Asian tech investments into EU and US hit $12B with 194% surge in Q3 2020

Asian tech investments into EU and US hit $12B with 194% surge in Q3 2020

Asia is among the regions with a vibrant tech sector with a reputation for edge-cutting products. With accelerated local growth, investors from the region have been focusing on expanding their trade to other areas with potential.

Data presented by BuyShares indicate that Asian tech investments in Europe and the United States hit $11.9 billion in the first three quarters of 2020. During the Q2, the investments stood at $1.9 billion, while in Q3, it was $5.6 billion, a growth of 194.73%. However, the investment has plunged by 39.95% on a year-over-year basis.

However, during the first three quarters of 2020, more deals were finalized by Asian tech investors compared to a similar period last. As of Q3 2020, the total deals stood at 304 while last year, the number was 292.

The research also reviewed the top five Asian activities in both Europe and America by deal volume as of Q3 2020. In both regions, Software remains the leading activity with 12 deals in Europe, and 32 in the US. Fintech is second with a deal volume of 12 in Europe while in the US the figure is at 13.

Pandemic slows down tech investments in Europe and the US

At the start of the year, activities in the sector from Asia began positively, but the onset of the coronavirus pandemic had a significant impact. The deal’s ecosystem was hampered since the flow of capital in the US and Europe was threatened. Generally, the pandemic suppressed overseas investment trends. The crisis forced companies to slash investment in the two regions.

Several factors are fuelling the investment of Asian tech companies in the EU and US. The Asian technology sector is flush with cash, and the domestic market remains competitive, hence the need to move abroad. The investment in both Europe and the US has opened room for partnerships with foreign companies.

Another factor fuelling the tech investments in Europe and the US is the slowing down of China’s local growth rates. Many ambitious local successful companies are now looking abroad to continue rapid expansion. Most of these companies are profit-oriented and seek to extend their streak.

The data shows that Fintech is closely competing with Software especially in Europe. The Fintech sector in Europe is interesting and lucrative because every country has different regulations, languages, and financial laws. The mix of talent means that there are several Fintech hubs in Europe with very different cultures. Most Asian investors are looking to leverage this diversity in their investments.

Regulations pose threat to Asian tech investments

From the data, the United States accounts for the highest number of activities by volume. The US market is attractive since it’s capital sector capital remains by far the deepest and most diverse in the world.

With Asian companies dominating foreign investments in the US policymakers and business leaders have been urged to acknowledge the arrival of Asian technology investors. In this sense, there have been calls to ensure that US national security policies remain streamlined and non-politicized.

Interestingly, the US investments by Asian companies continue to remain high despite regulators being viewed as a hurdle. Furthermore, the growing influx of Asian capital in both regions comes as the US and China have been locked in an ongoing trade dispute. The tariffs imposed have affected the financial markets. Chinese companies for example have been among the leading overseas investors in tech. The trade war heightened the risk of decoupling, forcing Chinese companies to look for alternatives elsewhere.

For Europe, it is now clear how regulations have impacted investment in the regions. For example, towards the end of last year, the European Union implemented a new framework to screen foreign direct investment into the 28-nation bloc, as concerns have increased in recent years about such investment.