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Growing investment in Asian e-commerce

The Asian e-commerce industry is attracting growing investment, although companies operating in the sector are seeing only modest growth in their value.

According to CB Insights, Asian e-commerce companies have attracted US$6.9 billion across 383 deals from venture capitalists since 2010. India and China have been the largest markets for activity.

India has seen over 150 e-commerce deals since 2010 with 25 deals coming in 2013 already. Well-funded India-based companies include Amazon competitor Flipkart and eBay-backed Snapdeal.

Meanwhile, mega-deals to companies including 360buy.com and 55tuan.com saw Chinese e-commerce companies rake in US$4.8 billion from investors since 2010.

The most consistently large area of investment across Asia has been to apparel and accessories which has consistently taken one of four 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 Management is the most active investor in Asia’s e-commerce sector. The top five is rounded out by Accel Partners, Intel Capital, Sequoia Capital and IDG. Tiger is doing deals across Asia but a vast majority of their e-commerce investment activity is in India.

There were 29 exits of Asian e-commerce companies in 2012. And the momentum is continuing into 2013 with 14 exits year-to-date.

Indian e-commerce companies have been responsible for more than four of 10 exits over time and are almost 50 per cent of exits in 2012 and 2013 to-date.

Sixty per cent of Asia’s e-commerce exits with disclosed valuations have been for less than US$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 month.

The poor valuations of Asia e-commerce 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, concluded CB Insights.

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