Since 2010, $6.9B has been invested in Asian eCommerce companies by investors. While financing remains hot, exit valuations remain lackluster.
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 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.