Venture Capital Report - Dow Jones & Company · 2019-01-15 · VENTURE CAPITAL REPORT VENTURE...

VENTURE CAPITAL REPORT

Venture Capital ReportChina | 4Q | 2018



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.

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EQUITY FINANCING IN CHINA DIPS IN 4Q, BUT ENDS 2018 WITH RECORD-BREAKING HAUL

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.

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FINANCING

Equity Financings into China-Based, VC-Backed Companies (2015–2018)


Number of Deals

VC DEAL FLOW IN CHINA-BASED, VC-BACKED COMPANIES, BY ROUND CLASS (2015–2018]

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FINANCING


Amount Raised ($B)

VC INVESTMENT IN CHINA-BASED, VC-BACKED COMPANIES, BY ROUND CLASS (2015–2018)

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FINANCING


MEDIAN DEAL SIZE FOR CHINESE COMPANIES HITS NEW RECORD IN 4Q

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FINANCINGMedian Equity Deal Size ($M)


MAJOR SHIFT TOWARD BUSINESS & FINANCIAL SERVICES; HEALTHCARE SPARKS NEW INTERESTCompanies 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.

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.

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FINANCING4Q 2018 Industry BreakdownBy Number of Deals

4Q 2018 Industry BreakdownBy Amount Raised


TOP EQUITY DEALS FOR CHINA-BASED, VC-BACKED COMPANIES (4Q 2018)

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Company Formal Name Company Familiar Name

Location Industry Code Industry Group Brief Description Close Date Round Type Raised ($M) Round Investors

(* denotes lead)

Beijing Byte Dance Telecommunications Co.

Ltd.Bytedance Beijing General

Media/ContentConsumer Services

Provider of a personalized news aggregation and recommendation

application.

10/25/2018 VC 6th $3,000.00Technology Crossover Ventures, Softbank Group Corp.*, Primavera Capital Group*, Kohlberg Kravis Roberts & Co.

LP*, General Atlantic LLC*

Suning Finance Service (Shanghai) Co. Ltd. Financesn Nanjing Payment/Transacti

onal Processing

Business and Financial Services

Provider of financial services. 12/28/2018 Growth

Equity $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 LendingBusiness and

Financial Services

Provider of an online platform for financial

asset exchange.12/3/2018 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

Business and Financial Services

Operator of an agricultural products business-to-business (B2B) e-commerce

platform.

10/8/2018 VC 6th $800.00 Tiger Global Management LLC*, Shunwei Capital Partners, Hillhouse Capital Management Ltd.*

Hangzhou Netease Music Technology Co.

Ltd.

NetEase Cloud Music

HangzhouMovie/Music

Producers and Distributors

Consumer Services

Provider of online digital music

services.10/12/2018 VC 2nd $600.00

General Atlantic LLC, China Everbright Ltd., Boyu Capital Advisory Co. Ltd., Bertelsmann Asia Investment, Baidu

Inc.*


MOST ACTIVE INVESTORS IN CHINA-BASED, VC-BACKED COMPANIES (4Q 2018)

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FINANCING

Number of Deals


STRONG FINISH FOR CHINESE VC FUNDRAISING IN 4Q, BUT STILL DOWN FOR THE YEAR

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FUNDRAISING

Chinese VC Fundraising (2015–2018)Based on multiple closings

Chinese fundraising presented a mixed picture in 2018.

After starting the year with the weakest quarter since

2Q 2013, VCs achieved a powerful finish in 4Q, raising

$4.57 billion across 19 funds. Despite this, overall

fundraising ended the year down 13% compared to

2017.

Strikingly, 2018 saw a continuation of the trend toward

dramatically larger average fund sizes. In 2011, the

average fund was around $97 million; by 2018, that

figure jumped to $240 million – an increase of nearly

150% in just 7 years.

The top fund of the quarter was Hong Kong-based

DCP Capital Partners LP, securing $1.56 billion in its

first close.


TOP CHINESE VC FUND CLOSINGS IN 4Q 2018

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FUNDRAISING

Firm Name Fund Name

Amount ($M)

Closed in 4Q

Location Offering Status Fund Type Closing Type

DCP Capital Partners LP DCP Capital Partners LP $1,557.05 Hong Kong Open Early-Stage Venture Capital First

Morningside Group (Holdings) Ltd.

Morningside USD Technology Fund $1,000.00 Hong Kong Closed Early-Stage

Venture Capital Final

Gaorong Capital Gaorong Partners Fund IV LP $500.00 Beijing Closed Multi-Stage Venture Capital Final

Fortune Venture Capital Co. Ltd.

Shenzhen Fortune Chuangtong Equity Investment $471.84 Shenzhen Closed Multi-Stage

Venture Capital Final

Legend Capital Co. Ltd. Legend Information Technology Fund $256.64 Beijing Open Multi-Stage

Venture Capital First


M&A MARKET PLUNGES IN 4Q, BUT 2018 OVERALL SETS ALL-TIME RECORDS

Following the overheated second and third quarters,

M&A activity swiftly fell back to earth in 4Q with

$3.44 billion paid in 18 deals. While the amount was

26% below the 5-year quarterly average, the number

of transactions was still quite high by historical

standards – the third-largest on record, in fact.

Despite the wild quarterly gyrations, 2018 as a whole

set new records for both the number of M&A’s and

the total amount paid on an annual basis.

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LIQUIDITY

China VC-Backed M&A Activity (2015 - 2018)


TOP CHINA M&As (4Q 2018)

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LIQUIDITY

Company Name Location Brief Description Industry Code Industry Segment Industry Group Acquirer Close Date Round Type Amount Paid

($M)

Beijing InMyShow Technology Co. Ltd. Beijing Operator of a new media

platform.General Media /

Content Media and Content Consumer Services

Guangxi Fortune

Technology Co. Ltd.

12/3/2018 Reverse Merger $653.61

Inner Mongolia Mining Asset

Management Co. Ltd.

Hohhot

Provider of a mineral resources exploration and development platform for

non-ferrous metals.

Mining (Non-Energy)

Materials and Chemicals

Industrial Goods and Materials

Zhongjin Gold Co. Ltd. 11/23/2018 Acquisition $653.04

1More Acoustics Technology Co. Ltd. Shenzhen

Manufacturer of accessories for digital

equipment.

Electronic Components /

Devices

Electronics and Computer Hardware

Information Technology

Gettop Acoustic Co.

Ltd.12/4/2018 Acquisition $488.58


VOLATILE IPO MARKET SWINGS BACK DOWN IN 4Q, BUT STILL ACHIEVES BEST YEAR SINCE 2010

After vaulting into the stratosphere the previous quarter,

the Chinese IPO market fell hard in 4Q, raising just $2.97

billion across 21 offerings. While this was the lowest

quarterly amount raised in almost two years, on an

annual basis it was the most raised for VC-backed

companies since 2010, with a total of $26.74 billion. On

the flip side, the number of IPOs completed in 2018 was

the lowest figure in five years.

Shenzhen Mindray Bio-Medical Electronics (dba Mairui

Biomedical) had 4Q’s top IPO, raising $863.91 million

with a valuation of $8.64 billion.

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LIQUIDITY

Chinese VC-Backed IPO Activity (2015-2018)


TOP CHINA IPOs (4Q 2018)

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LIQUIDITY

Company Name Location Brief Description Industry Code Industry Segment Industry Group Close DateRaised

through IPO ($M)

Exchange

Shenzhen Mindray Bio-Medical

Electronics Co. Ltd. (dba Mairui Biomedical)

Shenzhen Provider of medical instruments. Surgical Devices Medical Devices and

Equipment Healthcare 10/16/2018 $863.91 SZSE: 300760

Innovent Biologics Inc. Suzhou Provider of monoclonal

antibodies.Biotechnology Therapeutics Biopharmaceuticals Healthcare 10/30/2018 $421.82 HKEX: 1801

China Great Wall Securities Co. Ltd. Shenzhen

Provider of security brokerage, trading, and

financial advisory services.

Retail Investment Services /

Brokerages

Financial Institutions and Services

Business and Financial Services 10/26/2018 $285.09 SZSE:

002939


ABOUT US

Dow Jones VentureSource helps venture capitalists, corporate development executives, investment bankers and service providers find deal and

partnership opportunities, perform comprehensive due diligence and examine trends in venture capital investment, fund-raising and liquidity. It

provides accurate, comprehensive data on venture-backed companies – including their investors and executives – in every region, industry and

stage of development throughout the world.

The investment figures included in this release are based on aggregate findings of Dow Jones' proprietary research and are contained in

VentureSource. This data was collected through surveys of professional firms, interviews with company executives, and from secondary sources.

These venture capital statistics cover equity investments into early stage, innovative companies, and do not include companies receiving funding

solely from corporate, individual, and/or government investors. Figures contained throughout the report current at time of editorial but are subject

to change without notice.

No statement herein is to be construed as a recommendation to buy or sell securities or to provide investment advice.

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MEDIA CONTACT:

Toby Doman

+ 852 2831 2583

[email protected]

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Venture Capital Report - Dow Jones & Company · 2019-01-15 · VENTURE CAPITAL REPORT VENTURE...

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Transcript of Venture Capital Report - Dow Jones & Company · 2019-01-15 · VENTURE CAPITAL REPORT VENTURE...