Singapore venture capital market on a roll in Q2

Tech start-up Sea's office at Fusionopolis. The firm raised US$550 million (S$757 million) in its latest funding round. In the second quarter, total VC investment in Singapore hit US$725.3 million, according to a KPMG report.
Tech start-up Sea's office at Fusionopolis. The firm raised US$550 million (S$757 million) in its latest funding round. In the second quarter, total VC investment in Singapore hit US$725.3 million, according to a KPMG report.BT PHOTO

Rise led by tech firm Sea as mega deals steal show globally: KPMG

A US$550 million (S$757 million) funding round by technology firm Sea - previously called Garena - helped propel Singapore's venture capital (VC) market to fresh heights in the second quarter.

This came amid a surge in VC investment volumes globally, driven mainly by more such mega deals and a concurrent rise in the number of "unicorns" - firms worth more than US$1 billion.

Total VC investment here soared to US$725.3 million - the second-highest level in the past 51/2 years - over the second quarter, with 26 deals recorded. This followed US$403 million invested in the preceding three months.

The rise was due largely to the US$550 million "mega round" by Sea, according to a report released by KPMG yesterday.

"This underscores the importance of mature companies fund-raising within a developing venture ecosystem such as Singapore," said Mr Chia Tek Yew, who heads financial services advisory at KPMG in Singapore.

Despite an ongoing slide in the number of VC deals done globally, there was a surge in investment over the second quarter, said the report.

Globally, VC deals shot up in value by 55.3 per cent to US$40.1 billion during the second quarter, propelled by an uptick in mega deals around the world.

The United States led VC investments over the quarter with US$21.8 billion, followed by Asia (US$12.7 billion) and Europe (US$4.1 billion).

The funding jump was driven by a resurgence in mega deals, which saw China ride-sharing service Didi Chuxing raising a record US$5.5 billion and news platform Toutiao doing a US$1 billion funding round.

The quarter also saw the birth of 16 new unicorns globally - the most since the third quarter of 2015. They included British virtual-reality startup Improbable, Chinese bicycle-sharing firm Mobike and Chicago-based healthcare technology firm Outcome Health.

Blockchain technology - not just in financial services but in other industries such as retail - is set to keep attracting investor interest, said the KPMG report.

Artificial intelligence, virtual reality and health tech are expected to be hot areas of investment as well for the remainder of the year.

The report also said VC firms still have a lot of funds in reserve to invest at a healthy rate for some time - even with relatively high prices.

This illustrates "the perception of considerable opportunities remaining in key, emergent technologies and geographic areas", it noted.

Jungle Ventures managing partner Amit Anand said deal volumes remain strong in Singapore and the rest of the region. VC investment in South-east Asia has consistently grown 40 per cent to 50 per cent year on year for the past four to five years, he noted.

A version of this article appeared in the print edition of The Straits Times on July 14, 2017, with the headline 'Singapore venture capital market on a roll in Q2'. Print Edition | Subscribe