Venture capital investment in Asia-Pacific fell to the lowest level in more than a decade last quarter, while mega deals involving US artificial intelligence (AI) companies attracted capital and stole the limelight, according to KPMG.
Funding across the region dropped 32 per cent to US$12.9 billion from the preceding three months, the accounting firm said in a report on Thursday, while deal volume shrank 15 per cent to 2,149, with weaker activity in major investment markets like China, India and Japan, it added.
In contrast, venture capitalists poured US$91.5 billion, or 72 per cent of the global total, into US companies – the most in 10 quarters. A bullish surge on Wall Street in 2024 spilled into the new year, leading to blockbuster deals like the record-breaking US$40 billion investment in Microsoft-backed OpenAI amid an intensifying AI race.
Venture capitalists held back on Asia-Pacific investments amid heightened geopolitical tensions as US President Donald Trump threatened to unleash a tariff war when he returned to the White House in January. Trump rolled out the so-called reciprocal tariffs on April 2, reserving the biggest blow for China.
“We headed into the first quarter in 2025 with some cautious optimism around a renewed sense of business confidence, more investment and more exit activity,” said Conor Moore, global head of private enterprise at KPMG. “That optimism has now abated in the face of the uncertainty caused by various US executive orders and the back and forth on tariffs and trade.”
