Dealmaking by China-focused private equity (PE) and venture capital (VC) firms slowed for a second consecutive month in February, amid the week-long Lunar New Year holidays on the mainland.
There were 122 PE-VC deals in the month that raised a combined $5.2 billion, according to proprietary data compiled by DealStreetAsia. The total value of investments was down 30.7% from January, while the number of transactions decreased 14.7%.
The financial terms of 10 of the deals remained undisclosed.
Dealmaking in China has had a slow start in 2021 after the record set last December when $9.1 billion was raised across 191 deals.
Like in January, there were no billion-dollar investments in February.
The number of megadeals, or investments worth $100 million and above in Greater China, stood at 15 in the month, amassing a total of $3.3 billion. At 62.9%, the share of megadeals in overall financing was lower than 69.7% in January, and 68.6% in December 2020, but managed to stay in the usual 60-70% range.
There was one transaction worth over $500 million in the month. SVOLT Energy Technology, a developer of electric vehicle (EV) batteries and energy storage solutions, pocketed 3.5 billion yuan ($540.8 million) in a Series A round.
Megadeals happened across a wide range of industries in February, such as healthcare services, biotech, automobile & parts, agribusiness, consumer products, financial services, and semiconductors.
Early-stage deals outstrip late-stage funding
As the Chinese government continues to promote tech innovations and entrepreneurship, early-stage deals, i.e. Series B rounds and earlier, recorded more transactions than growth- and late-stage deals, i.e. Series C and later.
There were 51 deals in their Series A stage and earlier, compared with 34 Series B deals. In contrast, there were only 14 Series C deals, three Series D round deals, and five deals in the Series E round and later. The funding stages of 15 deals were not disclosed.
Capital, too, tilted towards early-stage transactions in February, largely driven by upstarts who managed to garner megadeals to support their next stage of growth. Eighty-five early-stage startups raked in more than $2.8 billion in Series B and earlier stages, accounting for 54.1% of total financing. The share of early-stage funding was only 44.3% and 22.1% in January and December, respectively.
Of the 15 megadeals in the month, there were three in the Series A round, including SVOLT Energy Technology, Geely-backed intelligent auto developer ECARX, and central processing units (CPUs) maker Moore Threads, which announced its unicorn status on Feb. 25 within 100 days of inception.
Six megadeals were in the Series B round, namely vaccines producer Yisheng Biopharma, internet hospital and online pharmacy SPH Health Commerce, diagnostics firm WuXi Diagnostics, esports social networking service Quwan, baby & maternal brand Babycare, and agribusiness Wangjiahuan.
Overall, 60% of megadeals in the month were completed by emerging businesses.
15 Megadeals worth $100m and above (Feb 2021)
|Startup||Headquarters||Investment Size (USD)||Investment Stage||Lead Investor(s)||Investor(s)||Industry/Sector||Vertical|
|SVOLT Energy Technology||Changzhou||$541 million||A||Bank of China Group Investment, CMG-SDIC Fund Management||Beijing Financial Street Capital Operation Centre, Changzhou Venture Capital Group, ZJU Jiuzhi Investment Management, IDG Capital, Cathay Capital, HT Capital||Energy Storage & Batteries||Electric/Hybrid Vechicles|
|Beijing Yuanxin Technology||Beijing||$465 million||E||Sequoia Capital China, Tencent||CITIC Securities, Qiming Venture Partners, Index Capital, Kunling Capital, CICC Capital, OrbiMed, Gopher Asset Management, E Fund Management||Healthcare Services||HealthTech|
|Horizon Robotics||Beijing||$350 million||C3||BYD Auto, Great Wall Motors, Changjiang Automobile Electronic, Dongfeng Asset, Sunny Optical Technology, Changzhou Xingyu Car Light, CMC-SDIC Capital, CICC Capital, Shougang Fund, Shanghai AI Industry Fund, Bohai Chuangfu, Minsheng Equity Investment Fund Management, Rosefinch Investment, ZWC Partners||Automobiles, Other Vehicles & Parts||Autonomous Driving|
|ANE Logistics||Shanghai||$300 million||CPE||Greater Bay Area Homeland Investments Limited, NWS Holdings Limited, Creo Capital, Huagai Capital||Logistics & Distribution||N/A|
|Clover Biopharmaceuticals||Chengdu||$230 million||C||GL Ventures, Temasek||Oceanpine Capital, OrbiMed, Delos Capital||Biotechnology||Biotech|
|ECARX||Hangzhou||$200 million||A+||China Venture Capital Fund||Automobiles, Other Vehicles & Parts||AI and Machine Learning|
|Guodong Group||Shanghai||$170 million||Pre-IPO||Morgan Stanley, Ping An Capital, CICC Capital, CITIC Securities Investment, Guolian Group, SPDB International, Changjiang Wonderbay Fund||Telecoms||N/A|
|SPH Health Commerce||Shanghai||$160 million||B||Shanghai Biomedical Industrial Equity Investment Fund, JIC Investment||Sinocare, Shanghai SITICO Asset Management, New Alliance Capital, Ample Harvest Finance, Huadong Industrial||Healthcare Services||HealthTech|
|Moore Threads||Beijing||$153.5 million||Pre-A||Shenzhen Capital Group, GGV Capital, Sequoia Capital China||China Merchants Venture, ByteDance, Pony.ai, Riverhead Capital Investment Management, Oceanpine Capital, Wen Ming Investment, First Capital, 5Y Capital, Shenzhen H&T Intelligent Control||Semiconductors||N/A|
|WuXi Diagnostics||Shanghai||$150 million||B||Thermo Fisher Scientific, Shiyu Capital, ABC International, Sunland Capital, CCBI Tech Venture, YF Capital||Healthcare Services||HealthTech|
|Yisheng Biopharma||Beijing||$130 million||B||OrbiMed, Oceanpine Capital||Biotechnology||Biotech|
|Wangjiahuan||Shenzhen||$123 million||B+||CPE||Paul Run Holding, Ziming Capital||Agribusiness||AgTech|
|Babycare||Hangzhou||$108 million||B||CDH Investments||Huaxing Grwoth Capital, Sequoia Capital China||Consumer Products||N/A|
|Guangzhou Quwan Network Technology||Guangzhou||$100 million||B||Matrix Partners China, Orchid Asia||Travel & Leisure||Social Media|
|uSMART||Hong Kong||$100 million||Financial Services||Fintech|
Pharma, software, medical devices firms gain traction
Startups in the pharmaceuticals and medical devices industries staged a comeback in February, clocking 14 deals each, to reclaim their position as a popular portfolio of China-focused investors. The investors see promise in the sectors, given China’s ageing population.
Meanwhile, internet and semiconductors, which had led the pack in January in terms of deal count, fell out of the top five.
Drugmakers raised more capital ($445.5 million), compared to medical devices fundraisers ($174.5 million).
Unlike pharmaceutical companies which raised more funding given their capital-intensive nature, all deals in medical devices were no bigger than $30 million and predominantly in the Series B round or earlier.
These emerging developers of medical devices & equipment present a prevalent tendency towards tech adoption. Nearly half of the 14 medical devices makers leverage advanced technologies, such as artificial intelligence (AI), to develop their products. And at least four of them are engaged in the R&D of robots used in surgeries, rehabilitation, medical imaging, and beyond.
Software companies also completed 14 deals worth a combined $309.5 million in February. The largest financing was a Temasek-led 500-million-yuan ($77.1 million) Series C round in Black Lake Technologies, a Software-as-a-Service (SaaS) startup that develops data-driven collaboration solutions for the manufacturing industry.
All other software fundraisers completed a round in the Series A or B stage, while funding stages were undisclosed in four deals.
Three investments fell in the $30-100 million basket: Burgeon Software’s 300-million-yuan ($46 million) Series B round, ECCANG’s $40 million Series B round, and Oray’s $40 million deal, while the remaining 10 deals were all smaller than $20 million.
A majority of these software startups are involved in SaaS (5), and AI & machine learning (4), while a few are in e-commerce software (2), big data (2), and fintech (1).
GL Ventures tops as most active investor
GL Ventures, the VC unit launched in February 2020 by Asia-focused PE major Hillhouse Capital Group, was the most active investor in February. Although the parent firm only invested in one transaction as the lead investor in the month, the VC arm injected capital into 14 investments, including nine deals where it led or co-led the deal.
Among the 14 deals, GL Ventures joined hands with Temasek to co-lead a $230-million Series C round for Clover Biopharmaceuticals, a clinical-stage biotech company that develops transformative biologic therapies. It also participated in three $50 million-plus deals, namely semiconductor startup AkroStar’s 400-million-yuan ($62 million) Series Pre-A round; chipmaker Cygnus’ 400-million-yuan Series Pre-A round; and contact lenses brand moody’s Series B and B+ rounds, in which the startup raised a combined 380 million yuan ($58.9 million).
Most active investors in China's PE-VC market (Feb 2021)
|Investment company||No. of deals||Total value of participated deals (USD)||Lead||Non-lead|
|Hillhouse Capital & GL Ventures||15||$593 million||10||5|
|CICC Capital and affiliates||7||$1,198 million||2||5|
|Sequoia Capital China||7||$918.5 million||3||4|
|Matrix Partners China||6||$207 million||4||2|
|Legend Capital & Legend Star||6||$109 million||3||3|
|GGV Capital||5||$351.5 million||2||3|
|CDH Investments and affiliates||5||$224.5 million||4||1|
|Northern Light Venture Capital (NLVC)||5||$103 million||2||3|
|Cowin Capital||5||$61.5 million||3||2|
CICC Capital, affiliated with the Hong Kong-listed investment banking firm China International Capital Corporation (CICC), and Sequoia Capital China, the bellwether of tech investments, were tied in second place for the number of participated deals.
The two investment companies backed seven deals each. CICC Capital and its affiliates led two of these transactions, while Sequoia Capital China led three.
Both invested in digital healthcare and pharmacy chain operator Beijing Yuanxin Technology’s 3-billion-yuan ($465 million) Series E round.
Other CICC-backed megadeals included AI chip designer Horizon Robotics‘ $350-million Series C3 round, and a 1.1-billion-yuan ($170 million) Pre-IPO round in communication infrastructure firm Guodong Group.
Note: In our monthly analysis for February 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.