Greater China Deals Barometer Report: Startup funding suffers steep 50% decline in May

China’s startup funding market hit a rough patch in May when the total deal value plunged by almost 50% compared to the previous month of April. 

Privately held companies headquartered in mainland China, Hong Kong, Macau, and Taiwan raised over $1.7 billion last month against nearly $3.5 billion in April. 

The monthly deal value was the lowest ever raised by Chinese startups since DealStreetAsia started tracking deals of all sizes in April 2020. The second-lowest value of close to $2 billion was recorded in October 2024.

With a total of 171 deals, the transaction volume also fell by 14.9% compared to April, according to proprietary data compiled by DealStreetAsia. 

While part of the funding drought could be attributed to the five-day “Golden Week” Labour Day holiday in China, the scarcity of megadeals in May serves as one of the signs of a prolonged funding winter. 

Limited partners (LPs) elsewhere are looking for signs of a shift in sentiment towards China, including consumer confidence, the substantive comeback of long-only investors, and the recovery of IPO markets, while private investors are on their quest for liquidity, as the overall exit landscape remains challenging. 

On a year-on-year basis, the monthly deal value was 30.6% lower than the nearly $3.7 billion in May 2024, while the deal count was 1.2% less than a year ago. 

Scarcity of megadeals

Only two megadeals, or transactions worth at least $100 million, were recorded in May, indicating a lack of conviction among investors to bet on large-sized firms.

The recovery of public listings in Hong Kong in Q1 2025 did not seem to convince investors to write cheques for up-and-coming firms in China.

That said, the largest deal of the month was by Xiangdao Chuxing, the ride-hailing arm of Chinese state-owned automaker SAIC Motor Corp, which raised over 1.3 billion yuan ($179.9 million) in a Series C funding round from industry investors and local government funds.

In the month’s second megadeal, Digua Robotics, a spinoff of Hong Kong-listed Chinese autonomous driving developer Horizon Robotics, raised $100 million in a Series A funding round from Hillhouse Investment and others.

Early-stage investments dominated the market with a total of 86 deals or 50.3% of the total deal count. There were no deals recorded at Series E or later rounds.   

With the A-share IPO market still muted, Chinese GPs are increasingly exploring several exit channels besides public listings. In an industry event organised by the industry body Hong Kong Venture Capital and Private Equity Association (HKVCA), investors weighed on how merging with listing companies has become one way to exit minority investments. 

Though trade sales remain challenging, investors feel the route can be crucial for control deals. Lastly, continuation funds have emerged as a popular tool for GPs to hold on to their  “crown jewel” asset.   

List of megadeals in Greater China (May 2025)

Healthcare shows promise 

Multinational pharmaceutical firms’ buying spree of Chinese biotech assets underscores how China has transformed beyond being a generic drug maker. In May, a total of 43 firms across medical device, pharmaceutical, biotech, healthcare services, and healthcare specialist collectively raised $550.6 million. 

Chinese medical devices maker EnChannel Medical is one of the top deals that closed its oversubscribed Series B financing at 600 million yuan ($83.1 million), jointly led by Dragonball Capital and existing investor Lilly Asia Ventures. 

Sirius Therapeutics secured nearly $50 million in a Series B2 financing round that saw existing investors OrbiMed, Creacion Ventures, and Hankang Capital re-up. 

In yet another major deal of the month, Hong Kong-headquartered PHASE Scientific, a biotech firm engaged in early disease detection through proprietary urine-based diagnostics, bagged $34 million in a Series A funding round led by Hong Kong-listed asset management firm Value Partners Group. 

Semiconductor remained the most-invested sector by deal count, with the completion of 31 deals or $202.8 million. 

State investors notch top spots 

CAS Star, a Chinese investment firm focusing on early-stage hard tech startups, was one of the most active investors of the month by deal count, investing at least $45 million into five startups across AI, semiconductor, materials, and the medical device sector. 

State Development & Investment Corporation (SDIC), one of China’s largest state-owned investment holding companies, and its affiliates, invested $46.1 million across five deals, making it the most active investor of the month by deal count.

Most active investors in China (May 2025)

Note: In our monthly analysis for May 2025, we have put together detailed charts of prominent deals, active investors, deal stages, and the most attractive sectors that have bagged the maximum venture dollars in the Greater China region.

Our database only considers deals officially announced by the related investee, investor(s), and/or financial advisor, while information based on market rumours and news reports citing sources is excluded.

For a more detailed analysis, and to enable comparison between primary and secondary markets, DealStreetAsia has started tracking deals of all sizes since April 2020, as against considering only transactions worth more than $10 million earlier.

We have also introduced a standardised system for industry classification. It currently includes over 50 industries, as well as over 45 new economy and high-tech verticals, which will progressively increase to adapt to local market conditions in our closely watched regions of Greater China, Southeast Asia, and India.