Scholar expects corporate venture capital to aid real economy

China's corporate venture capital (CVC) investments have boomed over recent years and grown to a level similar to independent venture capital (IVC) in terms of the value of deals, according to a report on CVC jointly released Thursday by the PBC School of Finance, Tsinghua University and CYZone.

Both CVC and IVC investments in the country have exceeded 70 billion yuan in 2016, the report showed. However, in terms of investment frequency, CVC is only one-fifth of IVC.

Tian Xuan, chief researcher for this report, told China Daily website that his team's research dated back to 2014 when he returned to China and found the concept of CVC was still unknown to the country, although many companies such as Baidu, Tencent, Alibaba and Xiaomi were conducting such investments based on their own business instincts.

Baidu invested in Iqiyi, as there were numerous searches for videos; in Qunar, as there were searches for air tickets; and in Uber, as there were searches for transportation, Tian said.

Companies conduct CVC due to strategic concerns so they could survive and thrive in the future, as technologies upgrade too fast and nobody knows what the future could be like.

"Our research is first to identify this trend for CVC and then to educate companies to do CVC investments, which could help them go beyond their own limits."

"As far as I can tell from financial statements of many listed companies, there are large amounts of unused funds, which may go to asset management channels to gain interest. And if these funds could be invested in emerging small companies that will be better," said Tian.