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It’s hot in Asia: VC funding doubled year-on-year in Q1 2016

Talks of a cooldown appears to be just that – talk. For now at least. According to Tech in Asia’s data, venture capital funding in Asia has doubled in Q1 2016 compared to the same period in 2015.

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Things get even more interesting when we break down the numbers by region. China has grown at a blistering pace, with its venture capital funding doubling to US$14.5 billion in Q1 2016 against Q1 2015. The country’s cooling stock market appears to have not affected investor confidence yet.

Southeast Asia exhibited the most growth in terms of percentage: it grew 2.5 times to US$478 million.

Southeast Asia’s creeping up on India, which is bucking the trend with a slight decline. However, venture capital investing in India, at US$818 million, is still double of Southeast Asia.

Biotech rising

A surprise pops up when we examine industries with the fastest growing venture capital funding: biotech.

Most of the biotech deals involve Israeli and Chinese startups. However, Aslan Pharmaceuticals is a name you should know from Singapore. The company, which develops therapies for tumors, has raised a US$34 million series C round led by a subsidiary of Singapore’s sovereign wealth fund Temasek Holdings.

Hong Kong’s Prenetics is another noteworthy startup. Armed with US$10 million in fundingled by a Chinese insurance giant, the startup is developing a test that makes sure prescribed medication doesn’t harm its users.

But in terms of deal volume and size, biotech still forms a small minority of deals in Asia.

Transportation renaissance in China?

Logistics and transportation startups got a ton of funding in Q1, making it one of the top verticals in Asia. Here’s a chart showing the top deals by size:

They’re are all from China. At the apex, Uber and Didi Kuaidi continue to do battle to secure drivers and passengers.

China topped the world in number of cars sold in 2015 – at 21.1 million versus the US’ 17.5 million. That means more idle cars sitting around waiting to be tapped by Uber and Didi.

Cainiao, an ecommerce logistics company backed by Alibaba, is blazing ahead.

Cainiao’s ascent is particularly interesting. Alibaba gained prominence by being a pure online marketplace without a dedicated logistical backbone. But as it felt heat from rivals that offered same-day or next-day deliveries, it saw the need to invest in this area too.

Cautious optimism

The global economy doesn’t have a clean bill of health. Advanced economies are still struggling to recover from the 2008 financial crisis, while growth in China has slowed.

Yet despite the malaise, the tech industry in Asia has grown unabated. This trend has continued in Q1 2016.

In fact, a weak economy may bolster the tech industry. For example, if the property market is weak, wealthy individuals may seek out more promising investment areas. Tech certainly has surface appeal.

Or perhaps the growth can be attributed to how the benefits of the internet and computerization of traditional industries are still far from being fully realized. In emerging markets like China, India, and Indonesia, a case can be made for that.

This article by Terence Lee originally appeared on Tech in Asia, a Burn Media publishing partner.

Image by GotCredit via Flickr.

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