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China Internet Firms Face VC Funding Squeeze: Reuters

4/23/2012

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Reuters reports that China's internet sector has seen a dramatic fall in venture capital investment.  According to the article, Chinese Internet companies raised $138.5 million in the first quarter of 2012, compared to a whopping $866.5 million invested in the same quarter last year, a decline of 84% (data from Thomson Reuters).  Last year, China's internet sector received $3.6 billion in venture investment, over double the $1.7 billion invested in 2010.  

The article cites several reasons for the decline in venture investment in the Chinese Internet sector include a general pull-back from an overheated sector, recent accounting scandals involving Chinese firms listed on US stock exchanges, tougher US listing requirements for Chinese firms, poor market performance of recent listings, and a shifting towards newer sectors.

I was recently in China meeting with venture capital firms, and the sense that I had was that there was a general cooling attitude towards venture capital investing in Chinese tech companies.  In addition to the factors cited above, a common reason that I heard was that liquidity in general (IPOs and M&A) was proving more difficult and taking longer than expected.

It's a good article and worth a read.  Here's the link:  
http://www.reuters.com/article/2012/04/23/net-us-dealtalk-china-internet-idUSBRE83M0AY20120423 

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