Venture Capital - China

China

Highlights

The country in China is projected to reach a Total Capital Raised of US$68.68bn in the Venture Capital market market by 2024.
Later Stage leads the market with a projected market volume of US$48.61bn in 2024.
When compared globally, the United States will generate the most Capital Raised (US$136.6bn in 2024).
China's Venture Capital market is rapidly expanding, driven by a surge in tech startups and government support for innovation.

Key regions:

Market definitionIn-Scope/Out-of-scopeMarket structureReportsMethodology

The Venture Capital market in China has been experiencing significant growth in recent years, driven by a combination of customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors.

Customer preferences: Chinese investors have shown a strong appetite for venture capital investments, seeking high returns in a rapidly growing economy. They are attracted to the potential for large-scale wealth creation that comes with investing in innovative startups. Additionally, the younger generation of Chinese entrepreneurs is more willing to take risks and pursue ambitious business ideas, which has further fueled the demand for venture capital funding.

Trends in the market: One of the key trends in the Venture Capital market in China is the focus on technology-driven sectors such as e-commerce, fintech, artificial intelligence, and biotech. Chinese startups in these sectors have attracted significant attention and funding, both domestically and internationally. This trend is driven by the rapid technological advancements in China and the increasing consumer demand for innovative products and services. Another trend in the market is the rise of mega-rounds and large-scale investments. Chinese venture capital firms have been actively participating in these mega-deals, which involve substantial funding for startups with high growth potential. This trend is fueled by the availability of large pools of capital and the desire to support the growth of promising companies.

Local special circumstances: China's unique market dynamics and regulatory environment have also contributed to the development of the Venture Capital market. The Chinese government has implemented policies and initiatives to foster innovation and entrepreneurship, creating a supportive ecosystem for startups. Additionally, the presence of large tech companies, such as Alibaba and Tencent, has provided a strong foundation for the development of the venture capital ecosystem.

Underlying macroeconomic factors: China's strong economic growth and rising middle class have created a favorable environment for venture capital investments. The country's large population and increasing consumer spending power have fueled demand for new products and services, leading to opportunities for startups to disrupt traditional industries. Furthermore, the government's focus on transitioning the economy from manufacturing to innovation-driven has also played a role in the growth of the Venture Capital market. In conclusion, the Venture Capital market in China has experienced significant growth due to customer preferences for high returns and investment in innovative startups, trends in technology-driven sectors, local special circumstances such as government support and the presence of large tech companies, and underlying macroeconomic factors including strong economic growth and rising consumer spending power.

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.