China’s venture capital (VC) investments this year have plunged significantly, making it the world’s worst performer amid the brutal crackdown of the communist regime and the tech industry downturn.
Using data from research firm Preqin, Bloomberg reported on November 3 that China’s venture capital deal value through October plummeted to $62.1 billion, a 44% decline from a year ago.
So far this year, the chip industry has raised $7.9 billion in deals, up 24% year-on-year.
The outlet noted that the stringent Zero-COVID policy of the regime had worsened its venture landscape. Multiple facets of business, from marketing and investments to the manufacturing of Tesla’s vehicles and Apple’s iPhones, have been hit hard by Shanghai and Zhengzhou’s lockdowns.
In addition, international venture companies have decided to recede as Chinese tech firms keep making losses and publicly traded shares continue to fall.
Jenny Lee, a managing partner at GGV Capital, said during a panel at Hong Kong FinTech Week this week, “The cost of capital has gone up dramatically. Every dollar that we have today now has a price.”
Lee added that many investors have to consider investing in regional groups due to the heightened U.S.-China trade war.
And they keep asking themselves, “which technologies may be bifurcated because of the US and China considerations?” before investing.
While China witnesses venture firms pull back globally, Preqin reported that India Venture Capital has outrun the communist regime and continues to become Asia’s leading fintech hub for four consecutive years.
The think tank said, “Global GPs continue to shift their gears to India, which has attracted $4.6bn across 204 fintech deals year-to-date, far surpassing China’s $836mn across 60 deals.”
In the first three quarters, funding for fintech startups and deal volume in India climbed 5% and 13% year-on-year, respectively. This indicates the country’s good regulatory landscape, maturing startup ecosystem, and partial resilience in the stock market this year.
In contrast, due to a harsh crackdown on tech firms, Beijing’s deal value tumbled by 73%, and the number of deals fell by 39% from a year earlier.