The venture capital (VC) funding received by startups in China experienced a significant decline of 44.8% year-on-year (YoY) during January-April 2023, reaching a total of $11.6 billion. This marks a stark contrast to the corresponding period in 2022, when the deal value amounted to $21.2 billion. However, despite this downturn, China has managed to outperform global markets, emerging as a resilient force in the venture capital landscape, reveals GlobalData, a leading data and analytics company.
An analysis of GlobalData’s Financial Deals Database reveals that deal volume witnessed a 19.7% YoY decline from 1,322 to 1,061.
Aurojyoti Bose, Lead Analyst at GlobalData, comments: “With growing investor cautiousness, several countries globally including China recorded a negative shift in VC funding activity. However, China still seems to be in a relatively better position.”
For instance, the decline in markets such as the US, the UK, and India far surpassed that of China. In January-April 2023, deal volume for VC funding in the US, the UK, and India dropped by 44.3%, 29.4%, and 49.5% respectively, compared to the same period the previous year. The decline in value was even more significant, standing at 51%, 53.2%, and 77.8% for these markets, respectively.
As a result, China continues to be the key APAC as well as global market and stands just next to the US in terms of VC deals volume and value. It accounted for 15.2% of the number of VC deals announced globally during January-April 2023 and 13.7% of the total deal value.
Bose concludes: “The venture capital downturn experienced during January-April 2023 in China highlights a challenging period for Chinese startups, as both deal volume and value declined compared to the previous year. The notable impact in terms of value suggests a more cautious approach from investors in the current market.”
