HONG KONG • The funding deluge that fuelled one of the world’s fastest technology booms may be ebbing.
Capital raised by investment firms intended for seed and early funding — before a start-up seals its first round of financing — plunged 53% to just 3.82 billion yuan (RM2.28 billion) in the first half (1H), according to a survey of 36 funds by Chinese researcher Zero2IPO.
More than 200 domestic venture capital firms saw money available for investment sliding 44%, according to a second poll.
The declines suggest start-up investment may begin to wane in the months ahead. China’s clampdown on credit, coupled with a brewing global trade war and turbulence in markets, is hampering the venture industry’s ability to amass new capital.
Zero2IPO’s numbers underscore a rapid fall in early-stage funding, a more severe hit to fledgling players rather than the well-established Internet giants that still attract deep-pocketed backers such as Tencent Holdings Ltd and Alibaba Group Holding Ltd.
Overall investment — encompassing later stages of funding for bigger start-ups — rose 15% to about 117 billion yuan in 1H.
“Due to caution about financial risks and the overall macro-economy, fundraising and exits have both not been doing well,” an analyst said this week. “But for institutions that don’t lack money, the next six months to one year is a prime time to make bargain investments.” — Bloomberg