Asia venture funding continues decline

KUALA LUMPUR (July 12): For the second quarter in a row, the Asia venture market declined, in tandem with global markets.

In a report on Monday (July 11), Crunchbase — which tracks trends, investments and news of global companies from start-ups to the Fortune 1000 — said the second quarter of 2022 saw a 19% decline when compared to the first, and a 20% drop from the same quarter in 2021.

It said funding to start-ups in the region hit US$28.1 billion (about RM124.68 billion), a significant decline from the US$51.5 billion raised in just the final quarter of last year.

It is also the lowest total since the first quarter of 2020.

Crunchbase said the deal flow also took a hit for a second consecutive quarter, with only 1,513 funding rounds announced — down 20% from the first quarter and 11% from last year’s second quarter.

It also represented a major decrease from the high of 2,246 deals closed in the fourth quarter of last year.

The firm said while it is important to note that 2021 was a record year for the continent as all levels of funding — from seed to late and tech growth rounds — saw a decline in total dollars even from the first quarter.

Late-stage drop

Crunchbase said not surprisingly, larger late rounds saw the biggest declines — a trend that is happening globally as valuations fall and investors are leery of dropping big money after significant losses in their portfolios.

It said that in the second quarter, late and tech growth rounds totalled US$15.7 billion — a huge 23% drop quarter-on-quarter and an even more staggering drop of 35% from the second quarter of last year.

The firm said that to put that drop in further perspective, more than US$34 billion was invested in such rounds in both the third and fourth quarters of last year — a clear signal that the venture market in Asia is well off the highs of 2021.

It said the drop in value corresponded with a drop in the number of later-stage deals.

The second quarter saw only 200 such deals announced, down 26% from the first quarter and 13% for the same quarter last year.

The record fourth quarter last year saw more than 350 deals announced.