Raising capital for a startup has traditionally been one of the most difficult parts of getting a business off the ground. But times are changing and many Asian startups have become billion-dollar success stories.
In just four years, Xiaomi Corp, China's largest smartphone vendor, became the world's most valuable technology startup with a valuation of more than $46 billion in December.
"Given Asia's high GDP growth and rapidly growing market size, it was natural for investors to look at China and other parts of Asia as places to invest," said Raman Chitkara, who leads the global technology practice at PricewaterhouseCoopers.
"They see the power of Asia－rapidly growing markets, rising new middle class, and growing urbanization－as accelerators for growth and high valuations. There is an entrepreneurial culture in Asia, particularly in China and India, and startups present a certain level of excitement.
"That, plus the potential for economic prosperity by building large-scale value over a short period of time, attracts people to start a business."
Zhongguancun district in Beijing alone gave birth to 49 startups a day last year. The State Administration for Industry and Commerce said nearly 3 million people set up their own businesses for the first time in the nine months from March last year, after China reduced the threshold for those who want to register a business.
At present, China has more than 1,600 technology incubators and hosts more than 1,000 entities investing in startups, with total venture capital exceeding 350 billion yuan ($56 billion).
Early this year, the government decided to set up a new national venture capital fund to help startups and promising entrepreneurs. The $6.5 billion fund will be used to support seed-stage technology startups in the country.
Peng T. Ong, founder of Match.com, the pioneering online dating service set up 20 years ago, recalled his tough days of searching for an investor for his startup business.
"It was harder then," said Ong, who now runs Monk's Hill Ventures, a venture capital firm in Singapore that invests in technology startups in Asia.
"But things have changed dramatically. With more business successes, huge Internet penetration and more mobile telephones, the Asian startup scene is altogether different now."
Flipkart, India's largest retailer by sales, has a success story similar to that of Xiaomi. Now valued at $15 billion, it was started by two friends a few years ago with $6,000 saved from their earnings.
Ma Rui, partner for China at the seed fund and accelerator 500 Startups, said the spectacular success of Internet-based businesses is fueling startup growth.
"Tech entrepreneurship is one of the few ways a talented young person with few resources and dollars can create something that affects millions of people in a fairly short amount of time."
Successful private enterprises are jumping on the bandwagon by developing incubation centers and investing in a growing number of tech startups in the region.
The Internet giant Tencent Holdings Ltd is building a center for technology startups in Chongqing, in partnership with the municipal government. It plans to develop 25 such ideas incubators across the country.
In April, Alibaba Group Holding Ltd announced it would set up a startup incubator for mobile Internet and mobile commerce in the Indian city of Bangalore, and Google has launched its startup incubator Campus Seoul in South Korea.
In India, startups have received some huge investments lately. Based on data compiled by a startup news website, YourStory, in the first quarter of this year 147 deals were put together. Indian startups raised $1.7 billion, registering a 300 percent annual growth. In the first quarter of last year alone, startups in the country raised $450 million. A total of 300 deals were closed last year. Kris Gopalakrishnan, co-founder of Infosys, one of India's biggest IT companies, said most of the investments from global investors or venture capitalists are happening at the seed stage.
"Angel funding typically happens locally," added Gopalakrishnan, who is also chief mentor of Startup Village, a technology business incubator in the southern state of Kerala.
Justin Hall, principal of Golden Gate Ventures of Singapore, said there is now more venture capital in the Asia-Pacific region than at "any other time in recent memory".
"It has had a tremendous catalyzing effect on the formation of new startups, from Singapore to Indonesia. These are exciting times for the sector," added Hall.
