CHINA’S rate of creating unicorns has dropped to a six-year low as venture capital funds shy away from early-stage funding while the economic impact of the coronavirus outbreak batters portfolio investments. Only four Chinese startups have reached unicorn status — valued at US$1 billion or above — as of May 13, the lowest number for the same period since 2014, showed data from PitchBook. Early-stage venture funding has dropped with just 13 percent of fundraising going into “angel” and “seed” rounds as of April-end, down from a third five years earlier, showed calculations based on PitchBook data. Angel and seed funding typically help entrepreneurs get business ideas up and running. In comparison, venture funding into the series B round — when investors help startups expand — accounted for nearly 29 percent of total fundraising, versus just 19 percent in 2015. Venture investors now demand even more clarity and detail in business plans before investing early in a startup, said investor-turned-entrepreneur Zijing Wu, whose Moli Culture & Technology designs dolls and picture books and offers related online courses based on inspirational female characters. “During the heyday of tech startups, a good business idea would already be valued at millions of dollars and startups would be burning cash while looking for ways to profit. Those days are gone,” said Wu. The number of venture capital investments for the first four months has fallen 35 percent this year, and the investment value has dropped 6.6 percent, according to data provider Preqin. Data from researcher IT Orange showed 27 startups have failed so far this year, and only 170 were founded in the first four months — a drop from 1,980 in the same period last year.(SD-Agencies) |