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Venture Capital in Asia Poised for Landmark 2017, Preqin Says

China State-Owned Venture Investment Fund is seeking to raise the largest venture capital fund ever.

  • Sheila Dang

Venture capital fundraising in Asia is on track to make 2017 a landmark year, with the Chinese market benefiting in part from government support for start-up financing, according to financial data research firm Preqin.

About 200 funds are currently raising capital for opportunities in Asia, including the China State-Owned Venture Investment Fund, which has a target size of 200 billion yuan, or about $29 billion. If China succeeds, it will be home to the largest venture capital fund ever, Preqin said in a March 23 statement.

“In particular, China has played a central role in the growth of the Asian market, and is now beginning to rival Silicon Valley as a hub of venture capital activity,” Felice Egidio, Preqin’s head of venture capital products, said in the statement. “The Chinese government has looked to encourage entrepreneurship by providing support and financing for start-ups alongside private firms,” he said.

At the beginning of March, 183 Asia-focused funds were seeking to raise a combined $56 billion in capital, almost triple the $20 billion that 130 funds were targeting at the start of 2016, Preqin data show. The region’s venture capital market is expanding as both domestic and international investors are looking for deals backing start-ups in Asia, according to Egidio.

Preqin’s Private Equity and Venture Capital Spotlight report this month examines first-time venture capital funds, which aim to raise $41 billion globally. The top four are focused on Asia and managed by Chinese firms. The Guangxi Beibu Gulf Industrial Investment Fund, the largest of the first-time funds, is targeting $3.2 billion to invest in environmental services and energy in China.

While venture capital interest in Asia is on the rise this year, North America remains the dominant market for investors targeting start-ups, largely due to the concentration of managers around California’s Silicon Valley. Sixty-two percent of the global capital raised in 2016 focused on North America, a percentage that has held steady since 2014, according to Preqin. That compares with a 24 percent share of the global market for Asia-focused venture capital.