Asia has been enjoying a vigorous period for venture capital deals, latest figures show. The question, however, is whether the knock-on impact of a cooling Chinese economy will affect VC action in the near-term.

Data seems to be piling up to suggest that venture capital in Asia is expanding rapidly and winning investment fans, judging by statistics from Preqin, the research organisation. 

Hot on the heels of a report a few days ago saying that Asian VC deal values have come close to matching those of North America, Preqin shows that aggregate deal value for VC and buyout funds hit record highs in 2014. Venture capital deals have already overtaken the 2014 total of $22.4 billion, the firm says, clocking up $31.4 billion by the end of August. Although the 1,573 deals in the region do not yet exceed the 1,783 deals in 2014, totals in South Asia and the ASEAN region already match or surpass those of last year. Over the past two years, average venture capital deal size has increased by 259 per cent, from $5.6 million in 2013 to $20.1 million in 2015 year-to-date. 

Preqin goes on to say that the rise in VC deals is reflected in the attitudes of both managers and investors – perhaps unsurprisingly. Some 21 per cent of managers have a primarily venture capital-based investment strategy, while the proportion of investors who think that venture capital offers the greatest opportunities at present is 43 per cent, the highest proportion of any private equity fund type.

All of which is to say that nothing succeeds like success. Of course, with most Asian equity market indices in the red since the start of this year, and concerns about a decelerating China, the climate for VC exits and fund-raising might not be as rosy as would have been the case in January. But the expansion of VC does suggest that familiarity with the investment model is becoming more entrenched. With business hubs such as Singapore stating that they want to encourage local Silicon Valley-style innovation, a crucial part of that ecosphere has to be a vigorous VC market. 

Other data is encouraging. Preqin said that primarily Asia-focused funds have higher median net internal rates of return than North America- and Europe-focused funds across 1998-2001 and 2010-12 vintages. However, the PrEQIn quarterly index, when rebased to the end of 2000 and 2007, puts Asia-focused funds second and third respectively.