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APAC VCs sharpen focus; see potential for rebound

In 2023, venture capital (VC) activity in Asia-Pacific decreased significantly, reflecting investor caution in a challenging economic environment.

Deal volume fell by 26.3% year-over-year, with the region's lowest investment level since early 2017.

Experts, however, are optimistic about a recovery in 2024, predicting a surge in deal opportunities, especially in the latter half of the year as economic conditions stabilize.

VCs are now prioritizing startups with clear profitability paths and robust return profiles. KPMG's Stephen Bates emphasises that investors are keen on startups that demonstrate focused and deliberate investment spending, agile strategy execution, and strong performance tracking. This more cautious approach is driven by a strict need to ensure returns to LPs.

In 2024, Bates expects significant investment opportunities in Series B rounds across ASEAN, particularly in startups with solid financial practices and corporate governance.

Emerging sectors like Generative AI, SaaS technologies, cybersecurity, and food agriculture are anticipated to attract considerable investment, while the financial services sector may see less interest given the abundance of strong fintechs at present.

Overall, despite the downturn in 2023, the VC landscape is poised for a rebound, driven by a professionalized investment approach and a focus on building profitable, high-value companies.

Article by Noreeen Jazul for Singapore Business Review. Read more here or in the PDF below.

Venture capitalists sharpen focus on targeting startups’ profit paths _ SBR
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