Investment into Chinese venture-backed companies continued its decline in the first quarter of 2013, as companies raised $432 million from 30 deals.
The drop represents a 64% decrease in capital and a 38% decrease in number of deals from the previous quarter.
Compared to the same period in 2012, investment fell by 55%, while the number of deals completed dropped by 46%.
1Q’13 capital raised in the healthcare and consumer services sectors declined from 4Q’12 figures. However, investment in IT and business and financial services companies experienced a rise.
Despite a 76% drop in capital raised from the previous quarter, consumer services companies received 51% of all allocated venture investment, raising $222 million through 11 deals.
Business and financial services companies reported a 26% increase in amount invested from the previous quarter, raising $106 million in 7 deals during 1Q’13. However, the investment figure represents a drop of 48% from that of 1Q’12.
Two deals were completed for venture-backed healthcare companies, level with 1Q’12 and up from the single deal completed during 4Q’12.
Capital invested fell sharply however, with $6 million raised compared to $24 million for 1Q’12 and $30 million in 4Q’12.
IT companies received $78 million through 7 deals during 1Q’13, a drop of 42% in deal flow but an increase of 26% in capital raised from the previous quarter.
Venture M&A and IPO Market Activity
M&As of venture-backed companies in China increased by 250%, with 7 deals completed compared to 2 during the previous quarter.1Q’13 represented the highest number of M&As completed during a single quarter since 2010, when 8 were completed in 3Q’10. Only 2 additional deals were completed by Chinese venture-backed companies during the whole of 2012.
The largest M&A of the quarter was Beijing ErenEben Information Technology Co. Ltd., which was acquired by Tsinghua Tongfang Co. Ltd. for $220 million.
No VC-backed companies completed an IPO during 1Q’13 in China. In comparison, 3 IPOs were completed during 4Q’12