Investors say they remain optimistic that tech breakthroughs and entrepreneurship will help open new markets, despite a slowdown in funding dubbed “capital winter” in China.
“There must be a cycle in the economy. Historically, investment and entrepreneurship would see their best chances amid some big challenges,” said Kaifu Lee, founder and CEO of the tech venture capital firm Sinovation Ventures. “Only those who have ideas, passion and ability will start a business.”
His words came as China has seen a slowdown in fundraising for venture capital and private equity firms. In the first 11 months of this year, total fundraising was 1.15 trillion yuan ($167 billion; 147 billion euros; ￡133 billion), down 28.7 percent year-onyear, according to the latest report by Zero2IPO Research, a leading venture capital and private equity research institution.
Despite the drop, Lee, the former head of Google in China, said he remained upbeat, saying the firm’s fourth round of US dollar-denominated funding and third round of yuan-denominated funding had already flowed to nearly 20 projects.
“We are very optimistic about the future. Venture capital will show its advantages during such a winter, especially in how it can use technologies to enable traditional industries in the current technology-driven era,” he said.
Lee made the comments at Sinovation Ventures, where its top executives shared their views about potential investment trends in China next year.
“The Chinese economy, unlike many others in the world, is diversified, as epitomized by the top-tier cities encountering some challenges, while second-and third-tier cities gain growth momentum,” said Wang Hua, managing partner of Sinovation Ventures.
For instance, he noted, mobile payments have already been popular for more than three years in toptier cities such as Beijing, Shanghai and Guangzhou, while in fourth- and fifth-tier cities, many older people are only just now beginning to adopt technology and shop online.
“It is part of the reason that Chinese online group discounter Pinduoduo can still gain popularity, even though Alibaba’s Taobao and JD were launched quite a long time ago,” Wang said. “It is like a magic cube. Different phases will bring different chances. Epoch-making opportunities will continue to burst out in the Chinese market.”
Artificial intelligence automation, consumption upgrades in smaller cities, as well as in the overseas market, will be the next investment hotbeds, he predicted.
Wang noted that artificial intelligence, on the other side, has moved from technology to application in the country, and all kinds of industries are accelerating AI applications.
(China Daily European Weekly 12/14/2018 page30)