Accompanied by an elevated understanding of the private investment model by entrepreneurs and increased investor confidence and savvy, Southeast Asia venture capital is coming of age with a promising outlook for 2015.
This sentiment was reinforced by Ernst and Young’s annual survey of venture capital and private equity investors in the region. 76% of participants believe that private equity investment in the region would continue to flourish due to an increasing abundance of investment opportunities in Southeast Asia along with redirected capital flows resulting from rising valuations of the developed markets. Participants in the Annual Outlook Survey consisted of 30 institutional investors, 50 private equity and venture capital investors, and 20 private placement agents and bankers in the Asia-Pacific region.
The survey yielded interesting insights into prevailing attitudes amongst investors, advisors, bankers, and agents in the region which also included questions about venture capital in Vietnam and Thailand. A notable change from last year was the sentiment shift towards corporate investors. In last year’s survey, nearly 80% of respondents viewed corporate buyers as a competitive threat to traditional funds and institutional investors and not a value-add to the private equity and venture capital ecosystem. This year it was only 40%, a sea change in attitude driven by the demonstration of corporate investors as an active M&A player and viable exit option for earlier stage private investors.
“We are seeing substantially increased activity from corporate investors, most notably those from Japan and Australia, as both corporate M&A buyers in the late stage as well as venture capital investors in the early stage,” says Tom Kim, Co-Founder at Inspire Ventures. He adds “the driving force behind the corporates seems to be one side, the internal M&A departments acquiring market share or product presence in our markets and on the other side, the venture capital divisions of these corporates taking riskier investment profit driven speculations in startups within their same industry sectors. Venture capital in Thailand has been seen both phenomena in abundance this year.”