BFP Silver is a VC fund of funds investing in early-stage VC funds globally. You can find some notes below on why investing in Greater China and South-East Asia is an important part of BFP Silver’s asset allocation.

State of Venture Capital in Asia

Long-term growth and strong returns in VC investing despite decline since the market correction in 2015

  • 162 VC Funds currently raising money in Asia
  • VC performance in Asia has been consistently strong recently, with median net IRRs of ≈15% for 2011–2013 vintage funds outperforming North America and Europe-focused funds

Greater China — Second Largest VC Market Globally

  • Second largest economy in the world (after the US) with 1.3bn mobile users
  • Some of largest global internet companies (e.g. Alibaba, Baidu) and VC deals (e.g. Didi, Ele.me)
  • Beijing as global number 2 in terms of VC funding with $1.9bn in Q3 ’16 (San Francisco with $3.3bn)
  • According to OECD, China will surpass US by 2019 to become №1 in R&D spending globally

South-East Asia — The Next China?

  • Large population with strong consumer demographics leads to great opportunities
  • 260m internet users, estimated to grow to ≈480m by 2020 (≈3.8m / month)
  • SE Asia’s internet economy of $30bn expected to grow to $200bn by 2025

Selected Players in the Ecosystem

Drivers for VC Firms

  • Reasonable entry valuations compared to other regions like the US
  • Greater interest from deep-pocket investors in later stages facilitate follow-on financing rounds
  • Subsidies from governmental organizations
  • Due to growing entrepreneurial culture in China and Singapore start-up scene attracts more and more talent
  • Massive amounts of R&D spending in China leads to technological advantages versus other regions globally

Vertical Trends


Sources:

Bain & Co.: Can Southeast Asia Live Up to Its E-commerce Potential, http://bit.ly/1WHZHtd

BCG Global Wealth Market-Sizing Database, 2015, http://on.bcg.com/1W2bno3

CB Insights Unicorn Research, https://www.cbinsights.com/research-unicorn-companies

Deloitte SE-Asia Report: http://bit.ly/2cWB2Rv

e-conomy SEA Presentation by Google and Temasek, http://bit.ly/2eJo71G

Gartner: Enterprise IT Spending in Southeast Asia Will Reach $62bn by 2018, http://gtnr.it/1CKJF6W

Internet World Stats, http://bit.ly/1mVgZl6

OECD — Economic Outlook for Southeast Asia, China and India 2016, http://bit.ly/2eVBdsF

Preqin, 2016 Global Private Equity and Venture Capital Report, http://bit.ly/2fb0aWb

Preqin, Asia Attracts Record Venture Capital Investment in Q2 2016, http://bit.ly/29Rkh9V

Preqin Special Report: Asian PE and VC, September 2016, http://bit.ly/2ePlsW7

Preqin, Venture Capital in South East Asia 2016, http://bit.ly/2dLVhSr

Venture Pulse, Q3’16, Global Analysis of Venture Funding, KPMG International and CB Insights, Oct 2016, http://bit.ly/2e2tYk9

We Are Social — Digital in 2016, http://bit.ly/2dbYoR4

WorldOMeters, http://www.worldometers.info/world-population