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VC investment in Asia recorded $24.5B across 2,206 deals, finds KPMG’s analysis

Aug 1, 2022

Energy continued to be one of the hottest sectors for investment across Asia, with companies raising large funding rounds even at early stages.

Global venture capital investments reached USD120.2 billion across 8,420 deals in the second quarter of 2022, according to the latest edition of KPMG Private Enterprise’s Venture Pulse Report.

Energy continued to be one of the hottest sectors for investment across Asia, with companies raising large funding rounds even at early stages. During Q2’22, China-based Gokin Solar raised USD251 million during a Series A funding round. The large early-stage funding rounds seen in recent quarters likely reflect the fact that energy startups are more capital intensive than startups in other sectors.

The Asian market remained sluggish with VC investment slipping to USD24.5billion across 2,206 deals in the second quarter, the report said.

According to the report, domestic VC funds are taking a stronger role in supporting fast-growing startups in China as VC funding in the country continues to tilt away from US dollar-based VC funds to yuan-based funds during Q2’22.

Looking ahead, VC investment in China is expected to remain relatively soft in Q3’22 given the ongoing COVID-19 situation and the uncertain geopolitical and macroeconomic environment. Fundraising activity in China’s VC market is also expected to remain muted.

M&A activity across Asia, however, could get a boost heading into Q3’22 as investors and corporates look to take advantage of lower valuations and the tightening funding environment to tap inorganic growth opportunities and the chance to gain market share.

In China, the energy, semiconductor and ESG sectors are expected to remain attractive for investors.

In Hong Kong, the healthtech, insurtech and greentech industries are expected to benefit from increased VC investment in the coming months amid a challenging overall funding landscape. The city’s development as a sustainable finance hub remained a high priority during Q2’22, with the Hong Kong Monetary Authority continuing to work on ways to drive green finance initiatives forward through its work with local and international banks.