TLDR: China’s venture capital & startup scene

By The News Lens (these highlights provided for you by Annotote)

my own research covering 24 VCs prior to the 2008 Global Financial Crisis, only two of the nine domestic VCs were effectively serving as investors in early state firms … what made these two VCs (one the captive VC of a state-linked conglomerate and the other the VC fund of a state ministry) able to pursue these investment strategies was mimicking the investment behavior of prominent foreign VCs active in China

domestic firms including JVs contributed only 11% of the venture capital funds for start-ups with foreign firms providing the rest.

[In 2016, a] whopping 1.37 trillion RMB raised by venture capital and private equity firms with the bulk of the funding coming from 323 government guidance funds … no doubt the Chinese government’s intends to support venture capital lavishly.

Many government guidance funds still invest in a range of other projects, such as infrastructure, rather than supporting early stage entrepreneurship. These funds often still have very restrictive rules about where they can invest and in what industries.

informal alliances of tech entrepreneurs, foreign venture capitalist and local governments, which want venture investment from wherever, have also provided a discreet pushback to give foreign VCs the space to operate within China

the rising number of local funds may mean local allies are harder to come by for foreign VCs at a time when the trends of the past five years indicate a hardening line against foreign investors


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