Funding wars: Chinese start-ups overtake US rivals

By Daniel Lanyon on Thursday 10 January 2019

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According to a new Preqin/INSEAD report, China’s venture capital market has seen huge growth in 2018.

Forget trade wars, VC funding is a new rift between the US and China. For the first time, Chinese start-ups have attracted more funding than their US counterparts, according to data compiled by Preqin.

In the first half of 2018, the latest available data, a total of $56bn was invested in venture capital in China while in the US the figure stood at $42bn.

The pace of growth has been fast. In 2010 China-based early-stage companies secured just $4.6bn in venture capital funding – in 2017 they secured $64bn.

Of the 321 venture capital-backed unicorns currently active worldwide, 98 are based in China while 162 are based in the US.

Five of the 10 largest venture capital unicorns are based in China, including Ant Financial Services Group which is the largest and currently valued at $150bn.

Christopher Elvin, Head of Private Equity at Preqin said that China’s emergence as a hub of innovation and entrepreneurship has been the major venture capital narrative of the past five years.

“Conditions in the country are well-suited to promote large technology firms – China boasts more mobile phone users than any other country, and technology like ecommerce and mobile payments are deeply embedded in the lives of many people.”

“With several unprecedentedly large funds in market to raise capital for investment in the sector, the prospects are bright for further developments in the China-based startup market.”

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