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Venture-capital funding in China falls to pandemic-era lows in weak 2024 start, with AI, EVs, clean energy as exceptions
By Jerry
Venture capital (VC) investment in China had a disappointing start to the year as overall investment fell to levels not seen since early in the Covid-19 pandemic, with the AI, electric vehicle (EV) and clean energy sectors among the few defying the gloom.
China continued to dominate Asia’s funding landscape in the first quarter, securing eight of the continent’s 10 biggest deals – most notably Moonshot AI’s blockbuster US$1 billion deal in February.
However, overall VC investment in the country fell 30 per cent quarter on quarter to US$11.5 billion, according to a report released on Tuesday by KPMG on the global VC market.
Globally, “market challenges – including the lack of exits, high interest rates, and continued geopolitical uncertainties – kept VC investors cautious”, the report said.
Investors were more selective about potential deals and extending bridge funding to their existing portfolio companies, it added, continuing a slump that lasted throughout 2023. VC deals in China last year totalled US$42.6 billion, representing a 27.4 per cent year-on-year decline in value, according to a separate report by data analytics firm GlobalData released in January.
Fundraising activity in China, while relatively strong, nonetheless was “well off pace” from previous highs, especially for domestic yuan-denominated funds, while foreign direct investment fell as multinational investors sold their China-based assets, according to the KPMG report.
Hong Kong’s VC market also took a hit from the decision to liquidate China Evergrande, as funds that invested in the troubled property developer need to write down their losses, it said, potentially shrinking the pool of liquidity available for investment.
Source: Trade Finance
