China’s venture capital firms outperform US, European peers amid breakneck economic growth in the past two decades
- China has become the world’s second largest venture capital market, with over 3,500 firms managing total assets worth nearly 2 trillion yuan
Chinese venture capital funds have outperformed those in the US and Europe in the last 20 years, as the country’s breakneck economic growth has given impetus to the rapid expansion of the industry, according to analysts.
Nevertheless, the sector is forecast to face major upheaval in 2019, with many smaller funds expected to collapse as winter sets in for the capital market amid a deepening economic downturn.
Chinese VC funds delivered an overall return of 1.79 times in the period from 1997 to 2018 as measured by total value to paid-in capital. That compared with US funds on 1.7 times and Western European vehicles on 1.75 times, according to an analysis released on Thursday by Paris-based eFront, a global financial software provider focused on private equity and alternative investments.
“China is one of the [world’s] largest emerging markets. The country has seen the fast development of a professional VC sector over the course of the last two decades,” said the report.
With soaring economic growth and the rapid advance of internet technology, China has become the world’s second largest VC market. It now has more than 3,500 VC firms managing total assets worth nearly 2 trillion yuan, according to separate government figures from China’s National Development and Reform Commission (NDRC). The NDRC is China’s top economic planner.
