#Asia No slowdown in China: internet companies raise over $6.5b in first half of 2015

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A fistful of Maos: China’s startups don’t want the dollar

Mao’s face adorns all the Chinese banknotes. Photo by David Dennis.

Investments in China’s tech companies and startups “soared” in the first half of the year, says a new report (PDF link) this week from PricewaterhouseCoopers. All the funding thrown at Chinese web and tech firms “in H1 2015 were almost the same as the full-year total of 2014.”

The report (hat-tip to Quartz for spotting it) mirrors the boom in funding for Chinese startups we’ve seen going on all year, including bumper investment rounds for Didi Kuaidi (US$3 billion), food delivery startup Ele.me (US$630 million), and laundry app Edaixi (US$100 million).

Both the deal value and volume reached a new China high since 2012, the report says.

In the first half of 2015, there were 1,126 investments in the tech and web industries in the country, amounting to US$15.56 billion (that covers four sectors: mobile and telecoms, internet, technology, plus entertainment and media; the chart uses the phrase “TMT” to group them together). In the same period, China saw a total of 2,525 venture capital and private equity investments across all industries, totalling US$25.4 billion.

China's tech funding booms as internet companies raised over $6.5b in first half of 2015

Focusing only on the internet sector as it’s the most relevant to startups, H1 saw web firms in China raise a total of US$6.57 billion.

China's tech funding booms as internet companies raised over $6.5b in first half of 2015

The tech industry remains strong despite China’s economic slowdown, although it’s not always the star performer in terms of deals. In Q2, a major entertainment industry deal meant that the media and entertainment sector was almost level with the entire internet sector.

Do you remember the first time?

First time funding deals amounted to US$3.97 billion across all tech and web areas in H1, but the never-ending ups and downs in first-time versus follow-on funding (see chart below) shows there’s no particular trend emerging – apart from it looking like a rollercoaster.

China's tech funding booms as internet companies raised over $6.5b in first half of 2015

“In H1 2015, first-time investments continued to be as strong as in H2 2014, accounting for over 60 percent of the total investments, which not only evidenced the rapid replacement rate in the [tech and web] industry, but also indicated investors’ preference for early-stage projects,” adds the report.

That churn is now being felt by local, on-demand startups (for things like laundry or car washing), which are springing up and dying off at alarming rates.

The full PWC report is here (PDF file).

See also…

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