China VC Deals Drop to Lowest Since 2015 as Funding Shrinks

(Bloomberg) -- Chinese technology startups are hunkering down for tougher times after the country’s slowest quarter for venture capital deals in almost three years.

There were 713 VC deals in the three months ended December, down 25 percent from a year earlier, according to data from market research firm Preqin. The amount invested in the quarter shrank 12 percent to $18.3 billion.

Overall, last year remained a record for venture capital deal-making globally, but the slowdown in China grew pronounced in the latter half of 2018. The slide in the country’s venture capital scene comes amid a cooling in the nation’s economy, the world’s second largest. That was exacerbated by a trade war with the U.S. and regulatory clampdowns that raised uncertainty in the previously booming sector.

Less money for funding could spell the end of some of the cash-burning battles for market share that have played out in the ride-hailing and bike-sharing sectors as investors become wary of loss-making business models that require subsidies for market share. The total amount of venture capital invested in the December quarter dived by 27 percent to $9.8 billion from the previous three months, separate estimates from CB Insights showed. And the number of deals slid 42 percent to 504.

To contact the reporters on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net;Edwin Chan in Hong Kong at echan273@bloomberg.net

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Edwin Chan

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