Following Beijing’s regulations restricting the freedom of Big Tech in China, start-ups and other significant companies in China have opted to search for new markets. Specifically, the markets in south Asia have low restrictions and little to no regulations regarding big tech. Wataru Suzuki stated that venture capital firms that support start-ups based in south-east Asia (including the subcontinent) are raising record amounts of funds following an influx of money from Chinese investors.
South Asia’s Profits
In 2022, $3.1 billion has been raised for southeast Asia and India focused VC funds. This is almost comparable to their revenue of $3.5 billion from the whole of 2021, matching it in the first half of 2022 alone. In contrast, Chinese VC funds fell sharply following the regulations from 27.2 billion in 2021 to just 2.1 billion, a striking loss for Chinese tech.
50% of Chinese investors plan to diversify out of China.
Jungle Ventures, a Singapore based company plans on making concentrated investments in 15 to 18 companies across southeast Asia as of 2022. Raising USD 600 million in 2022, Amit Anand (co-founder of Jungle Ventures) seems on track to capitalise on the tech market in south Asia.
In May 2022, Singapore-based East Ventures made over $1 billion in assets under management. Additionally, in April, India’s Elevation Capital made a record-breaking fund within the firm with $670 million raised for tech start-ups.
New Tech Apps in India & China
investors put money into VC funds from a variety of different sources, such as pension funds and university endowment funds. South Asia’s exponential growth in tech in the past few years, is evident in the success of listings such as food delivery service apps following the pandemic. The Singaporean app ‘Grab’ and the Indian company ‘Zomato’ have experienced record levels of profit that no doubt attract foreign investors.
At the same time, a drastic change in policy from the Chinese government has further driven investors south. Online education suffered a loss after Beijing banned for-profit tutoring, many of these online education companies were supported by foreign firms. As a result, companies such as SoftBank Group lost almost $600 million following their investment in Zuoyebang, an app developer that was helping students with their studies.
China also introduced greater restrictions on Big Tech.
Stopping anti-competitive practices, China has begun including measures regulating user data and increasing privacy online. This caused a drastic drop in publicly listed companies such as Alibaba.
Despite South Asia’s promise, the venture capital market is still significantly smaller than the Chinese market, so South Asian prosperity in venture capital firms will still take a while as the tech market grows.
By Ruelle Sittampalam