VC Dollars For China Take A Dip In 2019

This year has been something of a doozy for China when it comes to venture capital funding for its companies.

Subscribe to the Crunchbase Daily

Crunchbase News has written about China’s venture capital funding in the past, generally at the end of a quarter and focusing on the number of “supergiant rounds,” or deals of $100 million or more. But this time, we thought we’d take a mid-ish quarter check-in to see how the overall venture capital scene in China is looking, and it appears this year has been a bit of a dud.

From the beginning of the third quarter of 2019 (Oct. 1) until Nov. 19 (around the midpoint), companies based in China received $4.1 billion in venture capital over 183 deals. That’s significantly less from the same period in 2018, when Chinese startups nabbed $10.9 billion in VC dollars over 388 rounds.

For this year until mid-November, Chinese companies raised $35.6 billion over 2,047 rounds. Again, that’s way less than the same timeframe last year, when Chinese companies pulled $93.4 billion over the course of 2,795 funding rounds.

Now, Chinese venture-backed companies have still been getting large capital infusions. The largest deal of this year so far was Chehaoduo’s $1.5 billion Series D in February. But it should also be noted that there were only three funding rounds above the $1 billion threshold this year, fewer than last year’s 10 $1 billion+ rounds.

Funding rounds larger than $1 billion are not the norm (the U.S. has only had four of those kind so far in 2019), but they are becoming more common. And it certainly says something that 2018 saw 10 rounds above 10 figures in China while 2019 only saw three of such.

The number of supergiant rounds ($100M+) for Chinese companies also places China behind the United States and the rest of the world, as we wrote at the end of last quarter, and the overall number of VC rounds and deal volumes are down quite a bit from 2018, which saw the most VC funding success for China of the past five years.

Uncertainty about trade wars and China’s economic slowdown could be affecting the willingness of venture capitalists to invest in Chinese companies this year. Here’s hoping 2020 fares better.

Illustration Credit: Li-Anne Dias