China saw an increase in venture capital investing during the first half of the year, bucking a downward trend for VC funding in wider Asia and the globe, experts said.
VC fundraising in China totalled US$43.4 billion in the first six months – almost equalling last year’s full-year total of $46.9 billion.
The pattern in China comes while venture capital investment in Asia at large remained relatively soft during the second quarter.
China’s fundraising performance has led to “growing optimism” heading into the third quarter among venture capital investors in Asia, particularly that there will be higher IPO activity on the Chinese Mainland and in Hong Kong during the second half, according to KPMG, which researches the market.
The Asia region raised $20.1 billion in the second quarter across 2,395 deals, according to the KPMG Venture Pulse Q2 2023 report.
China bucked the downward trend significantly at mid-year, according to the report.
KPMG found that alternative energy, energy technology and battery storage continued to be attractive sectors in the region—particularly in China.
Libode, a lithium-ion battery component company in China, raised $374.7 million during Q2. Solar technology firm Qingdian Photovoltaic raised $217.5 million, and fusion technology company Neo Fusion raised $216.1 million.
Zoe Shi, partner at KPMG China, described VC investment in China during Q2 as “muted”, although the overall economy in the country is making a slow rebound.
“Despite the sluggish VC activity, we continued to see investor support for the energy and green technology sectors, particularly any solutions related to battery production. We also saw local governments increasingly collaborating with VC firms to invest in startups and provide various types of support to the overall ecosystem,” said Shi.
According to Shi, both China’s central government and a number of local governments have worked to support technology development and startup growth, particularly in critical industries.
Irene Chu, head of new economy and life sciences, in the Hong Kong region at KPMG China, more companies were starting to undertake the work required to lead to an IPO, “which will hopefully bode well for the IPO market in Hong Kong heading into the second half of the year”.
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