US dollars exit China’s VC market, ending 2-decade marriage that enabled rise of start-ups
- International investors in China’s most successful unicorns, including TikTok owner ByteDance and fashion giant Shein, are still waiting to cash out
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A sea change is taking place in China’s venture capital (VC) industry as the two-decade marriage between US investors and mainland start-ups comes to an end, casting a shadow over the country’s technology landscape, according to industry insiders and market data.
While US dollar funding from global investors, brokered by a generation of Chinese dealmakers who shuttled back and forth across the Pacific, facilitated the rise of the country’s most successful tech firms over the past decade, the money is quickly drying up. Foreign capital in China’s venture capital industry plunged 60 per cent year on year to US$3.7 billion in 2023, just 10 per cent of the peak in 2021, according to research firm Dealogic.
The “cycle is broken” and the bifurcation of US funds and China tech start-ups is set to widen, said Winston Ma, a law professor at New York University.
![An American flag is seen in front of the logo for Chinese ride hailing company Didi during its IPO on the New York Stock Exchange, June 30, 2021. Photo: Reuters An American flag is seen in front of the logo for Chinese ride hailing company Didi during its IPO on the New York Stock Exchange, June 30, 2021. Photo: Reuters](https://img.i-scmp.com/cdn-cgi/image/fit=contain,width=1024,format=auto/sites/default/files/d8/images/canvas/2024/07/16/e48763f6-a598-496e-9c9c-7e4cbcfe5157_e0ac29c1.jpg)
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