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HomeEconomyChina VC funding set for weakest first half in 8 years

China VC funding set for weakest first half in 8 years

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by Roxanne Liu and Kane Wu

BEIJING/HONG KONG (Reuters) – Fundraising for China-focused venture capital is set to have its weakest first half in at least eight years, data from research firm Preqin showed. A faltering economic recovery and U.S.-China tensions have rattled investors and start-ups.

Concern over the impact of the weaker business environment on startup prospects and valuations could mean a turnaround Investors and advisors say fundraising It may take time, as venture funds take longer to evaluate potential deals.

” Current market presents bifurcated funding paths: USD funds continue to face a challenging environment alongside their more risk-averse investors, at the same time400RMB (yuan) Funds increasingly rely on state-owned or government-backed investors. “Wilson Sonsini Law Firm’s China practice.

“Geopolitical de-risking overhang and economic uncertainty have also been weighing on the deal,” He said.

The decline reflects a turnaround after years of rapid growth for Chinese start-ups fueled by ample funding. U.S. security concerns and tit-for-tat Trade restrictions keep USD investors on the sidelines, while domestic RMB funds struggle in China’s post-COVID-


USD denominated fundraising for China has reached $46 million USD, while the total amount of funds denominated in RMB is 1 USD. 10 billion, Preqin data display.

compared to $4. Billion and $4. Equivalent to RMB 1 billion from January to June last year, a far cry from their respective peaks of about US$5. and $.

Over the same period, 100 million yuan was raised . VC deal valued at $.2 billion as of May lowest point since , when the coronavirus When an epidemic derails business activity.

There are only two unicorns — or startups with valuations — the world’s second largest so far this year, according to CB Insights data. Large economies have minted $1 billion or more.

Start-ups in the consumer industry face long-term financing, said Ji Xing, managing director of Beacon Capital, a financial advisor.

Chip designers may also become less attractive to investors due to weaker demand for downstream products, Ji said.

Dealmakers say falling valuations of public companies and tepid investor interest in initial public offerings are also making it difficult for start-ups to seek funding.

“Companies’ failure to obtain desirable valuations in their overseas listings has become a factor in early-stage funding for start-ups as investors are Assess their exit prospects,” said Ming Jin, managing partner at boutique investment bank Cygnus Equity.

However, the nascent artificial intelligence-generated content (AIGC) industry is likely to generate meaningful deal activity in the second half of the year, according to investors and advisors. Especially dollar-denominated venture funds.

Lighthouse’s Ji said: “USD investors tend to focus more on the underlying fundamentals disruptive opportunities presented by facility development and are willing to pay a premium for such opportunities.”

Wayne Shiong, a partner at venture capital firm China Growth Capital, said he expects venture capital deals to pick up this year, largely as top-flight, cash-rich funds are keen to deploy the dry stocks they have been holding. Gunpowder throughout the pandemic. 100



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