SA国际传媒

Even as the rest of the world saw new highs in 2021 for venture funding, Asia refused to be outdone.

The region set a new record with venture investment last year totaling $165.1 billion, up 50 percent from 2020 when that number hit $110.2 billion, according to SA国际传媒 data.

The new high surpassed the previous record of $150.2 billion set in 2018.

Table of Contents

• Early-stage rounds help lead the way
• Seed and angels remain strong
• Late stage is where the money is
• Who leads? Venture dollar volume by country
• Exits
• What we learned and a look ahead
• Methodology

Although increased valuations and larger late rounds undoubtedly helped push 2021鈥檚 numbers to new heights, deal flow also saw a slight uptick from last year, with more than 6,400 funding deals being announced compared to nearly 5,900 deals in 2020, a 10 percent increase.

However, that was not the only record to fall concerning venture funding. The final quarter of 2021 also set a new highwater-mark for one quarter in Asia鈥攖hanks to a strong Q4 push in China鈥攚ith $50.9 billion in venture capital invested in the region. Late-stage or technology growth rounds accounted for $33.6 billion of investments in the fourth quarter.

That bested the previous high for funding in Asia of $47.3 billion in Q2 2018. The quarter also represented an 87 percent increase from Q4 2020, which saw $27.3 billion of funding go to Asian startups.

While the full-year numbers saw a small upward push in deal flow, Q4 saw a significant upward swing compared to the same quarter in 2020. The fourth quarter of 2021 saw 1,925 deals completed, a 46 percent increase from the more than 1,300 deals closed for the same period in 2020.

The Q4 deal number represents the most deals announced in Asia in a quarter since Q4 2019鈥檚 reported 1,934.

Early-stage rounds help lead the way

Perhaps the strongest push by investors in the region was in early-stage investments, where there was an 88 percent jump in funding to those rounds. Last year saw $49.7 billion come into early-stage rounds in Asia鈥攖he largest on record鈥攃ompared to $26.5 billion in 2020, according to SA国际传媒 data.

Deal flow for those rounds also remained strong, as more than 2,100 funding deals were closed last year compared to just over 1,800 in 2020, a 19 percent increase.

Seed and angels remain strong

Likewise, angel and seed rounds saw their strongest year ever in terms of dollars raised. In 2021, angel and seed rounds raised $5.3 billion in the region鈥攖he most ever and a 53 percent increase from 2020 which saw $3.5 billion go into such rounds. That was even as deal numbers remained nearly level at about 3,300, per SA国际传媒 data.

Late stage is where the money is

While seed and early-stage rounds set new records in 2021, make no mistake the driver behind the new highs set in the year were what investors poured into later-stage companies.

Last year saw $110 billion invested into late-stage and technology growth rounds鈥攁gain, a new record and a 37 percent increase from 2020鈥檚 $80.3 billion. Some of the biggest late-stage and tech growth rounds in the region included:

• India-based online shopping website raised a massive $3.6 billion private equity round in July;
• China-based shopping platform raised a $2 billion venture round in February;
• closed a corporate round of about $1.9 billion in June; and
• China-based lithium battery developer raised a venture round of about $1.9 billion in September.

Even as valuations increased and round sizes grew, deal flow increased 35 percent in these later-stage rounds, with 973 late-stage and growth rounds closing in the year compared to 722 in 2020.

While those numbers may be tiny compared to what North American companies hauled in last year in venture, it鈥檚 astonishing when considering it took the region until 2017 just to break the $50 billion mark for investment in late-stage and technology growth rounds.

Who leads? Venture dollar volume by country

Unsurprisingly, this all begins and ends with China. The most populous country in the world took in nearly 48 percent of all funding in Asia. That is not unexpected when you consider Chinese companies took in six of the 10 largest rounds last year, including shopping platform $2 billion raise last February.

For the year, China saw funding to startups inside its borders grow 50 percent from 2020, ending at $78.5 billion. That number was helped by an extremely strong final quarter that saw $26.7 billion invested into Chinese startups鈥攖he most since Q2 2018.

Coming in second was India. While India had an impressive year鈥攃ompanies there saw $37.6 billion, a 12 percent increase from 2020鈥攊t still significantly lags behind China.

Israel, Singapore and Indonesia rounded out the top five for the year in total dollars received.

However, the country in the region that saw the biggest percentage jump鈥攁t least for those countries seeing more than $5 billion in funding鈥攚as South Korea. That country saw $5.7 billion of funding go to its companies, an amazing 222 percent increase from just $1.8 billion in 2020.

Exits

While large funding numbers are fun to talk about, investors care about exits鈥攁nd the region saw some impressive ones via the public markets.

Asia saw 97 companies go public during 2021. That number was helped by a strong final quarter which had 29 VC-backed companies go public after just eight went public in the third quarter.

Out of those companies that went public, 44 held their IPOs on the large U.S. exchanges, including:

• South Korea-based e-commerce company raised $4.6 billion for its offering in March;
• Singapore-based transportation app raised $4.5 billion through its IPO in December;
• China-based ride hailing service raised $4.4 billion in June. However, delisted less than six months after raising $4.4 billion after being the target of investigations and penalties from China鈥檚 Cyberspace Administration;
• India-based mobile content and commerce developer raised $2.5 billion in November through its offering; and
• China-based e-cigarette maker raised $1.4 billion in January through its IPO.

China led the way with 46 companies going public in 2021, and seven of the IPOs from companies in the region also raised more than $1 billion.

What we learned and a look ahead

While not North America, Asia did its part in 2021 to help set new global records in venture funding. Although those numbers are not unlikely to significantly fade lower in 2022, there are some concerns in the numbers and news headlines.

Even though most countries saw an increase in funding to their startups, Japan saw its numbers dip 14 percent to below $5 billion. There is likely no one reason for the decline, but the Japanese economy has been sluggish predominantly due to the effect of the COVID-19 pandemic on the country.

Although the drop is not necessarily a harbinger of a downturn for the entire region, it is interesting to note the world’s third-largest economy saw a downturn when so many numbers were up. It also serves as a stark reminder that the pandemic is not done affecting the world鈥檚 economy.

Another interesting development happened during the holiday season when the China Securities Regulatory Commission for companies wanting to list on overseas exchanges via a 鈥渧ariable interest entities, or VIE,鈥� model. The new rules include registering the company鈥檚 plans to go public with regulators.

Chinese companies took advantage of overseas exchanges to raise capital despite strict rules in the country concerning non-Chinese ownership stakes this year鈥�35 of the 46 IPOs of VC-backed companies occurred on exchanges outside mainland China鈥攁nd it鈥檚 not completely clear if the proposed new rules will make investors wary or not.

On one hand, there are added steps such as registering with Chinese regulators. However, on the other there does seem to be more clarity for companies seeking listings on overseas exchanges via VIEs.

Investors want to know what exits are available for companies when they put their money down, so continued investment in the country could be based on whether VCs see the proposed rules as the glass being half full or half empty.

Further reading

• Global Venture Funding And Unicorn Creation In 2021 Shattered All Records聽
• North American Startup Funding Scaled Unprecedented Heights In 2021
• Europe鈥檚 Unicorn Herd Multiplies As VC Investment More Than Doubled In 2021

Methodology

The data contained in this report comes directly from SA国际传媒, and is based on reported data. Data reported is as of Jan. 4, 2022.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

All funding values are given in U.S. dollars unless otherwise noted. SA国际传媒 converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to SA国际传媒 long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

Seed and angel consists of seed, pre-seed and angel rounds. SA国际传媒 also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early stage consists of Series A and Series B rounds, as well as other round types. SA国际传媒 includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late stage consists of Series C, Series D, Series E and later-lettered venture rounds following the 鈥淪eries [Letter]鈥� naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a 鈥渧enture鈥� round. (So basically, any round from the previously defined stages.)

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