Saturday, February 1, 2014

DJX VentureSource 4Q’13 China Venture Capital Report

Venture Capital Investment in China Improves During 4Q 2013

Investment into Chinese venture-backed companies markedly improved in 4Q’13, as companies raised $1.5
billion from 106 deals. The gains equate to a 76% increase in capital and a 16% increase in number of deals from the previous quarter.

Compared to 4Q’12, though deal flow improved by 66%, investment dipped by 4%.

314 deals were completed for China-based VC-backed companies during 2013 as a whole, up 20% on the
figure for 2012 but dropping 22% on the number completed during 2011. In terms of capital raised, $3.5 billion were accumulated during 2013, representing an overall decline of 29% from 2012 and 45% from 2011.

Equity Financings into China-based, VC-backed Companies, by Industry Group (4Q 2013)

Consumer Services companies took $985 million through 47 deals during 4Q’13, a 44% and 66% share of
overall deal flow and capital raised for the quarter respectively. The figures equate to a 52% increase in deal flow and 114% in amount raised for the sector from 3Q’13. The amount raised for the quarter also represents over half of total investment for the sector during 2013.

The Information Technology sector raised the second highest proportion of investment during 4Q’13. IT
companies drew $275 million across 28 deals, representing a drop of 28% in deal flow and 7% in capital raised compared with 3Q’13.

Business and Financial Services companies received $154 million through 18 deals during 4Q’13, an uptick of 38% in deals closed and over 3.5 times the amount raised from 3Q’13. The sector’s investment figure represents a 10% share of total equity investment into China-based VC-backed companies for the quarter.

The Consumer Services sector placed first for dollars raised during all of 2013, with $1.9 billion equating to a 54% share of investment for the year. IT companies garnered $762 million giving the sector a 21% share, while Business and Financial Services and Healthcare placed third and fourth respectively with a 10% ($348 million) and 6% share ($229 million).

Venture M&A and IPO Market Activity in China During 4Q 2013

M&A activity for venture-backed companies in China remained stable in 4Q’13 with five completed, the same as in 3Q’13 and three more than in 4Q’12.

A total of 20 venture-backed M&As were completed in 2013, representing an increase of 82% from the number completed both in 2012 and 2011.

12 VC-backed companies went public during 4Q’13 in China, the highest figure in a quarter since 2Q’12. The largest of these was YuanShengTai Dairy Farm Ltd., which raised $340 million for its November listing on the Hong Kong Stock Exchange.

Complete report

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