SINGAPORE -- Asian venture capital-backed companies enjoyed 45% year-on-year growth in capital received during the second quarter of 2015, bringing in more than $10 billion in investments, according to a recent report by KPMG, an audit, tax and advisory company.
The report notes that venture capital growth is driven by corporations on the hunt for companies with creative innovations. The buyers hope to integrate these innovations with their own businesses. Their activities are expected to continue as it is "cheaper for companies to invest in technologies rather than develop [them] internally," the report says.
Eight of every 10 deals in the quarter were made by Asian Internet and mobile companies, according to KPMG.
Singapore was the top country for Southeast Asia's venture capital activities, followed by Indonesia and Malaysia. In the second quarter, the republic had deals worth $160.7 million, while Indonesia had deals worth $3.5 million and Malaysia made $2.4 million worth of deals. For 2014, the amount of venture funds attracted by Singapore was around $1.07 billion.
Terence Lee, managing editor of TechinAsia, an online news organization, said, "Singapore's business-friendly environment and sound infrastructure is key." He added that the Singapore government's initiative to expand its Technology Incubation Scheme in 2012 "most likely led to the spike in investments in Singapore startups."
The government program helps to fund incubators that in turn seed startups. Under it, the government co-invests up to 500,000 Singapore dollars (around $350,000) in Singapore-based startups. An incubator can buy out the government's stake in a startup within three years by repaying the initial capital plus interest.
Investors have been investing in e-commerce-related companies, which are soaring in popularity in Asia. The online retail market in Singapore, Malaysia, Indonesia and three other Southeast Asian countries is worth around $7 billion. Globally, venture capital-backed companies raised $88.3 billion in 2014.