The US banking crisis is driving capital flows into Asian assets; analysts say investors are betting confidently on China and the region’s emerging economies.
2023 is seen as the “winter” of capital raising for tech startups due to shifting preferences among international and Vietnamese venture capital funds (VC); however, the recent explosion in the popularity of artificial intelligence (AI) applications like Sora and Chat GPT has caused many experts and investors to reassess the technology’s development potential.
Attractive Asia market
Furthermore, financial market indices throughout Asia, except Japan, continued to rise following Silicon Valley Bank’s (SVB) collapse on March 10. In the same time frame, this US bank index saw an almost 10 per cent decline.
Managing director and head of Citibank’s economic and market analysis for the Asia-Pacific region, Ms. Johanna Chua, stated: “We think Asia is still relatively well insulated from market shocks.” The USD will become less expensive as a result of the US fall, supporting capital flows in Asia more.”
The Asia-Pacific region also benefits from generally more flexible monetary policy, according to Bloomberg News. State banks in Australia, South Korea, Indonesia, and India have stopped the capital tightening cycle, in contrast to their counterparts in the West.
Investors take less risks
The general secretary of the Vietnam Bond Market Association, Mr. Do Ngoc Quynh, made it quite evident how the capital markets of established nations like the US and Canada as a whole differ from those of developing nations like Vietnam.
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Investors in sophisticated nations or countries are ready to invest heavily in research and development even when they have no idea how the final product will look. Funding research and development is a very costly and risky endeavour. It is not guaranteed that research products will be more optimised than existing ones, even with world-class experts.
On the contrary, one area where the Vietnamese financial sector is deficient is in venture capital funds and funding sources for early-stage companies.
According to Mr. Quynh, the model is either seed (also known as a seed round) or pre-seed, which refers to early capital when the project has not yet been revealed and is used when investment funds are prepared to “put in” between thirty and fifty thousand USD. Few successful initiatives are all that are needed for hundreds of early startup ideas—which are deemed unprofitable—to break even or even turn a profit after a few years. Creating this kind of investor will be challenging in the current climate.
The trend of combining Blockchain and AI
The Decentralised Physical Infrastructure Network, or DePIN, is one area where blockchain and artificial intelligence interact. Big data (big data) is the source of knowledge that AI must acquire, yet this training is highly costly.
Businesspeople will develop a market where people with unused video cards plug into the system for others who require that resource for training, even though industry giants like iCloud, Amazon, and others do not yet offer services. make AI. This is known as DePIN, and it’s going to catch on soon.
The combination of blockchain and AI will be very special. Some startups that combine blockchain and AI platforms have raised US$30 million, even $120 million, which is a very large sum at the moment, and there aren’t many funds that can disburse such a large amount of money.
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Technology scientist Mr. Nguyen Trung Thanh, Chairman of the Web3 Committee, Vietnam Blockchain Association, discusses the initial investment of venture capital funds for projects on deep learning or neural networks, the early forerunners of artificial intelligence, in 2013.
At the time, these projects were not trending at all, and researchers were unable to respond to the trend. Similar to the questions that investment funds currently ask, what is the method of conducting business, or who are the clients?
They continue to spend, though, and the outcome is the cutting-edge AI technology of today. As a result, there is always a high chance of new technology ventures succeeding and investors ready to contribute money.
It is crucial that the finished product genuinely adds long-term value to society; if we follow trends blindly, these projects will eventually fail financially. An example of this would be projects that exist and develop, such as AI technology, and ultimately fail.
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