Data Startups Venture

Everything Is A Bubble, China Edition

Morning Report: All things are good which probably means that, soon, all things will be bad.

The Chinese startup market is rocking. In the past few months, we’ve explored its electric and autonomous car market, the staggering scale of bets being made on bikesharing companies, the huge dollars flowing into the country’s AI sector, the boom in its broader automotive sector, and more. Hell, the Spotify-Tencent deal just went down and the country’s private-public work is afoot.

All that’s to say that tech is hot in China. But perhaps deals are moving even faster than we thought.

The Wall Street Journal recently published an article on the Chinese startup space that included the following eye-catching statistics:

In the first 11 months of this year, 3,418 new venture-capital and private-equity funds in China raised 1.6 trillion yuan ($241.76 billion), more than double the amount of 2015 and more than 10 times that of 2006, according to consultancy Zero2IPO Group. It estimates about 12,000 investment firms manage 8.5 trillion yuan in capital, an increase from 8,000 firms managing 5 trillion yuan in 2015.

For fun, how many American venture firms can you name, right now. Five? Ten? Certainly not more than twenty, I’d wager. Any more and I’d presume you’ve either had a few bad runs on Sand Hill road or that’s where you work.

Regardless, 3,418 is quite a few more than twenty (170.9 times as many, in fact), which makes our point. No matter how impressive various categories of startup activity in the country have proven so far, there’s more money waiting.

Which implies more activity in the country at a time when the United States early-stage market is undergoing some internal confusion. It makes for an interesting set of circumstances heading into the new year.

To close, given that the 3,418 figure is an 11-month tally, what would that work out to for the full year? If we ran it out at-pace to a full 12 months it would come 3,728. That’s a few.

From The Crunchbase Daily:

FCC repeals net neutrality

  • In a 3 to 2 vote, the U.S. Federal Communications Commission voted to undo net neutrality regulations, which prohibited broadband providers from blocking websites or charging for faster delivery of certain content. The move was broadly opposed by startups, who see the rule change as a potential impediment for scaling new online businesses.

Pishevar leaves Sherpa Capital

  • Venture investor Shervin Pishevar has stepped down from Sherpa Capital, the firm he founded five years ago, following allegations of sexual misconduct. Pishevar, an early Uber investor and co-founder of transport startup Hyperloop One, called the accusations untruthful and part of a smear campaign against him.

Legal tech scaling slowly

  • The legal sector hasn’t been entirely sheltered from the disruptive forces of automation, but it hasn’t exactly been an early adopter either. A Crunchbase News analysis finds that investment in legal tech has remained relatively weak in the past couple years. However, a plentiful supply of seed and early stage companies could signal more large, follow-on rounds ahead.
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