TLDR:
- Foreign VC firms are pulling back from investing in Chinese companies due to higher interest rates and geopolitical tensions.
- Chinese domestic investors, including state-backed players and tech giants, are increasing their involvement in VC mega deals.
According to a recent report by Preqin, the Greater China region is experiencing a surge in venture capital mega deals, particularly in industries such as artificial intelligence (AI), semiconductors, and clean technology. While foreign investors are scaling back due to challenges like trade tariffs and US restrictions, Chinese domestic investors are filling the gap. Chinese state-backed players and tech giants like Meituan and Alibaba Group are actively participating in the largest rounds of funding.
The report highlights that Chinese investors are accelerating their domestic investments in key verticals aligned with China’s economic policies. Clean technology investments in China have surpassed the US in both deal value and volume, with significant funding in electric vehicle companies. However, overall VC deal volume in Greater China has seen a decline compared to the global figure, indicating challenges in the region.
The report also notes that total venture funding from foreign investors into Greater China deals has significantly decreased, while investments from Chinese investors have remained steady. Chinese domestic investors are stepping up their involvement in VC deals, driving funding towards industries that align with China’s economic goals. Overall, the report underscores the shifting landscape of venture capital investment in Greater China, with Chinese players taking a more prominent role in driving mega deals focused on AI, semiconductors, and clean technology.
