Click HERE to view the original report by "Chinese Academy of Sicience and Technology for Development"
The "China Venture Capital Development Report 2022," based on the 21st National Venture Capital Organization Survey by the Chinese Academy of Science and Technology for Development, provides a comprehensive analysis of China's venture capital market in 2021. Here are the key highlights:
Strong Rebound in Venture Capital Industry: Despite domestic and international challenges, the venture capital industry in China experienced a significant recovery in 2021. The number of venture capital institutions reached 3,568, an 8.4% increase, and the total assets under management grew by 16.8% to 13,035.3 billion yuan (200 Billion USD).
Shift Towards 'Hard Tech' Investment: Investment in high-tech enterprises accounted for 40.4% of the total number of projects and 35.5% of the total investment amount. Notably, investments in hardware technology like semiconductors and electronics manufacturing led the way, reflecting a shift from software to hard tech.
Diversified Financing Channels with State-owned Entities Playing a Major Role: State-owned sole investment institutions, government guidance funds, and other government financial funds constituted 48.3% of the fundraising sources. Personal investments and foreign enterprises also contributed significantly.
Trend Towards Mixed Operations: Leading venture capital firms are increasingly engaging in diverse operations, including private equity and mergers & acquisitions. This blurring of lines between different investment types indicates a trend towards mixed operations in the industry.
Regional Concentration in Major Cities: The venture capital ecosystem continues to thrive in top-tier cities like Beijing, Jiangsu, Zhejiang, and Guangdong, which collectively accounted for a significant portion of the total number of institutions, assets under management, and investment projects.
Improving Exit Channels through Capital Market Developments: With the introduction of the Science and Technology Innovation Board (STAR Market) and the Beijing Stock Exchange, as well as other regulatory reforms, the capital market in China is providing better exit opportunities for venture investments.
Cautiously Optimistic Investment Outlook for 2022: The overall sentiment for 2022 among venture capital institutions is cautiously optimistic, with a mixed forecast reflecting both positive expectations and concerns about the global economic environment's impact on the venture capital industry.
Continued Policy Support for the Venture Capital Industry: The Chinese government has been actively implementing policies to support the venture capital industry. These include tax incentives for company-type venture capital enterprises, relaxed conditions for shareholder reduction in venture capital funds, promotion of healthy capital market development, improvement of the environment for foreign investment, and strengthened private equity supervision.