862 angel and seed rounds were closed in Q3, down 10% from Q2 and 25% from last year when 1,152 such rounds were announced.
Country breakdown
Not surprisingly, China’s long venture slide is one of the main culprits for Asia’s funding fortunes. China-based startups raised only $6 billion in Q3, a modest 19% drop from Q2, but an astounding 61% plummet from Q3 last year.
Similarly, Israeli startups struggled, raising only $700 million — down 23% from Q2 and 6% from last year — as conflict continues in the region.
The one bright spot on the Asia venture front may be Japan. Japanese startups locked up $1.3 billion, a whopping 95% increase from Q2 and up 58% from last year. That included a nearly $133 million Series E for human resource startup SmartHR.
What it means
While it’s important to remember Asia is not the only market seeing venture funding drop — global venture funding in the third quarter was down 16% quarter to quarter and 15% year to year — its drop from last year was much more significant.
One of the reasons clearly seems to be AI. Globally, artificial intelligence startups reached close to $19 billion, or 28% of all venture dollars in the third quarter.
However, Asia’s AI venture market seems to be being left behind — with artificial intelligence-related companies making up only 16% of that region’s startup funding in Q3 and only 17% in Q2.
While funding to AI startups seems to be covering up several issues in the global venture market, Asia is not getting that same benefit.
Read the full article: https://news.crunchbase.com/venture/asia-startup-funding-recap-q3-2024/
