Funding for Asian start-ups likely to slow amid coronavirus outbreak, if Sars and Zika any guide
- In 2003 and 2004, funding for Asian private companies declined by 27 per cent and 29 per cent respectively against 2002 levels
- The current coronavirus outbreak has not yet shown signs of slowing down, in terms of new infections
Financing for private companies in Asia is likely to slow amid the outbreak of the deadly coronavirus but could bounce back afterwards, according to a CB Insights report, which draws on how the 2003 Sars and 2016 Zika epidemics impacted markets in their respective regions.
It may add to an already cooling venture capital landscape in China amid the economic slowdown and the US-China trade war. In 2019, the amount of funding raised by Chinese startups fell 44 per cent from the year before to a total value of only US$54 billion, according to investment database CVSource.
In 2003 and 2004, funding for Asian private companies declined by 27 per cent and 29 per cent respectively against the level in 2002, according to CB Insights.
But both deal volume and funding started to recover in the third quarter of 2004, soon after the WHO announced China free of new cases in May that year.
China’s AI start-ups close more funding deals but attract less money
“At the end of the current coronavirus outbreak, we could see landmark deals or new funding highs in the Asian market,” the report says.
The WHO declared the 2016 Zika virus, which mainly affected South America, a global emergency in February and local funding in the first quarter dropped to just 25 per cent of the level a year earlier. The entire year saw funding volume in South America decrease by 50 per cent, the report said.
Following the end of the WHO warning on Zika in November 2016, deal-making regained momentum. The second quarter of 2017 saw a new high for deals in South America, with a record US$2.9 billion invested in 248 deals, the report said.
The current coronavirus outbreak has not yet shown signs of slowing down, in terms of new infections. The daily number of new cases reached 2,829 on Sunday, after growing for five consecutive days, and the infection rate has not yet peaked, according to official information from China’s authorities.
