China sees record VC investments last year, but cool-down may be coming
Venture capital investments in China last year hit a record $4.2 billion, or 30 percent higher than in 2007 — and VC firms are still flush with cash even as the economic slowdown is poised to worsen.
Some Chinese entrepreneurs say unemployment there could skyrocket any day now as many companies have been waiting until after the Chinese New Year next week (Jan. 26) to make cuts. China has become a major outsourcing partner, which means that its factory workers suffer when U.S. consumers stop buying imported goods manufactured there. With the U.S. and some European economies now in deep recession, the delayed impact on China is about to set in.
How this will affect venture capitalists and the pace of their investments remains to be seen. Gavin Ni, founder and chief executive of Beijing-based research company Zero2IPO Group, said the slump last year may have shaved off up to a fifth of what investment levels would have been without a downturn.
Still, VC firms in China raised a record $7.3 billion last year, 33 percent higher than the year before. On the other hand, there were only 28 initial public offerings last year in China, down from 70 in 2007, and a three-year low.
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About the Author, Matt Marshall
Matt launched VentureBeat in September of 2006, with the realization that no one else was covering the entrepreneurial and tech innovation scene with the velocity or depth that he was. Prior to founding VentureBeat, he covered venture capital for the San Jose Mercury News from 2001 to 2006. In 2002, Matt was awarded "Journalist of the Year" by the Northern California Society of Professional Journalists. Prior to working at the Merc, he was a correspondent for the Wall Street Journal in Bonn, Germany from 1995 to 1998, and a writer for the Washington Post in 1994. Matt holds a PhD in Government and an MA in German and European Studies from Georgetown University. In addition to VentureBeat, Matt is also the Executive Producer of DEMO, the leading launchpad event for emerging technologies.
