Q2 2020 Investment in Chinese Internet Startups Up 37% QoQ
CAICT, 7/11/20
Driven by the continued recovery of China's economy and looser liquidity, capital markets for Chinese internet startups rebounded strongly in Q2 2020, with the total amount of investment and financing disclosed for the quarter coming to USD 6.52 bln, up 37.0% QoQ but down 18.4% YoY, according to Chinese government data. The Policy and Economics Research Institute of the China Academy of Information and Communications Technology (CAICT), a department of China's Ministry of Industry and Information Technology (MIIT), also reported that the total number of funding and financing deals for Chinese internet startups during the quarter came to 321, up 146.9% QoQ, but down 38.7% YoY.
Investment & Financing of Internet Startups in China
| Period | Investment Total (USD Bln) | QoQ Change | Number of Deals | QoQ Change |
|---|---|---|---|---|
| 2019 Q2 | 7.99 | N/A | 524 | N/A |
| 2019 Q3 | 10.10 | 26.4% | 543 | 3.6% |
| 2019 Q4 | 2.99 | -70.4% | 233 | -57.1% |
| 2020 Q1 | 4.76 | 59.2% | 130 | -44.2% |
| 2020 Q2 | 6.52 | 37.0% | 321 | 146.9% |
The proportion of the investment and financing in China's internet startups in Q2 2020 that went to early stage ventures rose significantly, with seed round and Series A investments combined comprising 70.0% of the total, up 17.3 percentage points from Q1 2020 but down 6.0 percentage points from Q2 2019.
Breakdown of China Internet Investment Deals by Round
| Period | Seed | Series A | Series B | Series C | Series D | Series E or Above |
|---|---|---|---|---|---|---|
| 2019 Q2 | 45.9% | 30.1% | 14.3% | 6.6% | 2.2% | 0.9% |
| 2019 Q3 | 46.4% | 27.9% | 15.4% | 7.6% | 1.8% | 0.9% |
| 2019 Q4 | 18.1% | 38.2% | 27.5% | 9.3% | 6.4% | 0.5% |
| 2020 Q1 | 14.5% | 38.2% | 25.5% | 14.5% | 6.4% | 0.9% |
| 2020 Q2 | 41.7% | 28.3% | 17.5% | 9.0% | 1.8% | 1.8% |
The top segments in Q2 2020 by total number of deals were:
| Segment | # of Deals |
|---|---|
| Enterprise Services | 58 |
| E-commerce | 47 |
| Online Education | 35 |
| Internet Finance | 25 |
| Online Advertising/Marketing | 23 |
| Online Medical & Health | 22 |
| Information Security | N/A |
| Local Life | N/A |
| Online Music & Video | N/A |
| Online Gaming | N/A |
| Application Infrastructure | N/A |
| Online News/Information | N/A |
| Online Travel & Mobility | N/A |
| Social Networking | N/A |
| IT Services | N/A |
| Other | N/A |
| Sports, Culture, & Entertainment | N/A |
| Software Tools | N/A |
| Search Engines | N/A |
| E-government | N/A |
| Online Real Estate | N/A |
Three segments that saw particularly strong increases in total investment compared to Q1 2020 were internet finance, online travel and mobility, and e-commerce.
In Q2 2020, China had 12 internet startup investment and financing deals for which funding exceeded USD 100 mln each, for a combined USD 4.70 bln, comprising 72.1% of total investment and financing for Chinese internet startups during the quarter. Of these 12, the top 3 alone accounted for a combined USD 3.04 bln in funding, or 46.6% of total funding of internet startups in China for the quarter.
Keywords: wireless Q2 2020 VC enterprise services financial services online healthcare mobile healthcare online video online gaming e-commerce information security Internet funding online advertising online real estate online travel online education e-government online music MIIT IT services local life CAICT online search online information service SNS national statistics
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