Venture capital investment by Chinese-funded institutions surged
186.1 percent in the third quarter of this year from the previous
quarter, with 38 contracts signed involving 907.1 million U.S.
dollars, according to a recent report by ChinaVenture, a domestic
financial consulting service provider.
In the third quarter, Chinese-funded and foreign-funded venture
capital investment altogether stood at 1.1 billion U.S. dollars
nationwide, up 44.3 percent from the second quarter. The money went
to 109 deals, said the report.
"Although the growth of Chinese-funded institutions in venture
capital investment has gained momentum, they lack behind foreign
competitors in terms of experience, fund scales and
professionalism, "Liu Liang, a senior analyst with ChinaVenture and
one of the writers of the report, told Xinhua.
He maintained that Chinese-funded institutions were just
embarking on venture capital investment.
The focus of the venture capitalists had shifted from high-tech
industry to traditional industries, namely franchised business,
education, manufacturing, media and entertainment and energy
industries. The five sectors attracted at least more than 100
million U.S. dollars each in venture capital, said the report.
"The research and development threshold of these traditional
industries is low. Although return on investment of these
industries is relatively low, the growth is quite steady," said
Liu.
By comparison, the venture capital put into the Internet
industry slid from 232.61 million U.S. dollars in the second
quarter to 152.01 million U.S. dollars in the third quarter, due to
investors' cautious attitudes following market bubbles caused by
overheated investment, said the report.
"The country is seriously preparing for the setting up of a
growth enterprise stock market similar to the NASDAQ to help
start-up companies, which helps facilitate robust venture capital
investment," Dr. Ou Minggang, the Deputy Chief Editor of the
Chinese Banker magazine, told Xinhua.
Shanghai ranked first among Chinese cities in terms of venture
capital injected in the third quarter, with 387 million U.S.
dollars flowing into 27 contracts. It was followed by Beijing, with
35 deals clinched involving 321 million U.S. dollars, according to
the report.
Founded in 2005, ChinaVenture is a leading industry information
provider and its website has become the most popular domestic
venture capital portal website.
Venture capitalism, also known as risk capital, refers to money
invested in start-up firms and small businesses that have both
growth potential and the possibility of loss.
Ou held that venture capital investment is conducive to
long-term economic development and restructuring, as more market
mechanisms could be employed to fill badly needed funds for some
start-ups, especially those in high-tech, energy-saving and
environmental protection industries.
(Xinhua News Agency November 20, 2007)
