Venture investment across Asia remained comparatively strong despite easing from the prior quarter. Renewed momentum in China helped support the region, while investors across key markets became more selective. Capital continued to favor AI models, infrastructure and industrial applications, reinforcing the shift toward solutions with proprietary data, practical use cases and clear commercial value.
- Regional investment remained strong by recent historical standards.
- China’s venture market continued to regain momentum.
- Investors in Japan remained highly selective.
- AI, infrastructure and industrial transformation attracted sustained interest.
- Hong Kong’s public-listing environment remained active.
AI investment broadens across infrastructure and industry
AI remained the defining investment theme across Asia, but the focus extended beyond general-purpose consumer tools. Investors showed strong interest in model development, infrastructure, semiconductors, robotics and enterprise applications. In China, capital increasingly targeted industry-focused solutions and physical AI that can be deployed in manufacturing and logistics. In Japan, investors prioritized businesses with proprietary data, measurable implementation benefits and defensible capabilities. This evolution suggests that the most compelling opportunities are moving toward the enabling technologies and practical applications required to scale AI across the economy.
China’s venture market continues to regain momentum
China’s venture market strengthened as the macroeconomic backdrop improved and activity increased across late-stage financing, secondary transactions and public listings. Successful startup outcomes helped lift investor confidence, while institutional investors and family offices showed greater interest in businesses with proven fundamentals and cash-flow potential. Demand for alternatives in strategically important technologies also supported new company formation and investment. At the same time, policy priorities around industrial upgrading encouraged funding for robotics, semiconductors and other physical or industrial AI applications.
Selectivity rises as exit pathways diverge
Market conditions varied across Asia. Hong Kong maintained an active public-listing environment and a diverse pipeline spanning AI, semiconductors, robotics and consumer businesses. Mainland China remained more selective, particularly for listings involving protected or sensitive technologies. In Japan, sluggish exit activity, higher interest rates and cautious limited partners raised concerns about growth capital and fund liquidity. Corporate participation nevertheless remained important, especially where startups require proof-of-concept sites, manufacturing capabilities, quality controls or other resources beyond capital to commercialize complex technologies.
Trends to watch for in Q4’26
Venture investment in Asia is expected to grow steadily, led by AI and the infrastructure needed to support it. Deep technology should also gain traction, while general consumer AI tools may face a more difficult funding environment and further consolidation. China’s improving macroeconomic conditions, priority-sector policies and patient government capital could sustain momentum. Hong Kong’s active listing pipeline is expected to remain an important exit channel. In Japan, investors are likely to stay selective, focusing on semiconductors, photonics, advanced packaging, materials and components alongside healthcare, alternative energy, quantum technologies and space technology.
The robotics space is a big area for VC investment in China because robotic functions can be deployed immediately — for example, in factories for manufacturing and assembly, and even in logistics hubs. Technologies can often be deployed quickly, so companies can get real-world validation and data. On top of this, we’re seeing robotics startups focus more on general-purpose robotics — human-aid solutions and the like. It’s exciting and is driving a great deal of momentum.
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Q3’26 Global Venture Pulse Report
Explore global venture capital investment, deal activity, sector trends and the outlook for Q4’26
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Carolina de Oliveira
Global Lead of Emerging Giants, KPMG International and Partner and Private Enterprise Leader KPMG Brazil and South America Cluster
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Senior Director, KPMG Private Enterprise, Emerging Giants Network
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