Shenzhen topped the country in terms of the amount invested by its venture capital (VC) companies and in the number of projects, or startups, it has invested in last year, according to a report on China’s venture capital industry released Tuesday.
Figures from the report, jointly compiled by Shenzhen Chamber of Investment, Shenzhen Media Group and Shenzhen Special Zone Daily, showed that Shenzhen’s venture capital companies have invested a total of 49.7 billion yuan (US$6.98 billion) in 992 startup projects last year, earning the city a ranking of No. 1 nationwide.
Last year, more than 40 percent of the companies that went public on the Sci-Tech Innovation Board, also known as the STAR market, received investments from Shenzhen venture capital firms, Shenzhen Special Zone Daily reported yesterday.
In 2019, Shenzhen venture capital firms withdrew 160 investments after the high-tech startups they had invested in went public, down 11 percent year on year, the Daily said.
Industry insiders attributed the reason behind the decrease to the long Research & Development (R&D) cycle of the high-tech startups in which Shenzhen venture capital institutions invested. The city’s firms have invested mostly in startups that engage in the R&D of cutting-edge high technology, which usually requires a longer time commitment.
Following the fast expansion in 2018, thanks to the introduction of a series of innovative policies catered to the development of the venture capital industry in the city, Shenzhen venture capital institutions reported decreases in the amount of investment and the number of invested projects in 2019, down 4.2 percent and 17 percent, respectively. However, the declines were still below the national average, the Daily said.
Venture capital has played an important role in driving the city’s high-tech development. Among the 992 projects that Shenzhen venture capital institutions have invested in, 240 are local startups that specialize in radical high technology such as advanced manufacturing, Internet of Things (IoT) and artificial intelligence (AI). The local projects received 10.4 billion yuan in venture capital investment, taking up 20 percent of the total investment by Shenzhen venture capital firms last year.
One of the country’s top three venture capital highlands, Shenzhen has the most active private venture capital enterprises in China, according to the report. It continued: the booming venture capital industry has made significant contribution to the development of real economy, technology innovations and the economic restructuring of Shenzhen and the country as a whole.