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Alternative Market Briefing

Global venture capital industry AUM hits record levels at $856bn

Monday, September 23, 2019

Laxman Pai, Opalesque Asia:

Global venture capital is expanding fast, and over the past five years, the industry posted a compound annual growth rate of 17%, said a study.

Assets under management (AUM) soared to $856bn as of December 2018, a new record, according to a Preqin and Vertex Ventures study released recently.

"This puts the asset class within reach of a major milestone: $1tn in AUM, representing just under a third of total industry assets held by both private equity and venture capital," said the report.

Surging investor demand for Asia-focused venture capital funds has played a major role in the rapid expansion of global venture capital.

The comparison of AUM growth in Asian venture capital with AUM growth in North American venture capital between 2007 and 2018 shows a rapidly narrowing gap between the two regions - as of December 2018, that gap stands at just $74bn.

AUM held by North America-focused venture capital funds stands at $397bn vs. $323bn for funds targeting Asia. Just five years ago, North America-focused venture capital AUM ($241bn) was well over twice that of Asia-focused venture capital AUM ($72bn).

What is behind the increasing investor appetite for Asian venture capital? In a word: China. China's per capita income may be significantly below that of the US, but it is rapidly gaining ground when it comes to innovation.

Indeed, cities like Beijing and Shanghai have emerged as top global innovatio......................

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