Our capital raising lawyers in New Zealand and Singapore have had a busy first half of 2020, even as Covid-19 impacts globally on fundraising. As at end of July, we had helped clients close 58 financing deals in the first half of the year, slightly above where we were at the same point last year.
Last calendar year we advised on more than 100 deals – 116 to be exact – so it looks like this year we may be on track for that kind of number again.
Of the deals we’ve helped close so far this year, 39 were fundraisings by Southeast Asian companies, and the remaining 19 in NZ (12 of the recorded deals were started in 2019 but completed in 2020). Our numbers (compared with previous years) implies that startup financing, particularly in Asia, has remained pretty resilient. The availability of capital in Southeast Asia, with the particularly vibrant VC scene in Singapore, has ensured financings have ticked over during lockdowns.
It is fair to say that we have seen more bridge financings amongst existing clients than normal, compared to fundraising for new companies. As investors look to support existing portfolio companies over the next few difficult months, many companies have had to change their investment strategy. Venture debt may play an increased role alongside traditional equity financing in more deals we see going forward. Thankfully, to date, we’ve not seen many down rounds, but these could increase over the next 12 months unless founders can find alternative financing structures.
There’s a lot of discussion in the market about how the pandemic has changed the investment landscape, with deals being pulled or delayed. Fortunately, we’ve not seen too much evidence of that in the tech space so far. Deals are taking slightly longer however, and we expect more investor friendly terms to appear.
Stay tuned – we’ll be keeping a close watch to see how fundraisings in tech companies in our key markets continue to look over the rest of 2020.
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