Sovereign Funds Flock to Developing-World Startups


By Claire Milhench | May 2 2018

Read the full article on Reuters here.

LONDON (Reuters) – Sovereign investors are helping fuel billion-dollar funding rounds for emerging-market tech startups, where companies and their backers are fighting for first-mover advantage in the digital space.

The aim is to find firms that can replicate the models of Amazon, Netflix and Facebook in the United States – companies that will dominate a young, tech-savvy market.

Sovereign wealth funds (SWFs) have the capital to feed this trend – and the patience to wait.

Instead of exposing themselves to a stock market listing, companies simply return to private backers in ever-bigger funding rounds, building war chests to pick off their rivals.

To April 24 this year, SWFs participated in 15 venture capital mega-deals, worth some $10.9 billion, compared with 22 deals worth just $9.75 billion in all of 2017, according to funding database PitchBook.

Asian venture capital funding rounds worth $100 million or more reached a total $20.7 billion to April 21, data from research firm Preqin showed. That easily outstripped those in the United States, worth $8.9 billion, and in Europe, worth $1.7 billion.(Value of venture capital megadeals by region: