Venture Capital Fundraising Plummets in China

Chinese venture fundraising sunk to just US$73 million across two funds during the second quarter, a decline of 71% in the number of funds and less than a tenth of the amount raised during the first quarter, according to a report by Dow Jones.

When compared with a relatively weak second quarter last year, the latest quarterly performance shows significant declines as well, with the number of funds and amount raised falling by 75% and 72% respectively.

Envision Capital’s Growth Fund II was the largest Chinese venture capital fund raised during the second quarter. The fund collected US$67 million and accounting for 92% of the total amount for the quarter.

The US$6 million Jiangsu Modern Agriculture Venture Capital Fund was the other fund.

Investment into Chinese venture-backed companies plummeted as well. Chinese companies received US$438 million from venture capital funds in 47 deals, a 9% decrease in deal value.

The top five biggest deals are:

1, Goldman Sachs and the Government of Singapore Investment Corp‘s US$100 million investment into ShanghaiMed Healthcare Inc.

2, Capital Today‘s US$30 million investment into Shanghai Lifu Home Furniture Co.

3, Bertelsmann Asia Investment, DCM, Legend Capital Co. and Tencent Holdings’ US$30 million investment into Youxin Hulian (Beijing) Information Technology Co.

4, A US$20 million investment into Shanghai Hujia Cultural Broadcasting Co. by undisclosed investors

5, China Investment Wealth Venture Fund, IDG Capital Partners, Lapam Venture, Legend Capital Co., Qiming Venture Partners, Shenzhen Capital Group Co.’s US$20 million investment into Shenogen Pharma Group

In accordance with the tight IPO market, only two venture-backed companies completed IPOs during the second quarter, an improvement on the first quarter’s zero initial offerings but still significantly lower than the 15 that took place during the same period last year.

A total of US$294 million were raised in the two IPO deals, a 82% drop compared with last year.

But funds are looking for other ways to exit their investments. A total of 9 venture-backed merger and acquisition deals were completed during the first 6 months of 2013, 4 more than in each of the first halves of 2012 and 2011.