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Southeast Asia sees dip in funding

Anuradha Shukla | July 22, 2016
Investments dropped 35 percent Q2 2016, says KPMG Venture report.

Southeast Asia is experiencing a pullback in funding and deals with investments dropping 35 percent from US$396 million in Q1 2016 to US$255 million in Q2 2016.

The quarterly global report on VC trends published jointly by KPMG International and CB Insights indicates that the number of deals also fell by 25 percent from 68 to 51 over the same period.

Singapore did the most number of deals (15 deals worth US$54.6 million), and Indonesia attracted the highest investments (13 deals worth US$158.3 million).

Despite these two nations doing well, the region's performance in the second quarter this year was the worst since Q1 2015 that saw the signing of 54 deals worth US$140 million.

"Investment sentiment has turned more cautious with growing volatility in the global economic environment. Venture capitalists are becoming more selective and are taking more time to evaluate the value propositions,"said Chia Tek Yew, head of Financial Services Advisory, KPMG in Singapore."There is still interest in these start-ups, particularly those in the Internet, telecommunications and healthcare sectors, but their valuations have been more subdued than in the past."

Decline in volume and value

Southeast Asia saw decline in both the volume and value of deals as VC market has become cautious.Investors in the region are focusing on proven companies amid global macroeconomic upheaval. Asia too experienced a similar trend of increased funding across a declining number of deals.

In Q2 2016, Asia saw US$7.4 billion invested across 343 deals, US$7.2 billion invested across 389 deals in Q1 2016.This is quite low when compared to the US $14.7 billion and 453 deals Asia saw in Q3 2015.

"There's a lot going on, with uncertainty dominant in every market. The long-term impact of Brexit won't be clear for a while - which will create even more uncertainty in the market," said Yew.


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