Asia: Q1'26 Venture Pulse Report

VC investment in Asia rose in Q1’26, supported by several billion‑dollar financings across multiple jurisdictions, with capital concentrated in priority sectors such as AI, semiconductors, and infrastructure.

Q1'26 highlights for Asia

VC‑backed companies in Asia raised $31.8 billion across 2,724 deals
VC investment in Asia rebounded in Q1’26, driven by select billion‑dollar deals
AI, semiconductors, and infrastructure accounted for the largest share of investment
China saw signs of stabilization as investors selectively re‑engaged
Government and corporate capital played an outsized role in large financings

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Asia sees investment rebound led by large deals

VC investment in Asia increased in Q1’26 following a subdued end to 2025. Growth was driven by a small number of large financings across China, Japan, and Singapore, highlighting both renewed investor confidence and continued concentration of capital at the top end of the market.

AI, semiconductors, and infrastructure attract the most attention

AI remained a central focus for VC investors across Asia, spanning large models, industry‑specific applications, and enabling infrastructure. Semiconductor manufacturing, data centers, and energy‑related infrastructure also attracted significant attention, supported by strong government and corporate backing in several jurisdictions.

China stabilizes as investors selectively re‑engage

VC activity in China showed signs of stabilization in Q1’26 as investors cautiously returned to the market. Interest clustered around AI, robotics, semiconductors, biotech, and spacetech, with corporate and state‑supported capital continuing to play an outsized role in funding large and strategic investments.

Japan deepens public‑private investment model

VC investment in Japan remained resilient, supported by increased collaboration between government agencies, corporates, and venture investors. Public‑private partnerships played a key role in advancing capital‑intensive sectors such as semiconductors, AI, and spacetech, helping later‑stage companies scale despite a more selective funding environment.

Exit environment remains uneven across the region

Exit activity across Asia remained mixed in Q1’26. IPO markets in hubs such as Hong Kong showed pockets of improvement, particularly for AI‑focused companies, while M&A continued to serve as an important liquidity pathway as investors remained cautious about near‑term public listings.

Trends to watch for in Q2’26

Looking ahead to Q2’26, VC investment in Asia is expected to remain steady, with AI, semiconductors, robotics, alternative energy, and infrastructure likely to remain priority areas. Government involvement and corporate capital are expected to continue playing a significant role, while exit activity may improve selectively depending on broader market conditions.

Japan’s declining birthrate, aging population, and growing labor shortage is going to make AI for industrial implementation particularly important in the future, so we will likely see growing interest and investment in related sectors, in line with the government’s identified national priorities. Given the high payback risks and long payback period for some areas, including deeptech and semiconductors, many of these future investments will likely be collaborative, including government support, VCs, banks, and corporates.

Hiroshi Abe

Executive Board Member, Partner

KPMG in Japan