March 17, 2006

China awash with venture capital…Duh?!

Filed under: Start-up First Aid — Administrator @ 3:42 pm


“Show me the money!”

Last Tuesday, Stuart Biggs and Michael Logan published an article in the South China Morning Post titled “China awash with venture capital” which quotes Vincent Chan, chairman of the Hong Kong Venture Capital and Private Equity Association and vice-president of Jafco Investment, as saying:

“…an influx of US venture capital firms was pushing up valuations.

The pot is getting bigger. [Valuations have] gone up even higher. United States VCs are setting up new offices in Beijing and Shanghai every month,” he said.

But much of the focus was concentrated on mid- to late-stage investments. “There are still some VCs willing to invest in the early stage or pre-revenue stage,” he said. “However, many former small fund managers have been able to raise much larger funds [this year and last].

“There is a general tendency for them to work on bigger deals. Some have changed focus from venture into growth capital and compete with the traditional expansion capital investors.

“I believe there is a funding gap between early stage and late stage.”

This is absolutely the case

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