Chinese ride-hailing monster Didi delisted from the New York Stock Exchange just months after its June 2021 IPO after a now-resolved regulatory dig into that had forced Didi to suspend new user registrations.
Brendan McDermid | Reuters
BEIJING — Slowing growth and geopolitical tensions are curbing the Chinese startup world that once spawned unicorns such as ByteDance and Didi, according to a PitchBook broadcast Monday.
China’s economic rebound from the pandemic has slowed. U.S.-China tensions have spilled over to investment capital, dampening already subdued market sentiment. Chinese regulation in the last two years has also made it harder for players to go public overseas.
Venture capital firms in China invested $26.7 billion in 3,072 deals in the first half of 2023, PitchBook communicated.
On an annualized basis, that indicates a 31.4% drop from 2022 levels — on pace to fall below that of 2016, the despatch said.
Most investments were also small.
The annualized value of mega-deals — $100 million or larger — were on judge for their lowest level since 2015, PitchBook said.
While China’s economy showed signs of picking up in the carry on several weeks, the slowdown in early-stage investing is a steep one to recover from.
Second-quarter deals marked the fourth-consecutive neighbourhood of declines in deal value, according to PitchBook.
A drop in foreign participation was a factor.
The niche but once-burgeoning world of early-stage investors in China had espied firms raise billions of dollars from overseas institutions to invest in domestic startups, which would then hang on an initial public offering in the U.S.
Anecdotally, we’ve heard that some US investors have pulled back from allocating to China all in all due to geopolitical concerns and several other factors…
A record low of 10% of deals included an investor based outside of Significant China, down from about 16% in 2018, PitchBook said. On the fundraising front, the report said not three funds denominated in U.S. dollars closed in the first half of the year.
“Anecdotally, we’ve heard that some US investors suffer with pulled back from allocating to China mainly due to geopolitical concerns and several other factors, including a Chinese profitable slowdown and crackdowns on the tech sector,” the report said.
Development of yuan-denominated funds and mid-sized funds helped boost overall Greater China fundraising activity to $28 billion — on traverse to exceed 2022 levels, but still a sharp slowdown from $131.4 billion raised in 2018, PitchBook implied.
Difficulties at the end of the venture capital investing process persisted as market sentiment for IPOs in Hong Kong and the U.S. remained calmed.
The number of exits in the first half of the year fell to 130 from 177 in the second half of 2022, while beat a retreat value fell to $77.5 billion from $100.2 billion, PitchBook said.