China's venture capital is actively going overseas

Chinese venture capital has slowed down the pace of domestic investment but is still actively going out. The number of deals they have invested in overseas has almost doubled. Investment opportunities in some areas are moving overseas, and more countries are returning to normal from the epidemic control, which has attracted Chinese VCs to invest their limited funds overseas.

The number of deals made by Chinese VCs overseas this year exceeded that of 2020 and is even expected to surpass 2018 as a new sub-peak. They also made 14 percent of their overseas investment up from 8 percent five years ago.

Global innovation still growing: the US declines, Southeast Asia emerges as a new hotspot

Startups in Africa and the Middle East have so far raised more venture capital than they did in the same period last year; Start-ups in Europe, Latin America, south-east Asia, and South Asia raised more money in the first half than they did in the same period last year and, despite a decline in the third quarter, there is no doubt that the full year will surpass 2020.

51% of Bay Area venture capital firms have offices abroad, and they already have more offices in Singapore than in Boston or Shanghai. Singapore has surpassed Israel and the United States to become the country with the highest per capita access to venture capital investment in the world.

Although the US market is still the main investment destination for Chinese VCs, its status has begun to decline. Chinese VCs are increasingly looking to Southeast Asia, Latin America, and Europe.

Southeast Asia is a new hotspot for venture capital. Southeast Asia has 10% of the world's population and per capita GDP growth rate is 4 times the world average, with 480 million active Internet users. Singapore, which has opened up from the COVID-19 lockdown, is overhauling its visa regime and competing globally for innovative talent. For the first time this year, SuperReturn Asia, the main venture capital summit, will be held in Singapore instead of Hong Kong.

Investment direction: continue to be optimistic about the crypto market and fintech

While the focus of basic research and infrastructure development for blockchain, cryptocurrency and Web3.0 is still in the US, southeast Asia is an ideal market to validate the technology for consumers. This has attracted more entrepreneurs and venture capital firms in these domains to Southeast Asia.

There are currently more than 600 crypto or blockchain companies headquartered in Southeast Asia, and many of the founders have Chinese backgrounds. Chinese VCs are willing to bet on them, and more than 40% of all lead deals with Southeast Asian startups fall into this domain. In the past two years, 4 of the top 10 Chinese VCs that have led the most investment in Southeast Asian startups have been new faces in crypto or blockchain; Of the top 10 with the most investments, there are as many as 9 institutions that focus on crypto or blockchain venture capital, and Gobi Ventures alone is also focusing on other areas.

In addition to blockchain and cryptocurrencies, Chinese VCs have also set their sights on fintech and e-commerce in Southeast Asian markets. In these two areas in the region, Chinese VCs have led more than 30% and 20% of the investment, respectively.

Chinese VCs led similar investments in Europe, except that gaming replaced e-commerce as the third largest sector. Domestic investment in these areas has been close to empty.

Chinese venture capital investments in the United States are different. Biotech accounted for 33%, followed by AI at 16%. Both sectors focus on research and development, and the best startups still come mainly from China and the United States.

High inflation has pushed global capital markets to their lowest levels this year, with technology companies in particular falling even more. But so far, it has not significantly affected the actions of Chinese venture capital to go overseas.

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Sources:

外面世界挺精彩，中国风投奔海外 (qq.com)