Venture Capital Report - Dow Jones & Company
Venture Capital Report
China | 4Q | 2018
VENTURE CAPITAL REPORT
VENTURE CAPITAL REPORT
The following report presents Dow Jones VentureSource's quarterly findings for Chinese venture capital fundraising, investment, valuation, and liquidity. The included charts and graphs offer a comprehensive view of the trends currently affecting the venture capital market. Highlights for 4Q 2018 include: ? Equity investment retreated from the second quarter's high point, but 2018 ended with the greatest annual total seen in any country on record. ? While U.S. investment jumped ahead of China in 4Q, on an annual basis Chinese funding exceeded the U.S. for the third consecutive year. ? Median equity deal sizes in China hit a new record at $12.3 million. ? VC fundraising was a mixed picture ? activity surged from the previous quarter, but not enough to prevent a 13% year-over-year decline. ? Liquidity markets endured wild fluctuations, with both M&As and IPOs down sharply in 4Q. However, on an annual basis in terms of both capital
collected and deal flow, M&As had their best year ever; and IPOs experienced the best since 2010 in terms of amount raised. ? VC investment remained tightly concentrated in Beijing (38.8%) and Shanghai (17.4%) in amount raised.
VENTURE CAPITAL REPORT 2
EQUITY FINANCING IN CHINA DIPS IN 4Q, BUT ENDS 2018 WITH RECORD-BREAKING HAUL
FINANCING
Equity investment in 4Q retreated significantly from the record-breaking second quarter, but still contributed to a year that ended as the best ever for Chinese companies. In fact, the $139.72 billion raised across 3,725 deals in 2018 ranks as the largest annual total seen in any country, exceeding U.S. investment for the third consecutive year.
Median round amounts set a new record in 4Q, hitting $12.3 million. This is nearly four times the annual median from 2016, indicating that the surge of investment is broad-based.
The top deal of the quarter was a $3 billion round for Beijing-based Bytedance, the owner of Jinri Toutiao and Tik Tok, is currently valued at $78 billion.
Equity Financings into China-Based, VC-Backed Companies (2015?2018)
VENTURE CAPITAL REPORT 3
VC DEAL FLOW IN CHINA-BASED, VC-BACKED COMPANIES, BY ROUND CLASS (2015?2018]
FINANCING
Number of Deals
VENTURE CAPITAL REPORT 4
VC INVESTMENT IN CHINA-BASED, VC-BACKED
COMPANIES, BY ROUND CLASS (2015?2018)
FINANCING
Amount Raised ($B)
VENTURE CAPITAL REPORT 5
MEDIAN DEAL SIZE FOR CHINESE COMPANIES HITS NEW RECORD IN 4Q
FINANCING
Median Equity Deal Size ($M)
VENTURE CAPITAL REPORT 6
MAJOR SHIFT TOWARD BUSINESS &
FINANCIAL SERVICES; HEALTHCARE SPARKS NEW INTEREST
FINANCING
Companies in the Business and Financial Services sector grabbed the largest share of funding in 4Q, confirming a major shift in industry focus in 2018. With 44% for the quarter and 41% for the year, it was the first time this group took first place since 2012. The top deal of the quarter in this space was a $1.44 billion growth equity round for Nanjing-based Financesn, a payment/transactional processing company.
4Q 2018 Industry Breakdown By Number of Deals
Consumer Services came in second place in 4Q in terms of funding, but took the premier spot for deal flow. Bytedance had the largest round of the quarter in this sector (and the top deal for Chinese companies overall).
Perhaps the most intriguing industry to watch is Healthcare, which soared 109% in funding and 33% in deal flow during 2018 compared to the previous year. While companies in this space still comprise a relatively small portion of overall VC activity, at 8.5%, there is a clear trend beginning in 3Q 2017 of heightened investor interest.
4Q 2018 Industry Breakdown By Amount Raised
VENTURE CAPITAL REPORT 7
TOP EQUITY DEALS FOR CHINA-BASED,
VC-BACKED COMPANIES (4Q 2018)
Company Company Formal Name Familiar Location
Name
Beijing Byte Dance Telecommunications Co. Bytedance Beijing
Ltd.
Industry Code Industry Group Brief Description Close Date
General Media/Content
Consumer Services
Provider of a personalized news
aggregation and recommendation
application.
10/25/2018
Suning Finance Service (Shanghai) Co. Ltd.
Financesn
Nanjing
Payment/Transacti onal Processing
Business and Financial Services
Provider of financial services.
12/28/2018
Round Type
VC 6th
Growth Equity
Raised ($M)
Round Investors (* denotes lead)
Technology Crossover Ventures, Softbank Group Corp.*, $3,000.00 Primavera Capital Group*, Kohlberg Kravis Roberts & Co.
LP*, General Atlantic LLC*
$1,436.99
Zhongjin Zhida, Yunfeng Qitai, Suning Holdings Group Co. Ltd., Shenzhen Capital Group Co. Ltd., Qingdao Sishiren
Investment Management LP, Qiaogeli Investment, Macrolink Group, Jiaxing Kunjia, Guangji Minghe, GP
Capital Co. Ltd., Fujian Huaxing Venture Capital
Shanghai Lujiazui
International Financial Asset Exchange Co. Ltd.
Lufax Shanghai
Lending
Business and Provider of an online
Financial platform for financial 12/3/2018
Services
asset exchange.
VC 4th
$1,330.00
United Overseas Bank Ltd., UBS AG, SBI Holdings Inc., Qatar Investment Authority*, Primavera Capital Group*, Macquarie Group Ltd, LionRock Capital, JPMorgan Chase & Co., Hermitage Asia Capital Ltd., Hedosophia, Goldman
Sachs Group Inc., All-Stars Investment Ltd.
Beijing Yunshan Information Technology
Co. Ltd.
Meicai
Beijing
Business to Business
Marketplaces
Operator of an Business and agricultural products
Financial business-to-business 10/8/2018 Services (B2B) e-commerce
platform.
VC 6th
$800.00
Tiger Global Management LLC*, Shunwei Capital Partners, Hillhouse Capital Management Ltd.*
Hangzhou Netease
Music Technology Co. Ltd.
NetEase Cloud Hangzhou Music
Movie/Music Producers and
Distributors
Consumer Services
Provider of online digital music 10/12/2018 services.
VC 2nd
$600.00
General Atlantic LLC, China Everbright Ltd., Boyu Capital Advisory Co. Ltd., Bertelsmann Asia Investment, Baidu Inc.*
VENTURE CAPITAL REPORT 8
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