China VC fundraising down 50% in 2013

Jan 28, 2014

Venture capital fundraising in the mainland fell 79% quarter-on-quarter and 50% year-on-year, but capital deployed rose, with $1.5 billion invested across 106 deals.

Chinese venture capital fundraising fell 79% to $182 million across nine funds in the fourth quarter, new data shows.

Year-on-year numbers were also down, with VC fundraising totalling $1.97 billion in 2013, half the amount raised in 2012, according to DJX VentureSource research.

Govtor Capital’s Jiangsu Hi-tech Innovation Angel Fund raised the most in Q4 with $82 million, accounting for 45% of the total raised in the quarter.

Beijing Yonyou Xingfu Cloud Venture Capital Center and Tianjin Venture Capital came next, each generating $16.39 million. China Summit Capital and Guangdong Yuezheng Enterprise Investment each brought in $16.34 million.

While fundraising was down, investment into Chinese VC-backed companies rose in Q4 to $1.5 billion, a 76% increase. That couldn’t prevent the total capital deployed falling 29% year-on-year in 2013 to $3.5 billion.

There was also a 16% rise in the number of deals, to 106, last quarter. This capped a 20% increase in the number of deals last year over 2012, to 314.

In terms of industries, consumer services companies took in $985 million from 47 deals during the fourth quarter, a 114% rise in amount raised and 52% increase in deal flow. Information technology companies the next most popular investments, attracting $275 million across 28 deals, representing a 7% decline in capital raised and a 28% drop in deal flow.

Business and financial services companies, meanwhile, received $154 million across 18 deals in Q4, a 38% uptick in terms of deals closed and more than three-and-a-half times the amount raised the previous quarter.

Last year, consumer services raised $1.9 billion, followed by IT companies ($762 million), business and financial services ($348 million) and healthcare ($229 million).

Beijing Renren Youxin Investment, a peer-to-peer lender, took in the biggest individual investment in Q4, raising $130 million from its first round of financing from a group of investors led by private equity firm Trust Bridge Partners.

Android software company Beijing Zhuoyi Xunchang Technology, meanwhile, secured $120 million from Innovation Works (China) and Softbank Corp, while eHi Auto Services, a car rental company, garnered $102 million from Ignition Partners and Ctrip.com.

Five M&A deals were completed in Q4, the same number in Q3, capping a total of 20 M&A transactions for 2013, an 82% increase year-on-year.

Twelve VC-backed companies went public in the fourth quarter, the highest figure since the second quarter of 2012. The largest IPO was that of YuanShengTai Dairy Farm, which raised $340 million through its November listing in Hong Kong.