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Troubling Slowdown in China’s Venture Capital Fundraising

Just a year ago, it seemed as if every one in China was raising a venture capital fund. Thousands of new firms hung out a shingle, awash in cash from a boom in new capital from rich families, huge government spending and favorable policies for startups amid a booming domestic stock market.

The tide has turned. As the New York Times points out, Chinese venture capitalists are suddenly running out of cash, perhaps the tip of China’s economic iceberg showing signs of a slowdown.

That cash crunch is partly fueling a spate of tech stock market listings.

But even as China’s domestic venture capitalists are running out of cash, foreign venture capitalists—who are able to raise money from overseas institutions that domestic funds can’t access because of China’s strict currency controls–are still able to close big funds.

That could lead to some good bargain hunting.


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