For the past several years, venture capital investment in Asian startups grew steadily from approximately 100 deals and $1 billion per quarter in 2011 to up to 300 deals and $5 billion per quarter in 2015. In this presentation, Larry Scheinfeld explains why tech startups are not guaranteed to succeed, and how this is making investments a risky endeavor.

1. ASIAN STARTUPS FACE
DECREASE IN VENTURE CAPITAL
PRESENTATION BY LARRY SCHEINFELD

2. ASIAN TECH
STARTUPS ARE
FACING AN
UNPRECEDENTED
CHALLENGE.
Photo source: economictimes.indiatimes.com

3. FOR THE PAST
SEVERAL YEARS,
VENTURE CAPITAL
INVESTMENT IN
ASIAN STARTUPS
GREW STEADILY
FROM
APPROXIMATELY 100
DEALS AND $1
BILLION PER
QUARTER IN 2011
TO UP TO 300 DEALS
AND $5 BILLION PER
QUARTER IN 2015.

4. BUT DESPITE ASIA HAVING THE
MOST MOBILE USERS IN THE WORLD,
TECH STARTUPS ARE NOT
GUARANTEED TO SUCCEED, MAKING
ANY INVESTMENT A RISKY
ENDEAVOR.

5. In 2016, concern over
weakness in the global
economy, uncertainty about
China’s twice-crashed stock
market, and fear of a
potential tech bubble
bursting in Silicon Valley
have heightened the risk
and dramatically slowed
the flow of venture capital
to Asian startups.
2016

6. China, India, and South Korea are feeling
the worst effects of the slowdown.

7. In the first quarter of 2016,
venture capital investment
in China’s tech startups fell
to $1.8 billion from $2.5
billion in the same quarter
of 2015, a 28% decrease.

8. India’s tech
startups
received $736
million in this
year’s first
quarter, a 17%
decrease from
the $891
million they
received in in
the first quarter
of 2015.

9. South
Korean
companies
suffered the
most drastic
percentage
loss in
venture
capital
investment.

10. They received $45.8
million in the first quarter
of 2016, a 37% decrease
from the $72.2 million
they received in the same
quarter of last year.

11. Responding to the
significant
decreases in funds,
several Asian
startups have
shutdown
altogether while
others have been
forced to take
substantial cost-
saving measures.

12. CUTTING COSTS
Weichiashi, a Shanghai-
based corporate
crowdsourcing platform,
decided to cut even the
most trivial expenses like
snacks and beverages for
employees.

13. Where
employees were
once treated to a
company-
sponsored trip to
Thailand that was
paid for with $3
million in easily
raised funding,
they now receive
only one monthly
birthday party
with a small cake.

14. Diminished investment
forced RedMart Ltd., a
Singapore-based online
grocery-delivery service, to
halt plans for overseas
expansion.

15. However, it is unclear
whether RedMart stopped
receiving investment funds
altogether or is merely
being cautious amid further
fundraising efforts.

16. YIQI CHANG
Yiqi Chang, a
Shanghai-based
karaoke-booking
startup, laid off 400
employees over the
past three months in
an effort to make
ends meet.

17. Its 23-year-old founder, Yin
Sang, who in 2014 made
Forbes China’s list of 30
most successful
entrepreneurs under the
age of 30, previously sent
an email to all 600
employees to inform them
that his startup was out of
money and “in crisis.”
Image source: http://www.wsj.com/articles/asian-startups-hit-
by-venture-capital-slowdown-1462986692

18. Without venture
capital, Mr. Yin’s
startup, valued at
$100 million, started
2016 with almost zero
cash flow.

19. THE SLOWING OF VENTURE
INVESTMENT IN ASIAN STARTUPS
SIGNALS A GLOBAL SHIFT.
image source: globalpowershift.org

20. YIQI CHANG IS
JUST ONE
EXAMPLE OF
NUMEROUS
OVERINFLATED
TECH STARTUP
VALUATIONS.
Photo source: techcrunch.com

21. FIDELITY
Fidelity recently wrote
down the value of 19
Silicon Valley startups, and
many of today’s biggest
unicorns—startups valued
between $1 and $10 billion
—have far less cash than
their valuations indicate.

22. ACCORDING TO TOM TSAO,
MANAGING VENTURE CAPITAL
PARTNER AT GOBI PARTNERS,
THIS YEAR INVESTORS WILL BE
MUCH MORE SELECTIVE THAN
THEY’VE BEEN IN THE PAST AND
WILL LOOK FOR SUSTAINABLE
BUSINESS MODELS.

23. SOURCES:
• http://www.forbes.com/sites/falgunidesai/2016/02/21/will-the-venture-
capital-slowdown-hit-asia/#13b3098f2d35
• https://hbr.org/2016/01/why-chinas-market-crash-is-so-unsurprising
• http://www.wsj.com/articles/asian-startups-hit-by-venture-capital-
slowdown-1462986692
• http://www.dealstreetasia.com/stories/12-startups-that-failed-
in-2015-25046/
• http://fortune.com/2016/02/28/fidelity-slashes-more-startup-valuations/
• http://www.inc.com/magazine/201509/jeff-bercovici/are-we-in-a-tech-
bubble.html

24. IF YOU LIKED THIS PIECE, PLEASE VISIT:
LARRYSCHEINFELDVC.COM
Larry Scheinfeld is a co-
founder and partner of
Zelkova Ventures. Presently,
Larry sits on the Board of
Directors for the Starlight
Foundation, which
accommodates quality of
life programs for terminally
ill children. You can learn
more about Larry
Scheinfeld on Weebly.