After the first two months of slowdown in the dealmaking space this year, risk capital investors in the Greater China region have staged a comeback in March, thereby setting a new record of more than $11.4 billion in monthly capital deployment.
According to proprietary data compiled by DealStreetAsia, startups headquartered in Greater China managed to secure over $11.4 billion from private equity (PE) and venture capital (VC) investors, recording a whopping 119.5% jump from a month before. This is even as the financial details of 20 deals were not disclosed.
In terms of volume, there was a 63.1% jump last month with the total number of transactions standing at 199. In March last year, during the peak of the pandemic in Asia, dealmakers pumped about $6.1 billion across 68 transactions in China.
The pick-up in dealmaking activity highlights how investors are increasingly getting comfortable parking capital in startups as the impacts of the pandemic get clear across Asia. Take Southeast Asia and India, for instance. The two regions recorded similar fundraising rallies in March this year.
On account of megadeals closed by PatSnap and SiCepat Ekspres, the $781-million financing pumped into Southeast Asian startups was nearly five times that of February; while Indian startups raked in at least $2.38 billion, recording a 72% jump in value month-over-month.
Megadeals account for 69.3% of financing
The spike in fundraising activity in China can be primarily attributed to 27 megadeals, or investments worth $100 million and above.
Fangchebao (FCB), China Evergrande Group’s online real estate and automobile marketplace, was the biggest fundraiser after it agreed to sell a 10% stake to 17 investors for HK$16.4 billion ($2.1 billion) ahead of a planned initial public offering (IPO).
Another three startups, including grocery app Nice Tuan; e-commerce giant JD.com’s infrastructure asset management arm JD Property; and autonomous driving startup Momenta, successfully completed an investment of $500 million or over. With the addition of 23 deals within the $100-500 million range, these megadeals collectively pocketed almost $7.9 billion, or about 69.3% of the overall financing in March.
By and large, the proportion of financing garnered by megadeals has always retained at 60-70% of overall deal flow in recent months. It stood at 62.9% in February, in comparison with 69.7% in January, 68.6% in December, and 69.9% in November.
Entrepreneurship and tech innovations are in the ascendant in China. The country is already the world’s second-largest source of unicorns after the US, hosting 119 privately-owned companies valued at over $1 billion as of November 2020, according to US research firm CB Insights.
Even so, early-stage fundraisers – defined as companies at Series B rounds and earlier – still outnumbered their growth- and late-stage counterparts. In March, there were 94 deals at Series A stage and earlier, compared with 42 Series B deals; 31 Series C deals; 10 Series D round deals; and five deals at Series E stage and after. The funding stages of 17 deals were not disclosed.
Meanwhile, investors’ willingness to write bigger-ticket cheques in more mature startups has grown stronger as they gear up to grab a slice of quality deals.
At the most well-funded stage, the total value of Series C deals amounted to nearly $2.6 billion, or 22.5% of March’s overall investment scale, compared to 19.0% in February. Likewise, Series D deals raised 8.7% of financing, up from 1.7% in February; while deals at Series E rounds and later accounted for 22% of financing due to FCB’s $2.1-billion pre-IPO round, up from 14.7%. Deals with undisclosed funding stages collected about $1.7 billion, or 14.6% of the month’s funding.
Internet startups raise most funds; Tech giants ramp up investments
Floated up by five megadeals, Internet startups raked in the most funds in March, at close to $3.5 billion, across merely 10 deals.
FCB’s funding of $2.1 billion and Nice Tuan’s $750-million deal, alongside three hundred-million-dollar investments into cloud-based industrial Internet platform developer CASICloud-Tech; MetaApp, which created an interactive Internet platform that connects game creators and players; and ICHunt, a B2B trading platform for integrated circuit (IC) components, made the Internet industry top the charts in terms of aggregate deal value.
Fundraisers in the biotech, software, and consumer products fields – usually among the most-favoured five sectors for China-focused investors – continued to lead the pack in terms of deal count. Biotech and software startups both completed 22 deals, followed by China’s homegrown consumer products companies, which closed 20 transactions.
Unlike software fundraisers that were mostly at an early stage and hardly able to clock megadeals, capital-intensive biotech companies raised over $1.4 billion in total, thanks to Chime Biologics’ over-$190-million Series A+ round; Gensciences’ Series A and B rounds, in which it garnered over 800-million yuan ($121 million); a $120-million Series C round into EpimAb Biotherapeutics; and Biotheus’ $100-million fourth funding round.
Consumer products firms secured a combined $589.7 million, among which were major fundraisers including yogurt brand Simple Love; consumer electronics maker Shanghai Longcheer Technology; and smart lock brand Kaadas.
Chinese smartphone maker Xiaomi, and Shunwei Capital, created by Xiaomi co-founder Lei Jun and Tuck Lye Koh, emerged as the most active investment group in March – it participated in 15 deals worth a total of $648.5 million. Another China’s big tech firm Tencent also made it to the list of the most deep-pocketed investors, backing 11 deals worth about $1.1 billion.
As China’s tech giants all stepping up efforts in making strategic investments to generate synergies and consolidate market positions, Xiaomi recorded a portfolio of 310-plus investee companies, including both publicly-traded and privately-owned firms, as of December 31, 2020. According to its latest financial results, the total value of Xiaomi’s investments reached 67.3 billion yuan ($10.3 billion) by the end of last year.
Shunwei Capital, in particular, had 13 announced deals in March including two megadeals, namely Momenta’s $500-million Series C round, and logistics service FlashEx’s $125-million Series D2 round. Moving forward, Xiaomi is expected to make more bets around its focused strategy of “smartphone x AIoT (Artificial Intelligence of Things),” as well as smart electric vehicles (EVs) – a newly launched business that it pledged to invest $10 billion over the next 10 years.
Other notable PE-VC investment firms in March include Matrix Partners China, Beijing-based IDG Capital, tech investment bellwether Sequoia Capital China, as well as PE powerhouse Hillhouse Capital and its VC arm GL Ventures.
Most active investors in China’s PE-VC market (Mar 2021)
|Investment company||No. of deals||Total value of participated deals (USD)||Lead||Non-lead|
|Shunwei Capital & Xiaomi||15||$648.5 million||6||9|
|Matrix Partners China||14||$648.5 million||7||7|
|IDG Capital||13||$759 million||6||7|
|Sequoia Capital China||13||$663.9 million||5||8|
|GL Ventures & Hillhouse Capital||12||$1,097 million||8||4|
|Cowin Capital||10||$356 million||2||8|
|Source Code Capital||9||$787.5 million||2||7|
|5Y Capital||7||$108 million||4||3|
|Shenzhen Capital Group||6||$648.5 million||2||4|
The March numbers brought the total funds raised in Q1 2021 to more than $24.1 billion across 464 deals. That compares to less than $23.8 billion raised in Q4 2020 from 438 deals.
For the entire 2020, startups in Greater China managed to grab an aggregate of $56.2 billion from 1,193 transactions, shows DealStreetAsia’s report, Greater China Deal Review: Q4 2020.
Note: In our monthly analysis for March 2021, 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.
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.
Liya Su contributed to the story.
27 Megadeals worth $100m and above (Mar 2021)
|Startup||Headquarter||Investment Size (USD)||Investment Stage||Lead Investor(s)||Investor(s)||Industry/Sector||Vertical|
|FCB Group (A unit of China Evergrande Group)||Shenzhen||$2,100 million||Pre-IPO||United Strength Harmony Limited, Shenzhen Mingsheng Duling Commerce and Trade, Shenzhen Jianhui Investment, Shenzhen Jianke Investment, Foshan Xinmingzhu Enterprise Group, Tisé Opportunities SPC, CITIC Capital, Top Shine Global, Triumph Roc International, Kingsville Global Investments, Top Assemble Holdings, Advance Power International, Genuine Fair, Zhongrong International Trust, Anatole, JMC Capital HK Limited||Internet||E-commerce|
|Nice Tuan/Shihuituan||Beijing||$750 million||DST Global, Alibaba||the D.E. Shaw group, Dragoneer, Anatole Investment Management||Internet||E-commerce|
|JD Property||Beijing||$700 million||A||Warburg Pincus, Hillhouse Capital||Real Estate Development & Operating Company||Real Estate Tech|
|Momenta||Beijing||$500 million||C||SAIC Motor, Toyota, Bosch, Temasek Holdings, YF Capital||Shunwei Capital, Mercedes-Benz, GGV Capital, Tencent, Cathay Capital||Automobiles, Other Vehicles & Parts||Autonomous Driving|
|Zhongneng United||Nanjing||$461 million||C2, C3||C2: Source Code Capital; C3: Five Star Holdings Group||C2: Buhuo Ventures; C3: Oakwise Capital, VSFG Private Asset Management (PAM), Shanghai Shibei Hi-Tech's big data fund, YiMei Capital, Buhuo Ventures, Source Code Capital||Business Support Services||N/A|
|CASICloud-Tech||Beijing||$405 million||Strategic Investment||ICBC Financial Asset Investment, China Merchants Capital, Shenzhen Capital Group||Internet||Cloud Computing|
|Guoquan Shihui||Shanghai||$300 million||D||CMB International||Tiantu Capital, GenBridge Capital, IDG Capital, Vision Knight Capital, Buhuo Ventures||Retail||N/A|
|Newlink Group||Beijing||$200 million||Strategic Investment||Bain Capital||Joy Capital||Retail||Internet of Things|
|Walnut Education/Hetao101||Beijing||$200 million||C||KKR, Vision Plus Capital, GL Ventures||Source Code Capital, Huaxing Growth Capital||Education/Training||EdTech|
|Chime Biologics||Wuhan||$190 million||A+||VMS Group||Fidelity International, Panacea Venture||Biotechnology||Biotech|
|Yunxuetang/YXT.com||Suzhou||$190 million||E||E2: Matrix Partners China||E1: Tencent; E2: Sequoia Capital China, Hundreds Capital||Education/Training||EdTech|
|Iluvatar CoreX||Shanghai||$186 million||C||Cedarlake Capital, Centurium Capital||Gortune Investment, China Unicom Capital||Semiconductors||Cloud Computing|
|MediTrust Health||Shanghai||$155 million||B||Ant Group, Sinovation Ventures, Shanghai Biopharmaceutical Investment Fund||Huaxing Growth Capital, Northern Light Venture Capital, BioTrack Capital, Marathon Venture Partners (MVP), SAIF Partners China||Healthcare IT||HealthTech|
|Fadada||Shenzhen||$138 million||D||Centurium Capital, ZWC Partners, Tencent||Business Support Services||Blockchain|
|FlashEx/Beijing Tongcheng Biying Tech||Beijing||$125 million||D2||Shunwei Capital, SIG China, N5Capital, Tiantu Capital, Oceanpine Capital, Alpha Square Group, Axiom Asia Private Capital, Qianshan Capital, CF Quanxing Junyuan Capital Management||Logistics & Distribution||N/A|
|Simple Love||Guangzhou||$122 million||B||Matrix Partners China, BA Capital, CITIC Agri Fund, Maison Capital, Sequoia Capital China, YF Capital, Proterra Investment Partners, DCP Capital||Consumer Products||N/A|
|Gensciences||Nantong||$121 million||A, B||Haitong Kaiyuan Investment||Efung Capital, Huarong Rongde Asset Management, IDG Capital, New Alliance Capiptal, Huaige Capital||Biotechnology||Biotech|
|EpimAb Biotherapeutics||Shanghai||$120 million||C||China Merchants Bank International (CMBI), Mirae Asset Financial Group||Hony Capital, Cormorant Asset Management, Yanchuang Capital, Octagon Capital, Adrian Cheng (Individual Investor), ShangBay Capital, Decheng Capital, SDIC Fund, Sherpa Healthcare Partners, Hidragon Capital||Biotechnology||Biotech|
|Midu (affiliated with Nasdaq-listed Qutoutiao)||Shanghai||$110 million||C||Travel & Leisure||N/A|
|Biotheus||Zhuhai||$100 million||Fourth round||IDG Capital, General Atlantic||Kunlun Capital, CPE, Cowin Capital, HighLight Capital, Shiyu Capital, New Alliance Capital, Huajin Investment||Biotechnology||Biotech|
|Arctic Vision||Shanghai||$100 million||B||Loyal Valley Capital||Tencent, Octagon Capital, New World Development Group's Adrian Cheng, Nan Fung Life Sciences, Pivotal bioVenture Partners China, Morningside Ventures||Healthcare Specialist||Biotech|
|MetaApp||Beijing||$100 million||C||SIG China||China Creation Ventures (CCV), Sky9 Capital||Internet||N/A|
|USHOPAL||Shanghai||$100 million||D||FountainVest Partners||Cathay Capital, Zhongyuan Capital, Hengxu Capital, Dazhong Zhongsong Fund||Retail||Beauty & Hygiene|
|Ichunt.com||Shenzhen||$100 million||C||JD MRO||Internet||E-commerce|
|Shanghai Longcheer Technology||Shanghai||$100 million||B||Shenzhen Capital Group, Shenzhen Qianhai Wanrong Hongtu Investment Fund||Accurate Capital, Jintaifu Capital Management, Huaxu Industrial Investment Fund Management, Forebright Capital Management, FutureX Capital||Consumer Products||N/A|
|Airwallex||Hong Kong||$100 million||D3||Greenoaks||Grok Ventures, Skip Capital, ANZi Ventures||Financial Services||Fintech|
|Kaadas||Shenzhen||$100 million||B||Orchid Asia Group||Cowin Capital, Qianhai Huxing Asset Management||Consumer Products||AI and Machine Learning|