Tech investment surges in India, SE Asia as China plummets

China absorbed about three-quarters of the capital that went into early and growth-stage rounds for technology Asia-based in the last three months of 2020 and nearly two-thirds in the first three of 2021. This was driven by a COVID-19 related endorsement of business models that enable social distancing and remote delivery of services as well as by frenetic IPO activity.

The country’s share of regional investment in this area fell to one-third in the second quarter. The development coincides with antitrust investigations into dozens of local internet companies, including Alibaba Group, Tencent Holdings, ByteDance, JD.com, Didi, and Meituan. Regulatory action against start-ups that have recently listed in the US – for violating personal data collection rules – began in early July but could exacerbate the muted investment environment.

Capital deployed in China’s technology sector fell from $14.6 billion in the first quarter of 2021 to $8.3 billion in the second, preliminary data from AVCJ Research show. At the same time, early and growth-stage tech investment in India and Southeast Asia surged to $7.5 billion and $4.4 billion, respectively. The first-quarter totals for these geographies were $4.5 billion and $1.3 billion.

India and Southeast Asia surpassed China in the first three months of 2020, when the economic impact of the pandemic had yet to spread beyond Chinese borders. Otherwise, the shift is unprecedented.

The surge in activity has been connected to a revitalization in exit expectations. Several Indian software-as-a-service (SaaS) companies have listed in the US, part of a global boom in investment and exits in this space. Meanwhile, food delivery giant Zomato has already launched a domestic IPO, and digital payments players Mobikwik and Paytm have both filed for listings.

In Southeast Asia, ride-hailing player Grab is poised to go public in the US via a merger with a special purpose acquisition company at an enterprise value of $30.4 billion and Indonesian e-commerce player Bukalapak is set to list on the domestic bourse. GoTo – the product of a merger between local tech giants Gojek and Tokopedia – is expected to follow suit.

Private equity investment in Asia came to $58.7 billion in the second quarter, down from $59.9 billion during the prior three months. Both totals are comfortably above the immediate pre-COVID-19 average. Technology – across all investment strategies – accounted for 48% of capital deployed across the region, up from 45% in the first quarter. In each period, early and growth-stage activity was responsible for more than $0.80 of every dollar committed.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• South Asia
• Southeast Asia
• Technology
• Early-stage
• Expansion
• Regulation
• IPO
• China
• India
• Indonesia
• Growth capital
• TMT