China Enjoying Unprecedented Growth in Venture Investment

VCs love China. So suggests newly released data from Zero2IPO Research Center, a financial advisory services company with several offices in China and, it’s worth noting, an affiliated venture capital arm.

According to the firm, venture investment in China reached historic highs in the second quarter — both in the number of new funds to emerge, and the amount of money raised by investors. Specifically, Zero2IPO found that 28 domestic and foreign firms launched 40 new funds representing roughly $3 billion in capital. Unsurprisingly, a full $1.7 billion of that total came in the form of seven funds established by foreign firms, including IDG Technology Venture Investment, or IDGVC, which had a final close on a $515 million fund in the second quarter; Qiming Venture Partners, which just closed a $320 million fund; and Intel Capital, which recently set aside $500 million for its second China tech fund.

With so much money gushing in, it inevitably trickled down to a record number of China-based startups. Indeed, the 159 Chinese startups that received $1.2 billion in capital in the second quarter represent 31.4 percent more companies than raised around $900 million during the same period last year.

What China-obsessed U.S. VCs might not like to hear: Chinese VCs way outperformed their foreign counterparts in terms of getting companies public. Across Shenzhen and Hong Kong, 18 venture-backed tech companies went public in the second quarter. According to Zero2IPO, 13 of those companies were backed by Chinese VCs alone.