China secures six of top ten largest VC deals in Asia in Q2’24, KPMG analysis finds

AI and alternative energy vehicles propel VC investment in China

26 July 2024

26 July 2024, Hong Kong (SAR), China ("Hong Kong") – In Q2'24, VC-backed companies in the Asia region raised USD17.4 billion across 2,155 deals, with China securing six of the top ten largest VC deals in Asia-Pacific, according to the latest KPMG’s Venture Pulse Q2 2024 report. Unlike in other regions, e-commerce and consumer focused companies continued to find traction with investors in Asia. The sector attracted the two largest deals in Asia during Q2’24, with Singapore's marketplace platform Lazada raising USD1.9 billion and India's e-commerce company Flipkart raising USD1 billion.

New energy and semiconductors continued to attract relatively strong VC investment in China during Q2’24, led by a USD693 million raise by EV manufacturer Neta Auto and a USD599 million raise by CRRC Times Semiconductor. While investment in the EV sector remains robust compared to other sectors, deal activity has slowed somewhat as the market becomes more crowded, with some consolidation expected over the next few quarters.

Zoe Shi, Partner, KPMG China, says:

The AI space continued to attract strong VC investment in China during Q2’24, with investors showing particular interest in AI-driven applications. The number of AI focused startups have grown considerably over the last year, with many emerging and attracting investment. However, VC investors in AI are becoming more cautious. The big question now is which of these companies will be able to produce results and successfully commercialize their offerings.

AI companies were also highly attractive in Q2’24. Notable deals included retail-focused Zunyuan Supermarket raising USD528.7 million, generative AI company Zhipu AI raising USD400 million, AI and IoT platform company Terminus Technologies raising USD277.8 million. Many of the AI investments in China during the quarter focused on AI-enablement rather than on large language models (LLM) offerings, including areas like robotics and improving workplace efficiencies. VC investors also showed strong interest in AI related to autonomous vehicles.

Angela Chiu, Director, Deal Strategy and M&A, Hong Kong, KPMG China, says:

VC investors in China showed no rush to dive into making major deals during Q2’24, taking as much time as needed to conduct due diligence and, in some cases, delaying decisions to see how targets performed for a longer period. To spur investment, local governments have provided significant matching funds aimed at companies focused on areas of strategic importance, including semiconductors, alternative energy, new materials, and AI.

Looking ahead to Q3’24, AI and alternative energy vehicles are expected to remain attractive to VC investors. While VC investment in China is expected to remain relatively soft, it could pick up from the weak level seen in Q2 2024. Many China-based companies are preparing for IPOs, as the market expects a rebound in the IPO market in 2025.

-Ends-

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