Investments in privately-held companies in Greater China showed robust growth in June with private equity (PE) and venture capital (VC) firms pouring a total of over $6.2 billion into 154 startups.
June’s aggregate deal value was a 22.8% increase over May, while the number of investments also increased by 26.2% from the previous month, according to proprietary data compiled by DealStreetAsia.
However, the country’s tightening grip on the tech sector could cast a shadow over the dealmaking landscape in the months to come. Beijing stepped up oversight of data security and overseas listings by domestic firms in early July, days after ride-hailing giant DiDi Global’s US debut.
Meanwhile, dealmaking in the second quarter of 2021 was less vibrant as compared to the first quarter. Greater China-based startups raised close to $17 billion in the April-June period, representing a 29.7% decrease in total deal value from the January-March period. But the market was still more alive than Q2 2020, when startups collected only about $9.5 billion at the prime time of the COVID-19 pandemic.
In the entire first half of 2021, PE-VC investments in Greater China stood at $41.1 billion, up 7.9% from $38.1 billion in H2 2020. There were 889 transactions in H1 2021, 12.2% more than the 792 deals recorded in the previous six months.
Megadeals, defined as transactions worth $100 million or more, contributed to more than half of the financing in June.
Chubby Bear, a business-to-business (B2B) trading platform for home furnishing materials, pocketed the biggest investment in the month, raising $400 million from investors including CMC Capital Group, SoftBank, and others. This transaction, alongside another 18 megadeals, collectively secured over $3.7 billion, or 59.8% of the total funding in the month.
Startups that raised Series B or earlier-stage financing outnumbered their growth- and late-stage counterparts. In June, there were 63 deals at Series A round and earlier, 33 Series B deals, 20 Series C deals, 11 Series D deals, and two at Series E round and later. The funding stages of 25 investments were not disclosed.
Growth equity investors, which back companies at more mature stages of their life cycle, could face more uncertainties around exiting from their Chinese portfolios. New York-listed DiDi becoming the subject of China’s first cybersecurity review could slow down. IPOs, especially in the US. This may have a bearing on investors’ appetite for growth-stage, especially pre-IPO, investments.
For now, startups in their Series C stages were still the best-funded and garnered just over $1.7 billion in June, or 27.3% of the total financing. They were followed by companies in their Series B round, which raised over $1.1 billion; and those in the Series D round, which closed slightly more than $1 billion.
Nineteen megadeals in June 2021
|Startup||Headquarters||Investment size (USD)||Investment stage||Lead investor(s)||Investor(s)||Industry||Vertical|
|Chubby Bear||Shanghai||$400 million||C||C: CMC Capital Group; C+: SoftBank Vision Fund 2||C: Matrix Partners China, Genesis Capital, Tencent Investment, Yunqi Partners, Immensus Capital, Gan Jiawei (Individual investor), Cygnus Equity; C+: Matrix Partners China, CMC Capital Group, Genesis Capital, Yunqi Partners, Hundreds Capital, Ab Initio Capital, Gan Jiawei (Individual investor), Cygnus Equity||Internet||E-commerce|
|WeRide||Guangzhou/Zhengzhou||$310 million||C||Renault-Nissan-Mitsubishi alliance, China Structural Reform Fund||Automobiles, Other Vehicles & Parts||Autonomous Driving|
|Chehaoduo (Operator of Guazi.com)||Beijing||$300 million||H Capital||Sequoia Capital China, IDG Capital, Mark Yang/Yang Haoyong (Individual investor)||Automobiles, Other Vehicles & Parts||E-commerce|
|Hesai Technology||Shanghai||$300 million||D||GL Ventures, Xiaomi, Meituan, CPE||Huatai US Dollar Fund, Lightspeed China Partners, Lightspeed Venture Partners, Qiming Venture Partners||Automobiles, Other Vehicles & Parts||Autonomous Driving|
|Yaoshibang||Guangzhou||$270 million||Pearl River Investment, Baidu, Green Pine Capital Partners (GPCP), SFund||Healthcare IT||HealthTech|
|Insilico Medicine||Hong Kong||$255 million||C||Warburg Pincus||Qiming Venture Partners, Pavilion Capital, Eight Roads Ventures, Lilly Asia Ventures (LAV), Sinovation Ventures, BOLD Capital Partners, Formic Ventures, Baidu Ventures, CPE, OrbiMed, Mirae Asset Capital, B Capital Group, Deerfield Management, Maison Capital, Lake Bleu Capital, President International Development Corporation, Sequoia Capital China, Sage Partners||Pharmaceuticals||HealthTech|
|Dingdang Health Technology Group||Beijing||$220 million||Pre-IPO||TPG Capital Asia, OrbiMed Healthcare Fund Management, Redview Capital||Valliance Asset Management, Orchid Asia Group, Summer Capital, Yingke PE||Healthcare IT||HealthTech|
|Xforceplus Information Technology||Shanghai||$200 million||C+, C++||Dragoneer Investment Group, MSA Capital, Huatai Innovative Investment||Software||Saas|
|SmartMore Corporation||Hong Kong||$200 million||B||IDG Capital, CoStone Capital, Sequoia Capital China, Green Pine Capital Partners, Lenovo Capital, ZhenFund||Software||AI and Machine Learning|
|ZongMu Technology||Shanghai||$190 million||D||D1: Denso Corporation; D2: Cowin Capital, Gaoyuan Capital; D3: Xiaomi Yangtze River Industry Investment Fund||D1: Liangjiang Capital, Huantaihu Group, Jadex Capital; D3: Industrial Bank, Shanghai S&T Investment, Fosun Group’s private equity arm, Legend Capital, Qualcomm Ventures, Jadex Capital||Automobiles, Other Vehicles & Parts||Autonomous Driving|
|Stemirna Therapeutics||Shanghai||$188 million||Sequoia Capital China, China Merchants Medical and Healthcare Industry Equity Fund, WuXi AppTec, Greenwoods Investment||OrbiMed Healthcare Fund Management, Advantech Capital, Guoxin Guotong, CMB International, Efund, Forebright, Tsing Song Capital, CITIC Securities||Pharmaceuticals||Biotech|
|CD Finance||Beijing||$154 million||Equity financing||Teachers' Innovation Platform (TIP, affiliated with Ontario Teachers' Pension Plan)||ABC World Asia||Agribusiness||Fintech|
|Venturous Group||Beijing||$131 million||A||Benson Tam (Individual investor), Fidelity China Special Situations PLC, Savio Kwan's family office||Internet||Internet of Things|
|Xiao'E Tech||Shenzhen||$120 million||D||IDG Capital||GL Ventures, Qiming Venture Partners, GGV Capital||Business Support Services||Saas|
|Inmagene Biopharmaceuticals||Shanghai/San Diego/Hangzhou/Wuhan||$100 million||C||Highlight Capital, Panacea Venture||VMS Asset Management, Triwise Capital, South China Venture Capital, Kunlun Fund||Biotechnology||Biotech|
|EcoFlow||Shenzhen||$100 million||B||GL Ventures||Energy Storage & Batteries||CleanTech|
|Amber Group||Hong Kong||$100 million||B||China Renaissance||Tiger Brokers, Tiger Global Management, Arena Holdings, Tru Arrow Partners, A&T Capital, Sky9 Capital, DCM Ventures, Gobi Partners, Pantera Capital, Coinbase Ventures, Blockchain.com, Bit Digital, Digital Finance Group, Fenbushi Capital, Math Wallet, SNZ Capital, Continue Capital, Zhao Qingsun (Individual investor)||Financial Services||Fintech|
|Doublefs||Beijing||$100 million||Sequoia Capital China, IDG Capital, 5Y Capital, HIKE Capital, Capital Today||Consumer Products||E-commerce|
|Zhuanzhuan||Qingdao||$100 million||D1||Xiaomi Corporation||Shunwei Capital, Advantech Capital||Internet||E-commerce|
Self-driving startups outshine
Companies offering automobiles, auto parts, and related services grabbed the most funding in June — over $1.2 billion — as investors bet on the future of China’s mobility industry enabled by advanced technologies like artificial intelligence (AI).
The largest chunk of the $1.2 billion investment went to the top five fundraisers, namely self-driving firm WeRide; online car trading group Chehaoduo; lidar sensors developer Hesai Technology; autonomous driving solutions provider ZongMu Technology; and salvage cars’ online auction platform Bochewang. Noticeably, seven of the nine deals in the field were made into self-driving companies.
In terms of deal count, the software industry continued to lead the pack with 22 transactions. Xforceplus Information Technology, which provides software that enables supply chain and value-added tax (VAT) invoice management; and Hong Kong-based SmartMore, a hardware and software developer for intelligent manufacturing, each raised $200 million to become the two largest fundraisers in the area.
Investments into Chinese domestic consumer brands grew more active against the backdrop of the country’s growing middle class and China’s per capita disposable income in H1 approaching 18,000 yuan (about $2,781.6). At 16 deals, the consumer products sector surpassed biotech, semiconductors, and internet industries to clock more transactions, mostly by fashion e-commerce, beverages, fitness & wellness, as well as beauty & hygiene businesses.
Sequoia China retains title of top investor
Sequoia Capital China, which invested in tech giants including Alibaba, JD.com, and TikTok-owner ByteDance, retained its position as the most active venture firm in Greater China through capital injections into at least 13 companies in June. The value of its participated deals totaled nearly $1.3 billion, including five megadeals in Chehaoduo; SmartMore; Hong Kong-based AI drug discovery firm Insilico Medicine; mRNA-driven drugs and vaccines maker Stemirna Therapeutics; and cross-border fashion e-commerce website Doublefs.
Other active PE-VC investment groups include Matrix Partners China, the China team of US-based Matrix Partners; Asia-focused PE powerhouse Hillhouse Capital’s VC unit GL Ventures; as well as Legend Capital and Legend Star, investment arms of Chinese conglomerate Legend Holdings, among others.
Most active investors in China's PE-VC market (June 2021)
|Investment company||No. of deals||Total value of participated deals (USD)||Lead||Non-lead|
|Sequoia Capital China||13||$1,291.5 million||4||9|
|Matrix Partners China||11||$789 million||7||4|
|GL Ventures||8||$638 million||7||1|
|Legend Capital & Legend Star||8||$386 million||2||6|
|GGV Capital||8||$331 million||3||5|
|IDG Capital||7||$780 million||1||6|
|Xiaomi Corporation and affiliates||6||$635 million||4||2|
|SoftBank and affiliates||5||$461 million||3||2|
|CITIC Group and affiliates||5||$409 million||3||2|
|*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 June 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.