Asia Venture Funding Continues to Struggle, Hits Lowest Level Since 2016

Although the global venture market saw a small uptick in the first quarter from the previous one, the Asia region continued to see declines in startup funding as late-stage and growth rounds tanked.

Total venture funding in the region fell to $17.3 billion in Q1, a drop of 4% from Q4 2023 and an 8% decline year to year, Crunchbase data shows. The total represents the lowest amount of funding in the Asia region in a single quarter since Q4 2016.

Deal volume made an even worse showing in the quarter, with only 1,615 deals announced in Q1, down 8% from the previous quarter and a whopping 22% decline from Q1 2023 when deal volume totaled 2,064.

Table of contents

• Late-stage and growth rounds continue down trend
• Early stage makes gains
• Angel and seed remain steady
• Breakdown by country
• What we learned
• Methodology
• Glossary of funding terms

Late-stage and growth rounds continue down trend

Late-stage and growth rounds hit the lowest dollar total since Q3 2014. Such rounds totaled only $5.5 billion in 152 deals for the quarter.

The dollar amount represents a massive 43% drop just from Q4 2023 when late-stage and growth funding was $9.6 billion. It also represents a similar 41% decrease from Q1 2023 when such funding hit $9.4 billion.

Deal volume did not see the same massive drops, falling only 12% from Q4 2023 when there were 173 late-stage and growth rounds announced, and down only 10% year to year — indicating it was the dollar amount of those rounds that really fell.

Early stage makes gains

Perhaps surprisingly, many of the other venture numbers for the region showed progress — or at the very least steadiness.

The biggest gains were seen in early-stage funding, with the total amount hitting $10.2 billion, up 51% from the previous quarter’s $6.8 billion. It also represents an increase of 34% from Q1 2023 when total dollars for such rounds hit only $7.6 billion.

In fact, the three largest rounds from the region were all early stage — and all from China.

• In March, China-based Zhiji Automobile, a developer and manufacturer of electric vehicles, raised a $1.1 billion Series B.
• In February, China’s artificial intelligence startup Moonshot AI raised more than $1 billion in a funding round led by Alibaba Group and HongShan, formerly Sequoia Capital China.
• Also in February, China-based low-orbit broadband satellite network company Yuanxin Satellite raised a Series A of $943 million led by China Development Bank.

Deal volume for early-stage rounds fell slightly. In Q1, 563 early-stage rounds were closed, a 5% fall from last quarter and a modest 8% dip from the previous year.

Angel and seed remain steady

The earliest of rounds saw only small declines. Angel and seed funding totaled $1.6 billion in 900 deals for the first quarter.

The dollar amount is an 8% downturn from the $1.7 billion in Q4 2023 and a 15% drop from Q1 the previous year. The number of deals only fell 9% from Q4 of last year, but a more eye-catching 30% from Q1 2023 when that number was 1,283.

Breakdown by country

China continued to dominate the region’s venture scene and also saw significant gains — bucking Asia’s overall trend.

The Red Dragon saw startups in the country raise $1.1 billion in Q1, up 9% from the previous quarter and a more substantial 14% from Q1 2023 when total venture funding in the country was only $10.3 billion.

Chinese startups actually raised 10 of the quarter’s 11 largest rounds in the region.

India and Israel also saw gains of 15% and 25%, respectively, quarter to quarter. However, whereas India remained nearly unchanged year to year, Israel was down 45%.

Out of Asia’s top markets, Singapore saw the biggest downturn quarter to quarter in the region, with venture falling 54% — from $1.7 billion to $800 million — in Q1.

What we learned

The political tensions between China and the U.S. — the world’s largest venture market — does not seem to be crushing China’s private market, although the country is still far off its venture funding highs of 2021.

The tensions in Israel, however, do seem to be affecting the region’s venture flow — something that could be the case for the foreseeable future.

Asia also is benefiting from the current AI craze circling the globe. More than $3 billion in venture funding for the region went to AI startups — up 52% from Q4 2023 and a whopping 349% from the first quarter of that year when such startups saw only $700 million — Crunchbase data shows.

All regions of the world are different when it comes to venture funding — apparently except when it concerns AI.

Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of April 3, 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