VC activity on the rise in China

Both venture capital fundraising and investments increased significantly in H1 2014

Venture capital firms in China invested 144 percent more in new opportunities in the first half of 2014 compared to the same period last year, according to data from Dow Jones VentureSource.

Investment into venture opportunities reached $5.1 billion during the first half of this year, a huge jump from the $2.09 billion invested in H1 2013. Similarly, the volume of deals has also risen, to 228 from 151, equating to a 51 percent increase.

Venture capital fundraising also experienced a boost in the first half of this year.

Firms raised a total of $4.27 billion for China’s venture industry – 360 percent more year-on-year. Just $930 million was raised by venture capital firms during the same period last year, Dow Jones VentureSource data showed.

IDG Capital Partners' China Venture Capital IV was the largest fund raised in the second quarter of 2014, garnering $586 million in commitments and accounting for 19 percent of the total amount for the quarter.

The fund was closely followed by Yunfeng Capital Management, a $500 million early-stage and venture capital fund founded by Alibaba Group chairman Jack Ma and Target Media founder David Yu. Yunfeng also recently raised a $1.1 billion buyout fund in the country.

Legend Capital, Matrix Management and Shunwei China Internet Fund all also raised upwards of $315 million during the second quarter of the year, helping boost fundraising totals to the highest level in a single quarter since Q4 2011.

However, while venture-backed M&A and fundraising picked up, listings in China fell substantially from the flurry of IPOs completed during the first quarter of 2014 when the IPO markets in China re-opened. 

Just 11 companies went IPO in China in the second quarter, compared to 27 in Q1, although the latter figure is likely skewed by a rush of activity driven by regulators opening China's capital markets in January. In comparison, 12 companies listed in Q4, with just two listing in Q2 last year. 

Despite the decline in the number of IPOs for the quarter, a total of $2.75 billion was raised, which is an increase of 34 percent over the previous quarter and the highest quarterly figure since 3Q 2011. A total of $4.8 billion has been raised for Chinese VC-backed IPOs during the first half of this year, the most in any half-year since the first six months of 2011 when $9.3 billion was raised.