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China’s Q3 VC investments nearly triple quarter-on-quarter

By Zhang Jiawei (chinadaily.com.cn)
Updated: 2009-11-09 17:34

Venture capital (VC) investments almost tripled quarter-on-quarter in China with $630.43 million in the third quarter, compared with $211.49 million a quarter earlier, according to data from CVSource, the investment consulting firm ChinaVenture's online database system.

The number of VC investment cases increased by 161.1 percent to 94 in the third quarter from 36 in the earlier quarter. In the third quarter of 2008, the number was 86 but investment totaled $1.026 billion, CVSource's data showed.

Average investment per case was $6.71 million in the third quarter, up 14.2 percent from the earlier quarter's $5.87 million, but down 43.8 percent from $11.94 million in the same quarter of 2008.

Foreign VCs, which have been dominating the industry in China, are now facing head-to-head competition from their domestic peers. The number of cases carried out by domestic VCs for the first time surpassed that of foreign VCs in the second quarter of 2009; this happened again in the third quarter.

Domestic VCs disclosed 61 investment cases in the third quarter, accounting for 64.9 percent of the total. The sum of investment for domestic VCs reached $295.6 million, compared with the industry's total of $630.43 million in the third quarter in China.

Related readings:  VC firms optimistic about China investment prospects  VC investment in China hits new high  VC investment in China more than doubles in Feburary

The 94 cases involved 17 different industries, with the most active being: IT, 25 cases; Internet, 16 cases; manufacturing, 14 cases; medical care service, 11 cases; and telecommunications, 8 cases.

Most of the investments happened in the development and expansion stages of a target company, especially the development stage which saw 51 cases in the third quarter, accounting for 54.3 percent of the total.

Beijing and Shanghai were the most favorable destinations for VC investments. Beijing topped the list with 21 investment cases totaling $154.67 million; Shanghai was in second place with 17 cases but saw a higher investment of $240.26 million in the third quarter, according to CVSource.