While mutual funds and hedge funds, as well as traditional VC firms, are pursuing fewer new tech investments in the US, investors from China have ramped up.
China investment into US tech startups is being enabled by a number of factors. These include: RMB depreciation becoming more of an issue, Chinese investors looking to diversify their assets, an ambitious government innovation agenda, and global ambitions by Chinese internet giants.
Since the start of 2011, investors from the Greater China Region (China, Taiwain, Hong Kong) have participated in 679 US tech deals totaling $18.2B, according to CB Insights data. Between 2012 and 2015, deal activity by Chinese investors in US tech companies rose over 4.5X. In the first nine months of 2016, Chinese investors have participated in 160 US tech deals totaling $3.5B in total funding.
Mid-stage deal share rises; seed drops
In 2016 YTD, 28% of US tech deals involving Chinese investors have taken place at the mid-stage (Series B-C), which is higher than any of the previous four years. As Chinese investors have jumped into more sizable investments and taken corporate minority stakes, seed stage US tech deal share involving Chinese investors has fallen below 35% in both 2015 and 2016 YTD after reaching 44% in 2014.
California dominates China investments; geographic diversity has spread
While California-based tech companies have drawn the large majority of deals by Chinese investors, Chinese investment in US tech companies has become more geographically diverse.
Between 2012 and 2013, Chinese investors participated in US tech investments across 16 states. Between 2014 and 2015, Chinese investors invested in US tech companies across 24 states.
Below is a table of notable US financing deals this year involving investors from Greater China in areas from autonomous vehicles to augmented reality to VR content.
|Company||Focus Area||Round Amount ($M)||China Investors||Date||Location|
|Magic Leap||Augmented reality||$798.5||Alibaba Group, Enjoyor Group||Feb-16||Florida|
|Zoox||Autonomous vehicles||$200||AID Partners||May-16||California|
|Unity Technologies||Game development platform||$181||China Investment Corporation, Frees Fund||Jul-16||California|
|Velodyne||LiDAR sensor technology||$150||Baidu||Aug-16||California|
|NextVR||VR content||$80||CITIC Guoan, NetEase Capital, China Assets Holdings, CMC Holdings||Jul-16||California|
|Razer||Gaming hardware and products||$75||Hangzhou Liaison Interactive||Feb-16||California|
|Circle Internet Financial||Consumer payments||$60||Baidu||Jun-16||Massachusetts|
|Meta||Augmented reality||$50||Tencent, Lenovo Group, Ningbo GQY, Horizons Ventures, Banyan Capital||Jun-16||California|
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