Asia Venture Funding Hits 10-Year Low In Q3

Venture funding in Asia continues to sink — hitting its lowest total in nearly a decade last quarter.

Total venture dollars to Asia-based startups fell to $13.2 billion — its smallest total since it hit $13 billion in Q1 2015 — according to Crunchbase data.

The number also represents a 13% decline from Q2 and a massive 44% drop from last year when that total hit $23.8 billion.

Deal flow also continued to plummet, with only 1,509 deals announced in Q3, an 8% decrease from Q2 and a 23% drop from last year.

Not even the AI craze could save the venture numbers for Q3, as AI-related startups in Asia raised only $2.1 billion, down 20% from Q2 and the same as last year.

Table of contents

Late-stage rounds struggle

The biggest culprit to Asia’s sinking venture funding fortunes remains late-stage growth rounds. Such rounds totaled only $5.8 billion, down 30% from Q2 and a decline of 62% from the $15.3 billion raised by late-stage startups last year.

The number also represents the lowest total for late-stage funding in Asia since before 2015.

Big rounds were few and far between, but did include:

• China-based AI startup Baichuan Intelligence raised a $390 million Series A.
• China-based automotive-grade chip manufacturing company XLMEC raised a nearly $344 million round.
• India-based e-grocery startup Zepto raised a $340 million Series G.
• China-based AI firm Moonshot AI raised a $300 million round.

Deal flow remained consistent with Q2 with 139 rounds announced, but that did represent a 17% dropoff from Q3 last year.

Early stage stagnant

Good early-stage numbers do not make up for late-stage rounds crashing, and Asia’s numbers here were even less than good from a venture capital perspective.

Numbers were down — but not as dramatically as late stage. Early-stage startups raised $5.6 billion last quarter — a 12% bump from Q2, but a 17% falloff from the $6.8 billion raised last year.

Deal flow was relatively stagnant with Q2, as 508 deals were consummated. However, that was a 22% drop from the same quarter last year.

Seed mixed

Seed and angel rounds fell 9% from Q2 to $1.8 billion. That number is actually an incremental 6% increase from a year ago when angel and seed rounds totaled only $1.7 billion.

Deal volume, however, was significantly down for the quarter. Only 862 angel and seed rounds were closed in Q3, down 10% from Q2 and 25% from last year when 1,152 such rounds were announced.

Country breakdown

Not surprisingly, China’s long venture slide is one of the main culprits for Asia’s funding fortunes. China-based startups raised only $6 billion in Q3, a modest 19% drop from Q2, but an astounding 61% plummet from Q3 last year.

Similarly, Israeli startups struggled, raising only $700 million — down 23% from Q2 and 6% from last year — as conflict continues in the region.

The one bright spot on the Asia venture front may be Japan. Japanese startups locked up $1.3 billion, a whopping 95% increase from Q2 and up 58% from last year. That included a nearly $133 million Series E for human resource startup SmartHR.

What it means

While it’s important to remember Asia is not the only market seeing venture funding drop — global venture funding in the third quarter was down 16% quarter to quarter and 15% year to year — its drop from last year was much more significant.

One of the reasons clearly seems to be AI. Globally, artificial intelligence startups reached close to $19 billion, or 28% of all venture dollars in the third quarter.

However, Asia’s AI venture market seems to be being left behind — with artificial intelligence-related companies making up only 16% of that region’s startup funding in Q3 and only 17% in Q2.

While funding to AI startups seems to be covering up several issues in the global venture market, Asia is not getting that same benefit.

Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of Oct. 2, 2024.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

We have made a change to how we include corporate funding rounds in our reporting as of January 2023. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)

Illustration: Dom Guzman