The Asian eCommerce industry is seeing financing way up, exit activity also growing but valuations still mostly small. Since 2010, Asian eCommerce companies have attracted $6.9B across 383 deals from venture capital investors. India and China, not surprisingly, have been the largest markets for activity. While exit activity has also grown, exit valuations have been pint-sized.
With forecasts that Asia will be home to over half of the world’s population by 2020 and 1/3 of the world’s consumer spend, it is perhaps only natural to expect that eCommerce activity to the region is on a tear. And it is. Deal volume and funding activity to the region are up 31% and 56% year-over-year (YoY) respectively.
But while financing growth is high, the exit environment for Asian eCommerce companies has been flaccid. Yes – exit activity has grown but the majority of the exits are small (<$50 million) – clearly not venture-level exits. Based on their willingness to plow increasing amounts of money into Asia’s eCommerce sector, investors believe the tide will turn. Will it?
India leads on financing deal activity …
India has seen over 150 eCommerce deals since 2010 with 25 deals coming in 2013 already. Well-funded India-based companies include Amazon competitor Flipkart and eBay-backed Snapdeal.
…While China is the clear financing winner
Mega-deals to companies including 360buy.com and 55tuan.com saw Chinese eCommerce companies rake in $4.8B from investors since 2010.
Over 2/3 of Russia Deals Go to Apparel and Travel
Russia has seen 61 eCommerce deals since 2010 and 2/3 of the deals were to Apparel or Travel companies.
Investment spans a diverse array of sectors
Deal share is spread across everything from travel to apparel & accessories to food & grocery. As investors try to find each market’s Amazon, the multi-product category has seen an increase in deal activity.
The most consistently large area of investment across Asia has been to Apparel & Accessories which has consistently taken 1 of 4 deals. Large deals to the likes of Rocket Internet-backed Zalora and China-based Moonbasa are among the more well-funded Asia-based apparel focused e-tailers.
Tiger Global is region’s most active investor
Tiger Global Management is the most active investor in Asia’s eCommerce sector. The top 5 is rounded out by Accel Partners, Intel Capital, Sequoia Capital and IDG. Tiger is doing deals across Asia but a vast majority of their eCommerce investment activity is in India.
Uptick in exit activity in 2012; 2013 also strong
There were 29 exits of Asian eCommerce companies in 2012. And the momentum is continuing into 2013 with 14 exits year-to-date.
Indian eCommerce companies have been responsible for more than 4 of 10 exits over time and are almost 50% of exits in 2012 and 2013 to-date.
Despite all the excitement, exit valuations are humdrum
60% of Asia’s eCommerce exits with disclosed valuations have been for less than $50 million. The largest exits were to companies like China-based DangDang and VIPshop and India-based MakeMyTrip which all IPO’d. China-based LightInTheBox also went public last week.
While the LightInTheBox IPO – the first of a Chinese company in 2013 – performed well and VIPshop’s price has rebounded, will it be enough to reverse the tepid post-IPO performance of other Asian eCommerce companies?
The poor valuation outcomes for Asia eCommerce companies to-date coupled with the high degree of short interest in public Chinese companies (by firms like Muddy Waters) suggests that the sector overall may be exit-challenged for the time-being, and Chinese companies in particular face some significant headwinds.
If LightInTheBox’s post-IPO performance continues to stay strong and if Alibaba which is slated to IPO late this year fares well, this may portend good things for the Asian eCommerce industry.