China Deal Review: Unfazed by regulatory action, PE-VC funding rises 11.6% to $7b in July

Hong Kong. Photo by Ruslan Bardash on Unsplash

Financing into Greater China-based startups in July 2021 stood at $7 billion — up 11.6% from the previous month, as investors seem unfazed by Beijing’s actions against homegrown tech giants that have made the market riskier.

Private equity (PE) and venture capital (VC) firms made at least 177 investments across mainland China, Hong Kong, and Taiwan last month, a 14.9% increase over June when 154 deals were clocked, according to proprietary data compiled by DealStreetAsia.

In comparison with July 2020, the number of PE-VC deal volume in the region grew 52.6%, while deal value clocked a substantial growth of 71.1%, largely on account of the presence of a billion-dollar transaction last month.

The biggest financing in the month was the electric battery maker and storage solutions provider SVOLT Energy Technology‘s 10.28 billion yuan ($1.6 billion) Series B round led by Bank of China Group Investment (BOCGI).

Megadeals amount to nearly $4.7b

After a three-month shortage in big-ticket investments, the value of megadeals — transactions worth $100 million and more — picked up in July and accounted for 66.8% of the month’s total funding.

Besides SVOLT’s $1.6 billion Series B, two other companies also raised sizeable funds — ESWIN Material, the integrated circuit (IC) unit of Beijing ESWIN Technology Group, and Banma, which develops solutions that power internet cars, each closed 3 billion yuan (about $464 million) deals.

The three largest transactions, together with another 17 megadeals, collectively garnered nearly $4.7 billion.

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The 20 megadeals ($100m and above) in July 2021

StartupHeadquartersInvestment size (USD)Investment stageLead investor(s)Investor(s)Industry/SectorVertical
SVOLT Energy TechnologyChangzhou$1,600 millionBBank of China Group Investment (BOCGI)China's National Fund for Technology Transfer and Commercialization, Country Garden Venture Capital, Shenzhen Capital Group, CCB Investment, IDG Capital, Sany, Xiaomi, Huaxing Growth Capital, Oceanpine Capital, SDIC, JZ CapitalEnergy Storage & BatteriesElectric/Hybrid Vechicles
ESWIN MaterialXi'an$464 millionBCITIC Securities Investment, Goldstone InvestmentZWC Partners, Addor Capital, China life Private Equity Investment, China Internet Investment Fund, Xindongneng Investment ManagementSemiconductorsN/A
Banma Information Technology Shanghai$463.5 millionAlibaba, Yunfeng Capital, SAIC Motor, CMG-SDIC CapitalAutomobiles, Other Vehicles & PartsInternet of Things
Mei Wei Dental GroupShanghai$155 millionBFortune Capital, New Hope Group, TFTR InvestmentHealthcare SpecialistN/A
City Cloud TechnologyHangzhou$154 millionDYuexiu Industrial Fund, Hangzhou High-Tech Investment, Binjiang Hi-Tech Venture Capital, Jiashan State-Owned Assets Investment, DT Capital PartnersInternetInternet of Things
SemiDrive TechnologyNanjing$154 millionBCDB Equipment Manufacturing Industrial Investment Fund, V FundBOC International, Shangha Science and Technology Innovation Fund, Zhangjiang Haoheng, Matrix Partners China, CTC Capital, Vertex Ventures China, Chendao Capital (invested on behalf of Contemporary Amperex Technology Co Limited)SemiconductorsAutonomous Driving
Beijing Cloudwise Technology Beijing$150 millionESequoia Capital ChinaSIG, CPE, ASG, FutureX Capital, CRC CapitalIT InfrastructureAI and Machine Learning
CalmCarTianjin$150 millionCZF Friedrichshafen AG (ZF Group)Dragonstone Capital Management, OCI International, Alpha Win Capital, Zhongke Xianjin Fund, VinFast, Great Filter Venture, China Unicom Capital, China Unicom-CICC CapitalAutomobiles, Other Vehicles & PartsAutonomous Driving
MicroPort Cardiac Rhythm Management Limited/MicroPort CRMShanghai, China/Clamart, France$150 millionCMicroPortHillhouse Capital, CICC Capital, Country Garden Venture Capital (CGVC), Yong Rong (HK) Asset Management, L Square Private Management, E Fund Management, Worldstar Global Holdings LimitedMedical Devices & EquipmentN/A
InferVisionBeijing$138.9 millionD2Springhill Fund, AsiaTech Ventures, Z-Park Fund, Goldman Sachs Asset Management, CCB Trust, TopoScend Capital, Xiangli Capital, Zhongguancun Science City, Shenzhen Yicun Tongsheng Equity Investment Fund, Shanghai Lianyi InvestmentHealthcare ServicesHealthTech
Animoca Brands Hong Kong$138.89 millionUnicorn First tranche: Kingsway Capital, RIT Capital Partners (formerly Rothschild Investment Trust), HashKey Fintech Investment Fund, AppWorks Fund, LCV Fund, Huobi, Octava, Ellerston Capital, Perennial, Axia Infinity Ventures, SNZ, Liberty City Ventures, Metapurse; Second tranche: Blue Pool Capital, Coinbase Ventures, Gobi Partners, Korea Investment Partners, Liberty City Ventures, Samsung Venture Investment Corporation, Scopely, Token Bay Capital, zVentures (corporate venture arm of Razer Inc)Travel & LeisureBlockchain
Hefu-NoodleNantong$124 millionECMC CapitalZWC Partners, Longfor Capital, Tencent InvestmentFoodN/A
Geneplus TechnologyBeijing$116 millionCCCB InternationalCCB Investment, GGV Capital, Jinmao Capital, Fortune Capital, Alibaba Health Information Technology, Baidu Ventures, Sharewin Investment, Yuanfeng Capital, Huajin Capital, Juanci Investment, ZGC Zhongnuo Fund, Gold Seed Venture Capital, Weiting Capital, Chuanghehui CapitalBiotechnologyBiotech
Freetech Intelligent Systems/FreetechShanghai$100 millionAChina Internet Investment Fund (CIIF)Hua Ventures, Hunan Minmetals High-Tech Fund Management; Dofeng-BOCOM Auto Industry Investment Fund, Yunxiang Wuzhen Equity Investment, Huiyou Capital (Shenzhen Hui Capital), Zhuoyi CapitalAutomobiles, Other Vehicles & PartsAutonomous Driving
GOGOX (previously GOGVAN)Hong Kong$100 millionBOCOM International, Cyberport Macro FundLogistics & DistributionRidesharing /Transport
Adlai NortyeHangzhou/North Brunswick (US)$100 millionDCMG-SDIC Capital, Hangzhou TigermedLegend Star, WuXi Biologics' industry fundBiotechnologyBiotech
NEIWAIShanghai$100 millionDCarlyle GroupVertex Ventures, Qiming Venture PartnersConsumer ProductsN/A
TransThera BiosciencesNanjing$100 millionDCPE, China Structural Reform FundSixty Degree Capital, China Merchants Capital, GP Healthcare Capital, CoStone Capital, Jiangsu Ruihua Investment ManagementBiotechnologyBiotech
Bota BiosciencesHangzhou$100 millionBSequoia Capital China CMB International Capital, Matrix Partners China, 5Y Capital, Source Code Capital, Sherpa Healthcare Partners, MeituanBiotechnologyBiotech
BioMapBeijing$100 millionAGGV Capital Baidu, Legend Capital, BlueRun Ventures, Xiang He Capital, Robin Li (Individual investor)BiotechnologyHealthTech

More early-stage bets

Investors made more bets on early-stage startups in their Series B round and earlier, as Chinese regulators’ attempts to tighten oversight of initial public offerings (IPOs) clouded the prospect of exiting from later-stage portfolios.

More than half (53.1%) of the transactions in July happened in the Series A stage and earlier. Those in the Series B round accounted for almost one quarter (24.9%) of the deal volume.

Among growth- and late-stage deals, there were 12 in the Series C stage, six in Series D, and four in the Series E round and later. The funding stages of 17 investments were not disclosed.

In terms of the distribution of capital across different investment stages, SVOLT and ESWIN’s Series B rounds boosted the cumulative deal value in the stage to approximately $3.4 billion, or 48.2% of July’s financing. Deals in the Series A stage came second with more than $1.1 billion, followed in sequence by Series C, Series D, and Series E.

Biotech, medical devices sectors close more deals

While China’s new cybersecurity draft rules weigh on foreign listings of technology firms that possess the data of at least one million users, biotech and healthcare companies have become a steady source of IPO-based exits. These portfolios’ popularity in the public market, especially amid the prolonged COVID-19 pandemic, has also made them more attractive to investors.

Against this backdrop, the biotech industry recorded more investments than all other sectors in July — 28 deals totaling $890.7 million.

A large chunk of the capital went to the top five fundraisers, namely next-generation sequencing (NGS) firm Geneplus Technology; Adlai Nortye, a clinical-stage biopharmaceutical firm that develops immuno-oncology medicines; clinical-stage biotech company TransThera Biosciences; industrial biotech player Bota Biosciences; and BioMap, an AI-based precision medicine startup backed by internet search giant Baidu’s co-founder Robin Li.

Among them, Adlai Nortye, a pre-revenue company that registered a net loss of 437 million yuan ($67.4 million) in 2020, filed for an IPO on the Hong Kong stock exchange only days after the new round. TransThera Biosciences is also targeting to go public in the Asian financial hub.

Medical devices, another health-related industry, also gained good traction and recorded 20 deals worth a combined $389.5 million. MicroPort CRM, a subsidiary of Hong Kong-listed Chinese medical device developer MicroPort, inked a term sheet to raise $150 million from investors including Hillhouse Capital, although all other transactions in the sector were of much smaller size at no more than $30 million.

Sequoia China tops active investor list

Sequoia Capital China, an investor in tech giants like Alibaba, JD.com, and TikTok-owner ByteDance, continued to lead the pack as the most active venture firm in Greater China in July with capital injections into at least 13 startups. Led by one of China’s most influential rainmakers Neil Shen, the firm made 13 investments in June; 15 in May; and 15 in April.

The total value of its participated deals amounted to $533.5 million, including one megadeal in industrial biotech player Bota Biosciences. The remaining 12 deals were made into startups across the verticals of biotech, software, food, medical devices, pharmaceuticals etc.

Other active PE-VC investment groups include Beijing-based IDG Capital; Matrix Partners China; smartphone maker Xiaomi’s founder Lei Jun-backed Shunwei Capital; and Asia-focused PE powerhouse Hillhouse Capital’s VC unit GL Ventures, among others.

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Most active investors in China's PE-VC market (Jul 2021)

Investment companyNo. of dealsTotal value of participated deals (USD)LeadNon-lead
Sequoia Capital China and affiliates13$533.5 million76
IDG Capital10$1,837 million64
Matrix Partners China10$369 million55
Shunwei Capital9$52 million45
Hillhouse Capital & GL Ventures8$215.8 million35
SDIC and affiliates7$2,254.5 million43
Legend Capital and affiliates7$290 million16
Sherpa Healthcare Partners7$255 million16
Cowin Capital7$64.5 million16
5Y Capital6$161.5 million15
*If one deal is backed by only two investors, we consider neither of the two investors as a lead investor.

Liya Su contributed to the story.

Note: In our monthly analysis for July 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.

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.