Tech start-up funds plummet in China

HONG KONGThe 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