Venture Capital Report

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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