Asia Challenges North America As Most Active Continent For Venture Capital Deals In Q3 2015 by Preqin

Venture capital deals in Asia comprised 38% of the global number, and 45% of global deal value in the quarter, while North America represented 44% of both global number and value

The venture capital industry in Asia has seen strong growth over the past year, and in Q3 the aggregate value of deals was comparable to the total value of deals in North America. India and China, the largest part of the Asian industry, marked 709 financings in the quarter, worth a combined $16.9bn. There were 932 venture capital deals in North America in the same period, worth an aggregate $17.5bn. Asia’s share of global deal flow has increased by seven percentage points from Q2 to Q3 2015, and its share of deal value has increased by nine percentage points. At the same time, the North American market share of the number of deals dropped by six percentage points from Q2, while the aggregate value that the region contributed to the global total fell by nine percentage points from 53% in Q2 to 44% in Q3.

Venture Capital Deals

Other Key Venture Capital Deal Market Facts:

  • Worldwide Figures: Globally, there were 2,121 venture capital financings in Q3 2015, worth a combined $39.8bn. Although this marks a 9% drop in deal numbers from Q3 2014, the aggregate value is 88% higher than the same period last year.
  • European Decline: Europe witnessed 297 deals in Q3, a 7% drop from last quarter. In 2015 YTD, 980 deals have been seen in the region, a 25% decrease from the 1,307 deals in the first three quarters of 2014.
  • Chinese Growth: In Q3 2015, the aggregate value of deals in Greater China increased 88% from Q1. In that quarter, there were 252 deals worth a combined $6.9bn, while in Q3 there were 437 deals, worth $13bn.
  • Financing Rounds: Angel and seed investments comprised 22% of venture capital deals in Q3, unchanged from Q2. Series A deals comprised 20% of the number of deals, and series B comprised 10%. Add-on deals decreased from 8% of the number of deals in Q2 to 5% in Q3.
  • Average Deal Size: The mean value of venture capital deals has increased across all financing stages from 2014 to 2015 YTD. Average series A deal value has increased 35%, from $7.9mn in 2014 to $10.7mn for 2015 YTD. Average venture debt deal size was stable in 2013 and 2014, at $9.7mn and $9.6mn respectively, but has now increased to $40.9mn in 2015 YTD.
  • Biggest Deals: The two largest investments in Q3 2015 were both in Chinese transport technology firm Didi Kuaidi. The company received $2bn in July, and a further $1bn in September, from a consortium of investors including Alibaba and CIC. The next largest financing was $1bn to Uber Technologies Inc., from Microsoft and Times Internet. Nine of the ten biggest venture capital deals in Q3 were based in Asia.
  • Dry Powder: The unspent capital available to venture capital firms currently stands at $143bn globally, up slightly from the $141bn in dry powder recorded at the end of last quarter.

Venture Capital Deals

Comment:

“The venture capital industry is developing in two different directions between emerging and mature markets. In emerging markets, particularly in Asia, rapidly developing economies like China and India are providing increasing numbers of opportunities for investors and fund managers. While average deal size is increasing slightly, the key driver of growth is the increasing number of deals.

In the more mature markets of North America and Europe, deal numbers have fallen, and the total number of deals in 2015 so far is a quarter lower than in the first three quarters of 2014. However, average deal sizes are still rising in these regions, especially for later stage and debt financings, and now stand at record levels.”

Venture Capital Deals

Christopher Elvin, Head of Private Equity Products – Preqin