VC funding in China drops 26.8 pc during Jan-Oct as India sees surge

New Delhi (The Uttam Hindu): As India sees a surge in venture capital (VC) funding, China saw a steep 26.8 per cent decline in VC funding (by value) in the January-October period this year, according to a new report. A total of 2,116 venture capital (VC) funding deals worth $28.2 billion were announced in China during January-October. “This represents a year-on-year (YoY) decline of 22.5 per cent in VC deal volume, whereas the total disclosed funding value fell by 26.8 per cent,” according to GlobalData, a leading data and analytics company.

An analysis revealed that from January to October 2023, China witnessed the announcement of a total of 2,731 VC deals with disclosed funding value of $38.5 billion. The number of VC deals valued more than or equal to $100 million announced in China decreased from 70 during January-October 2023 to 50 during January-October 2024. “Crackdown on companies coupled with the ongoing conflicts, uncertain market conditions and economic challenges have weighed heavily on investor sentiment,” said Aurojyoti Bose, lead analyst at GlobalData. This can also be understood from the fact that China witnessed a decline in the number of big-ticket deals during January-October 2024 compared to January-October 2023, Bose mentioned.

China accounted for a 15.4 per cent share of the total number of VC deals announced globally from January to October 2024 while its share in terms of the corresponding funding value stood at 12.9 per cent.

Despite this downturn, China has maintained a substantial presence in the global VC landscape standing just next to the US in terms of both deal volume and value, said Bose. VC investors in India are focused on more traditional sectors for investment, including fintech, electric vehicles, and consumer technologies. Strong demographics, a robust economy and a vibrant capital market are the real drivers behind this optimism. In October, India saw private equity/venture capital investments worth $4.7 billion across 91 deals, a 40 per cent increase from September. Credit investments were the leading deal type in October, followed by growth investments, according to the IVCA-EY monthly PE/VC roundup.