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The Evolving China VC Market
York Chen iD TechVentures Ltd.
Stanford Univ., May 24/25, 2010
(Non-confidential)
Panel: "Financing China 2.0: VC and IPO Outlook"
VC Investment Amount, ’02 to ‘09
2005 2006 2007 2008 2003
$3,247M 440
$1,777M
324
$1,173M
228
2004
$992M 177
$1,269M
253
Yearly Investment Amt. Yearly No. of Investment Deals
$518M
216 226
$418M
2002 2001 2009
607
477
$2,701M
YoY ： - 36% dollars
- 21% deals
$4,210M
Source: China 2009 VC Market Report, Zero2IPO, April, 2010
VC Inv. 2009: RMB vs USD Investment Amt.:US$2,701MNo. of Investment Deals: 477
US$M
Source: China 2009 VC Market Report, Zero2IPO, April, 2010
VC Inv. Sectors, 2009
Undisclose
d, 102.94 , 3.8%
Broad IT, 788.56 , 29.2%
Services, 346.27 , 12.8%
Bio/Healthc
are, 189.71 , 7.0%
Clean-tech, 355.84 , 13.2%
Traditional, 917.58 , 34.0%
3
1
2
Investment Amt.: US$2,701M No. of Investment Deals: 477
US$M
1
2 3
Source: China 2009 VC Market Report, Zero2IPO, April, 2010
VC Inv. in Broad IT, 2009 By amount, USD M
By deal
Source: China 2009 VC Market Report, Zero2IPO, Jan., 2010
VC Inv. in Internet, 2009 By amount, USD M
By deal
Source: China 2009 VC Market Report, Zero2IPO, Jan., 2010
VC Exits, 2009: Sectors and Routes By Industry: 123 By Option: 123
Source: China 2009 VC Market Report, Zero2IPO, April, 2010
Key Trends Under Developing: - Foreign Players “Go Onshore” - Diversifying from High Tech to High Growth - Convergence of Foreign and Local GPs
Project Project
1 2 3
Onshore Offshore
Model A (Sino-Foreign JV Fund)
(Offshore Holding)
3a
Route 1: invest into China projects’ offshore holding entities, mostly in Cayman Route 2: direct cross-border investment and turn a China entity into a JV Route 3a: to sponsor a locally registered RMB JV fund with foreign participation.
Project
1 2
3b
Model B (Pure RMB Fund)
(Offshore Holding) Onshore Offshore Route 1: invest into China projects’ offshore holding entities, mostly in Cayman Route 2: direct cross-border investment and turn a China entity into a JV Route 3b: to sponsor and initiate a locally registered pure RMB fund
3
Broad IT Investment (%) Dropping (Data Comparing ‘05 & ‘09)
Year Inv $ Broad IT % 05: 1.1B 60% 06: 1.7 62 07: 3.2 43 08: 4.2 36 09: 2.7 29
Source: Zero2IPO annual VC reports, 2005 to 2009
(2005)
(2009)
Undisclose
d, 102.94 , 3.8%
Broad IT, 788.56 , 29.2%
Services, 346.27 , 12.8%
Bio/Healthc
are, 189.71 , 7.0%
Clean-tech, 355.84 , 13.2%
Traditional, 917.58 , 34.0%
A. Offshore USD Fund: �Parked offshore (Cayman Island)
B. Onshore RMB JV Fund:：�Invested by both foreign and local LPs, registered in China and denominated in RMB.
C. Onshore Pure RMB Fund:�Invested only by local RMB LPs.
Convergence of Foreign and Local GPs
A B C
Foreign GPs are “Going Onshore”, moving from A to B, and eventually onto C, while local GPs are “Going Abroad” trying to access foreign funding.
China VC 2.0 • Since IDG operating in China in 1993, foreign VCs
dominate and play an instrument role in bring up China VC to today’s status.
• The year 2009 marked three “Firsts”: – RMB onshore inv. surpassed USD offshore’s – Non-tech deals got more VC funding than tech’s – RMB fund raising surpassed that of USD’s.
• RMB onshore activities will continue to be active. But, it will take many years for local RMB onshore activities to assume the center stage.
yorkchen@idtvc.com www.idtvc.com
+86-13911735538 (SMS Preferred)
What’s expressed in this PPT highlights York’s personal observations. It serves for academic discussion only, and not representing iDT VC’s view point. �
VC Charity Yanxing China (雁行中国) MV: http://v.youku.com/v_show/id_XNTQ5OTE5MTY=.html
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