China Deal Review: Startups raise $1.62b in Jan despite CNY, coronavirus outbreak

People walk on the street in Macau wearing face masks to protect them to be infected with coronavirus. Source: Macau Photo Agency/Unsplash

Chinese startups have garnered about $1.62 billion across 33 transactions in the first month of 2020 even as the mainland market has nearly come to a standstill since the Lunar New Year holiday started on January 24.

According to proprietary data compiled by DealStreetAsia, all venture capital deals worth $10 million and more were recorded before the Lunar New Year, an originally seven-day public holiday that the Chinese government extended to February 2 in the wake of the coronavirus outbreak.

The epidemic, which appears to have started in central China’s Wuhan city, has already led to temporary store and factory closures of Apple, IKEA, Tesla, Starbucks, Disneyland and more companies with operations in China.

As the World Health Organization (WHO) declared the epidemic a global health emergency last weekend, nations like Australia, Singapore, and the United States banned or restricted the entry of Chinese citizens and any foreigners that have recently visited China, potentially further disrupting supply chains and business activities in the country.

Since the impact of the coronavirus on deal flows is yet to be seen, the mainland Chinese VC market remained largely intact in January with an approximately 31 per cent growth, or $382.3 million more, compared to the total deal value in December 2019.

Please find below detailed charts and analysis of prominent deals, active investors, deal stages and top sectors grabbing the largest venture dollars in the Greater China region between January 1 and 31, 2020.

Growth-stage startups grabbed the lion’s share of funding

Venture capital investments into startups at Series B round were the most active in terms of the deal volume in January, with 12 transactions accounting for a combined $298 million. Companies at the Series C round came second with seven investments, followed by their counterparts who did not specify the funding round, marked as “Undisclosed,” with five deals.

Regarding the deal value in the month, growth-stage startups remained more attractive than their domestic peers who previously closed only one funding round. Companies at and post-Series B round collected an aggregate of about $1.02 billion – nearly 63 per cent of the total deal value – through 23 investments.

The five companies who did not specify their funding stage pocketed a total of $478 million with ANE Logistics, a Shanghai-based express shipping unicorn that had previously raised at least six rounds, securing $300 million. This boosted the capital raised by Chinese growth-stage startups to at least $1.221 billion in January.

Centurium tops the list with $400m across two deals

Centurium Capital, a China-based private equity firm specialized in consumption, services, and healthcare investments, was the most generous investor in the month leading two mega-deals worth at least $100 million. The firm invested in the aforementioned $300 million in ANE Logistics, which was the largest VC deal in January.

The company also led a $100 million Series D round in corporate training service provider Yunxuetang, bringing the total capital raised by the startup to $200 million. YF Capital, backed by Alibaba’s former executive chairman Jack Ma Yun, and SIG Asia Investments also poured money into the Series D round.

Most Active Investors in China’s VC Market

Expand Table

Investment CompanyDeal VolumeTotal Value of Participated Deals (USD)
Qiming Venture Partners4287.3 million
Sequoia Capital China3124 million
Centurium Capital2400 million
SIG Asia Investments2158 million
China Merchants Bank2137 million
Hillhouse Capital2114 million
Baidu Ventures287 million
Greater Bay Area Homeland Investments258 million
Ivy Capital 228 million
GGV Capital224 million

Shanghai-based Qiming Venture Partners was the most active investment institution in the Chinese VC market in January 2020 with participation in four transactions worth a combined $287.3 million.

With over $4 billion across seven USD-denominated funds and five RMB-denominated funds, Qiming Venture Partners injected capital into four transactions – all but one below $100 million – in the month. The two larger deals include a $173 million Series C round in Hesai Technology, which develops 3D-sensors (LiDAR) for autonomous vehicles in China, and an $88.3 million investment into community e-commerce platform Nice Tuan.

Sequoia Capital China came second in terms of the deal volume after the Chinese division of US venture capital major Sequoia Capital poured money into three deals valued at $124 million in total.

Besides these companies, China Merchants Bank, Asia-focused private equity firm Hillhouse Capital, and SIG Asia Investments, the regional investment arm of trading firm Susquehanna International Group, also made the list by joining in two transactions that added up to over $100 million.

Baidu Ventures, the investment unit of Chinese internet search giant Baidu, Asia-based asset management firm Ivy Capital, global venture capital company GGV Capital, and Greater Bay Area Homeland Investments, a government-backed investor with $14.8 billion in debut fund, also participated in two yet relatively small transactions in the month.

Health-tech continues to lead

Among all industries surveyed, health tech-enabled startups remained to be the most popular portfolio component in China’s VC market in January 2020, with an aggregate of $437 million across nine transactions. Two out of six startups which closed a mega-deal worth at least $100 million were from the health technology sector:

· Zhiyun Health, a digital healthcare service platform, raised a combined 1 billion yuan ($144 million) in Series C+ and Series D rounds led by SIG Asia Investments and CMB International. The company is “on the path” to becoming the next unicorn in China’s digital healthcare field, said the company founder and CEO Kuang Ming in a statement.

· Transcenta, a biotherapeutics company based in Hangzhou, secured $100 million in a Series B+ round led by Greater China-focused venture capital firm Fortune Capital and CR-CP Life Science Fund. CR-CP Life Science Fund is a joint fund created between China Resources and Thai conglomerate Charoen Pokphand Group.

The logistics industry came second in terms of the deal value thanks to the sole yet largest round raised by ANE Logistics.

Ranked third was the AI & Robotics field, which recorded five transactions worth a combined $284 million. The only mega-deal in the space was the $173 million Series C round raised by Hesai Technology. The company, created in Silicon Valley in 2013 and relocated to Shanghai in 2014, has so far raised more than $323 million through four funding rounds.

Fundraising performance in the Chinese education technology space also saw good traction with two startups in the field closing $100 million each in the month:

· Education services provider Wanxue Education received $100 million in a Series D round led by Asian private equity firm ADV Partners, as the startup seeks to raise the stakes in serving the exponentially growing demand for advanced education in China.

· Yunxuetang, also known as YXT.com, closed $100 million in a Series D round led by Centurium Capital with participation from YF Capital and SIG Asia Investments.

China’s VC Deals Worth $100m and Over

Expand Table

StartupHeadquarterInvestment Size (USD)Investment StageLead Investor(s)Other Investor(s)Sector
ANE LogisticsShanghai300 million-Centurium Capital-Logistics
Hesai TechnologyShanghai173 millionCBosch Group, Lightspeed China PartnersON Semiconductor, Qiming Venture Partners, Detong Capital, Axiom Asia Private CapitalAI & Robotics
Zhiyun HealthHangzhou144 millionC+, DCMB International, SIG Asia Investments
OP Financial, Samsung Electronics, Bojiang Capital, LB InvestmentHealth Tech
Transcenta HoldingHangzhou100 millionB+CR-CP Life Science Fund, Charoen Pokphand GroupLily Asia Ventures, Temasek, Hillhouse Capital, Teng Yue Partners, Sequoia Capital China, ARCH Venture Partners, Epiphron Capital, the China Merchants Group Merger Fund, ChinaEquity Group Health Tech
Wanxue EducationBeijing100 millionDADV Partners-Ed Tech
YunxuetangBeijing/Suzhou100 millionDCenturium CapitalYF Capital, Susquehanna International GroupEd Tech

Liya Su contributed to this 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.