In less than two decades, the region completely overtakes Europe, jumping to the second spot globally. 

It is clear. The once-easy world of the China tech start-up is no more after a prolonged market decline – and regardless of the whipsawing in mainland shares we have seen recently.

As finews.asia commented in 2022, falling regional equity indexes made start-ups across the region look expensive compared to the shrinking valuations of their publicly listed brethren. In China, particularly, many also felt the downstream impact of a widespread crackdown on big tech.

Different Landscape

But in all this, something is being forgotten. The world’s venture capital landscape has been utterly transformed in recent decades, with a chart published over the weekend by online publisher Visual Capitalist showing just how much things have changed. 

Asia’s share of global venture capital jumped from a relatively paltry 3 percent in 1997 to 28 percent in 2023, or more than a quarter of all global investment.

Overtaking Europe

Moreover, what makes that statistic so stark is that in 1997 the region lagged significantly behind Europe’s 10 percent share, while it now dramatically outpaces its current 19 percent.

You could make facile attributions that it is because of a bad case of continued 1970s Eurosclerosis but that would be missing the point. Europe, although it is third worldwide, almost doubled its share between 1997 and 2023 while it is the only region globally that saw any growth apart from Asia.

Still Leading

The US and Canada suffered the largest drop in share (51 percent versus 86 percent between 1997 and 2023) - but they remain the world’s largest leaders by a long shot. 

That itself seems ironic in the day of the NVIDIA, the Generative AI boom, and the so-called Magnificent Seven. But maybe we are all getting too focused on the here and now and not looking at the larger picture.

World Factory

Indeed, it might be easy to attribute it to the fact that less money has been flowing into North American startups at the expense of the listed equities of established contenders, but the truth probably lies somewhere else.

As Visual Capitalist rationalizes it, the main reason for the changing picture, and Asia's dramatically higher share of the overall pie, is the fact that China essentially became the world’s manufacturer in the 2000s. 

Shot at Leaders

The growth has been so strong that it has managed to give the wider region, with its current 28 percent share, a shot at being on more equal footing with North America’s 51 percent a decade or two from now. In 1997, when that comparison was 86 percent and 3 percent - just thinking like that would have seemed like a pipe dream.

But there are a few cautionary statistics in the chart as well. Latin America’s share of venture capital investment has remained unchanged at 1 percent over the roughly two-half-decades while Africa has gone from zero to 1 percent.

Trump and Tariffs

Still, as senior finance industry executives like to say – change is the only constant in business, and it is unclear what the future regional distribution of venture capital investment will look like in the next two and a half decades.

For one, thing, as the world faces the prospect of Trump 2.0 and the possibility of tariffs directly aimed at China's manufacturing sector, investing in mainland startups is probably going to become a great deal more of a hit and miss kind of undertaking than it was in the early 2000s.