More Global Startups Looking To Asia For Funding – Forbes

For startup watchers Asia is commonly thought of as a huge (if perilous) potential market, a source of talent, and a possible breeding ground for competitors. Now, it’s increasingly taking on a new role– a source of funding.

A report earlier this year from the Asia Society and Rhodium Group found Chinese firms have committed to investing $6 billion in the U.S. tech sector in the first quarter of 2014 alone. Compare that to peak annual investments of just $1.5 billion in previous years. A new analysis from the Financial Times claims this spike in funding is part of a larger regional trend. Asian investors are opening the tap, and the accelerating flow of funding from Asia has two main drivers, according to the FT.

A Foothold in the Region

With Asian ecommerce, gaming and messaging companies growing in prominence around the globe, entrepreneurs from elsewhere are increasingly interested in the huge Asian market and increasingly open to hearing from Asian investors who might help their businesses gain a foothold in the region.

English: victoria peak panorama hong kong kowl...

English: victoria peak panorama hong kong kowloon night 2011 dusk (Photo credit: Wikipedia)

“Company executives and founders around the world are ‘increasingly receptive’ to potential suitors from the region, says Winston Cheng, TMT banker at Bank of America Merrill Lynch,” reports the FT.

Eric Setton, the CEO of U.S. video messaging app Tango, which recently sold a quarter of the company to Chinese ecommerce company Alibaba for $215 million, called having a partner who deeply understands the Chinese market ”a slam dunk,” for example. Joe Medved, a partner at venture group SoftBank Capital, has also recently urged startups to reconsider Asia when thinking of expansion.

“With its advanced mobile infrastructure, Asia ranks as one of the leading mobile markets, especially for companies that have a strong foundation in advertising, gaming and commerce,” he wrote in Re/code. “What you will find in Asia are quality partners and strong distribution potential — offering an exciting mix of opportunities for later-stage startups.”

Money to Burn

On the other side of the equation, several major players in Asia are flush with cash to invest. Alibaba, which is expected to be valued at more than $150 billion following an IPO later this year, and Tencent, which has seen the value of the company rise from $60 billion to $140 billion over the last year and a half, have been “aggressively taking stakes in companies around the world as soaring valuations give them freer access to financing,” notes the FT.

Investment in the tech sector is also coming from sovereign-backed funds from countries like Malaysia, Singapore and Hong Kong, who have become increasingly interested in getting a piece of the red hot action around tech startups.

The sum result of these converging trends? “The region is emerging as a key source of funding for the sector, putting Hong Kong and Singapore firmly on the map for tech startups seeking cash,” concludes the FT. For more details about specific deals and further data, check out the in-depth analysis.


More Global Startups Looking To Asia For Funding – Forbes}

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