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China is now in a Golden Age for startup funding

posted onAugust 30, 2018
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China's startup funding is on pace to smash records in 2018 according to data from Tech in Asia. Chinese tech startups have raised US$43.4 billion in the first half of the year, while the whole of 2017 they raised US$58.8 billion.

“One reason for the boost in domestic startup investment may be US President Donald Trump” the largest English language technology media focusing on Asia wrote. As US-China trade war continues to rattle world markets, money that once flowed to US investments returns to China and  it’s likely that a good deal of it is being re-invested into domestic projects. 

Chinese investment in the US dropped an astonishing 92 percent year-on-year in the first five months of 2018.  

Chinese investors prefer backing ecommerce and fintech startups as well as robotics and artificial intelligence ones.

They also prefer funneling the most money into young-but-somewhat-established startups raising rounds like series A, B and C, Tech in Asia found. Together, investments in those funding stages accounted for around 44 percent of all the money invested in first-half 2018. 

The H1 2018 number doesn’t include Ant Financial’s landmark US$14 billion funding round, which market watchers called the biggest-ever single fundraising globally by a private company. Ant Financial, an affiliate company of the Chinese Alibaba Group, is more of an established corporate entity than a startup, so it doesn’t get factored into Tech in Asia's startup numbers. 

Start-ups in China got  47% of the world’s VC funding in the 3months ended June, compared with a combined 35% for the US and Canada, according to a report by Crunchbase. The South China Morning Post (SCMP) wrote that Crunchbase may have underestimated the amount of fundraising going on in the Asian country because it tracks only relatively big rounds. 

Venture capitalists poured billions into areas from artificial intelligence to blockchain, lured by a potential market of 1.4 billion consumers who are getting connected and increasing their spending on everything from entertainment to health care, SCMP said.

Of note, China created 46 startups worth at least $1 billion between 2012 and 2017 — 80% of all of Asia's unicorns according to a survey conducted by CB Insights. Beijing startups alone brought in $72 billion in funding since 2012, second only to Silicon Valley's $140 billion; New York brought in $36 billion and Shanghai brought in $2. 

China has seen a huge increase of startups in recent years as the government vowed to transform the country from the factory of the world to a global innovation centre.