Singapore VC deals reach US$725.3 million in Q2, second-highest level in five years

A file picture of the Singapore skyline. PHOTO: AFP
A file picture of the Singapore skyline. PHOTO: AFP

SINGAPORE - A US$550 million round of funding raised by tech company Sea - previously called Garena - helped propel Singapore's venture capital market to new heights in the second quarter.

This came amid a surge in venture capital investment volumes globally, mainly due to an increase in the number of such massive deals and a concurrent rise in the number of "unicorns" - company valued at more than US$1 billion.

Total venture capital investment in Singapore soared to US$725.3 million - its second-highest level in the past five and a half years - in the second quarter, with 26 deals recorded. This followed from US$403 million invested in the preceding three months, according to data released by KPMG on Thursday (Jul 13).

The surge was largely due to the US$550 million "mega-round" raised by Sea.

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

Despite an ongoing decline in the number of venture capital deals globally, there was a surge in investment in the second quarter, the KPMG report said.

Globally, venture capital deal value skyrocketed 55.3 percent to US$40.1 billion in the second quarter, propelled by an uptick in mega-deals around the world.

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

The increase in funding was driven by a resurgence in mega-deals, including Chinese ride-sharing service Didi Chuxing raising a record-breaking US$5.5 billion and news platform Toutiao's US$1 billion funding round.

The quarter also saw the birth of 16 new unicorn companies worldwide - the highest number since 2015. Among the new unicorns were British virtual reality startup Improbable, Chinese bicycle-sharing firm Mobike and Chicago-based healthcare technology company Outcome Health.

Blockchain technology - not just in financial services but also other industries like retail - is expected to continue to attract investor interest and attention, the KPMG report said.

Artificial intelligence, virtual reality and health tech are also expected to be hot areas of investment throughout the remainder of 2017.

The KPMG report also said VC firms still have a lot of funds in reserve to support a healthy rate of investing for some time, even in a climate where prices are relatively high.

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