China Deal Review: Startup funding jumps 26% in Dec to $9.2b as chipmakers take off

Xi'an city, Shaanxi province, China. Photo by Camillo Corsetti Antonini on Unsplash

Startup investments ended on a high note in 2021 with almost $9.2 billion being raised across 185 deals in Greater China last month with hard tech, healthcare, and software industries continuing their deal-making momentum entering the new year.

In December, the deal value expanded by 25.9%, and the number of transactions rose by 32.1% as compared to November, when a total of $7.3 billion was raised across 140 deals, according to proprietary data compiled by DealStreetAsia.

Dealmaking in the second half of 2021 also fared better than the first six months with the completion of 1,004 deals worth approximately $46.4 billion in total. In H1, Greater China-based startups secured $41.1 billion across 889 deals.

Chip designing house Chipone Technology pocketed over $1 billion in the month’s biggest funding round led by Beijing-based hard tech investment firm Oceanpine Capital. This big-ticket transaction followed months of hectic dealmaking in China’s semiconductor industry, driven by a global chip supply crunch and Beijing’s determination to achieve tech self-reliance.

Developers of eco-friendly cars and related charging and energy storage solutions have garnered the interest of investors looking to cash in on the carbon neutrality theme.

SVOLT Energy Technology, an EV battery maker and energy storage solutions provider, secured $943 million in its third major fundraising success last year. Backed by Bank of China Group Investment and asset manager CDH Investments, the startup had completed a Series B round at $1.6 billion and a Series A round at $550.2 million earlier the year.

Renowned investors IDG Capital and hedge fund Coatue Management made heavy bets on a nascent player NIUTRON, despite the competition among more established predecessors including NIO, Xpeng, and Li Auto already heating up. IDG and Coatue backed a $500-million Series A round in NIUTRON, a new energy vehicle (NEV) brand created in 2018 by Li Yinan, who had earlier founded Nasdaq-listed electric scooter firm NIU Technologies. The startup plans to start selling its first SUV model in H1 2022 and roll out delivery in September.

 

Megadeals contribute to surge in funding

One of the key contributors to December’s funding surge was megadeals, or investments worth at least $100 million, which increased to 24 deals as compared to 15 in November.

Excluding Chipone, SVOLT and NIUTRON, there were 21 deals in the range of $100-500 million that collectively gathered over $6 billion, up 17.6% from $5.1 billion one month earlier.

Startups across biotech, medical devices, consumer products, semiconductor, auto & parts, energy storage, and renewable energy demonstrated stronger capability in raising larger cheques than counterparts.

Their deep-pocket investors include Sequoia Capital China, CDH Investments, Legend Capital, private equity firm Primavera Capital Group, Chinese insurer PICC’s investment unit PICC Capital, and Goldstone Investment, which is affiliated with investment bank CITIC Securities, among others.

Earlier-stage startups showed greater appeal to investors in the Greater China market. In terms of deal count, the Series A round and before ranked first with the completion of 72 investments, or 38.9% of the month’s total deal count. Series B round came second with 50 deals, followed by 27 Series C deals, six Series D deals, and six at Series E round and after.

In terms of deal value, the Series B stage led the pack with over $3.3 billion in financing, which was 36.1% of all capital raised in the market last month. Series A stage followed with $2 billion, after which were Series C stage with $1.3 billion, Series E stage with $1.2 billion, and Series D stage with $334 million, respectively.

List of 24 megadeals in Dec 2021

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StartupHeadquartersInvestment size (USD)Investment stageLead investor(s)Investor(s)IndustryVertical
Chipone TechnologyBeijing $1,021 millionEOceanpine CapitalUNIC Capital Management, CCB Private Equity Investment Management, GGV Capital, Prosperity Investment, CITIC Private Equity (CPE), Beijing Singularity Power Investment Management, Silk Road Huachuang Investment ManagementSemiconductorN/A
SVOLT Energy Technology Changzhou$943 millionB+CDH Investments, China Mobile Capital, PreIPO Capital, China’s Industrial Bank, PICC Capital, Taikang Asset Management, Sichuan Energy Investment, Han’s Laser Technology Industry Group, Changzhou Xingyu Automotive Lighting SystemsEnergy StorageElectric/Hybrid Vechicles
NIUTRONBeijing $500 millionAIDG Capital, Coatue ManagementAuto & PartsElectric/Hybrid Vechicles
Beijing ESWIN Technology GroupBeijing $392 millionCGoldstone Investment, China Internet Investment Fund (CIIF)Shang Qi Capital, China Development Bank Capital, China InnoVision Capital, IDG Capital, Legend Capital, Liu Yiqian (Individual Investor)SemiconductorIoT
ZTO Freight Jiaxing $300 millionBLogistics & DistributionIoT
Vastai Technologies Shanghai$251 millionB1, B2Alibaba Group, PICC Capital, Matrix Partners China, 5Y CapitalChina Life Investment Management, Mirae Asset Global Investments, CoStone Capital, THU Capital, Redpoint China Ventures, Glory Ventures, Yuan CapitalSemiconductorAI and Machine Learning
Huadian Fuxin Energy Corporation LimitedBeijing $236 millionChina Life Insurance Group, China Reform Holdings, China Southern Power Grid Company, National Green Development Fund (NGDF)Renewable EnergyCleanTech
Thousand Oaks BiopharmaceuticalsNantong $236 millionGoldstone Investment, CDH Shanghai Dinghui Bai Fu Wealth Management (CDH Investments)BiotechBiotech
AvistoneBeijing $200 millionAVivo CapitalPrimavera Capital, Bain CapitalBiotechBiotech
ABclonal TechnologyWuhan $189 millionDSequoia Capital China, CMB International Capital, Lucion Venture CapitalLoyal Valley Capital, Taikang Asset ManagementBiotechBiotech
Jiangsu Meike Solar Science & Technology Zhenjiang $188 millionBBeijing Financial Street CapitalState Power Investment Corp (SPIC), Huaneng Capital (China Huaneng Group), China Merchants Capital, CCB Investment, Cloudview CapitalRenewable EnergyCleanTech
Innoforce PharmaceuticalsHangzhou $157 millionAYanchuang Capital, South China Venture Capital (SCVC)Quan Capital, Quan Capital Management, Advantech Capital, Triwise Capital, CICC Capital, Highrun Capital, Euland Venture, Panlin Capital, S&G CapitalBiotechBiotech
Haomo.AIBeijing $157 millionAGL Ventures, Meituan, Qualcomm Ventures, Shoucheng Holdings Limited (affiliated with Shougang Group)Auto & PartsAutonomous Driving
DERABeijing $157 millionCChina Reform Fund, CICC CapitalChina Unicom CICC, CITIC New Future Investment, Shenzhen Capital Group, Hongta Innovation Investment, Nanjing Yihua Capital, Shinefore Venture Capital, Yunhang CapitalSemiconductorN/A
FTXT Energy TechnologyShanghai$141 millionACMG-SDIC Capital, PICC CapitalEnergy StorageElectric/Hybrid Vechicles
ANTIYBeijing, Harbin$141 millionCCybersecurityN/A
Innogen Pharmaceutical TechnologyShanghai$120 millionYoushan Capital, China Growth Capital CICC Qide Fund, V Star Capital, China Everbright Limited, Everest Venture Capital, DYEE Capital, Cash Capital, Pudong Investment Holdings, Lanting Capital, Cowin Capital, Xiaochi CapitalBiotechBiotech
SyMap Medical Suzhou$100 millionVMS Group, Primavera Capital GroupSequoia Capital China, Simiao Equity InvestmentMedical DevicesN/A
Suzhou Rainmed Medical TechnologySuzhou$100 millionDPing An CapitalSeresia Asset Management, Lighthouse CantonMedical DevicesHealthTech
ChaowanzuBeijing $100 millionBSequoia Capital China, Gaorong Capital Bertelsmann Asia Investments (BAI), K2 Angel Partners, Panda CapitalConsumer ProductsE-commerce
T11 Food MarketBeijing $100 millionBAlibaba GroupMSA Capital, Redview CapitalRetailE-commerce
Shanghai LePure BiotechShanghai$100 millionB+Legend Capital, Hillhouse Capital Group, New Alliance Capital, HM CapitalMedical DevicesBiotech
XbiomeShenzhen$100 millionBSky9 Capital, 5Y Capital, Legend Capital, Primavera Capital Group, Gaorong Capital, HIKE CapitalBiotechHealthTech
Robosen RoboticsShenzhen$100 millionB, B+B+: Cedarlake CapitalRencent Capital, Lightspeed China Partners, Sequoia Capital China, Dayone Capital, Glacier CapitalConsumer ProductsRobotics & Drones

Investments in Chinese chipmakers grow further

Investors have acted on the opportunities emerging from the chronic global chip shortage across industries such as cars and consumer appliances, driving up dealmaking activity in China’s semiconductor sector to a new high.

The semiconductor industry overtook biotech and software to top in December, with nearly $2.2 billion being raised across 18 deals. It marked a sustained growth from $1.4 billion across nine deals in November and $404.5 million across six deals in October.

While Chipone’s billion-dollar Series E round contributed to 46.7% of the total chip investment, there were another three megadeals, each at over $100 million – potentially an indication of the budding market competition landscape.

The artificial intelligence of things (AIoT) chips provider Beijing ESWIN Technology Group raised $392 million in a Series C round led by Goldstone Investment and the 100-billion-yuan ($15.7 billion) China Internet Investment Fund (CIIF).

AI chip startup Vastai Technologies raked in $251 million in its Series B1, B2 rounds co-led by e-commerce giant Alibaba Group. DERA, which designs enterprise-level solid-state drives (SSD) – storage devices that use integrated circuit (IC) assemblies to store data – secured $157 million in a Series C round.

Sequoia China ups stake in carbon-neutral deals

Sequoia Capital China retained its perch as the most active investor in Greater China with participation in at least 16 deals worth a combined $832 million.

In December, the firm invested in four megadeals across the biotech, medical devices, and consumer products sectors. It injected capital into medical devices maker SyMap Medical and consumer robots firm Robosen Robotics. Sequoia China also co-led a $189-million Series D round in ABclonal Technology, which offers reagents for life science research, and a $100-million Series B round in online designer toy platform Chaowanzu.

An investor of some of China’s biggest tech giants including Alibaba and food delivery firm Meituan, Sequoia China has backed about 600 companies since its inception in 2005 with focuses on the TMT, healthcare, and consumer goods & services fields.

The bellwether of China tech investments partnered with clean energy major Envision Group in March 2021 to set up a 10-billion-yuan ($1.6 billion) carbon-neutral technology fund.

Other active investment firms in the month were GL Ventures, the venture capital arm of Asia’s Hillhouse Capital Group; Legend Capital, an investment platform of China’s Legend Holdings; investment banking firm CICC and its affiliated funds, among others.

Most active investors in China’s PE-VC market (Dec 2021)

Expand Table

Investment companyNo. of dealsTotal value of participated deals (USD)LeadNon-lead
Sequoia Capital China16$832 million610
GL Ventures12$432 million75
Legend Capital and affiliates8$671.5 million35
CICC and affiliates8$525 million53
CDH Investments6$1,477 million24
IDG Capital6$964.5 million24
5Y Capital6$407 million33
Gaorong Capital6$386 million24
Cowin Capital6$153 million24
Shunwei Capital6$146 million15
*If one deal is backed by only two investors, we consider neither of the two investors as a lead investor.

Note: In our monthly analysis for December 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.

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.

Liya Su contributed to the story.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.