China VCs Pouring Billions Into Silicon Valley Startups

Chinese venture capitalists have been throwing money at Silicon Valley startups to the tune of $2.4 billion from the start of the year through May.

According to a report in the Financial Times, Chinese venture capital investment in Silicon Valley startups is expected to double the amount invested last year, which was a record at the time. The paper cited data from research firm Rhodium Group.

The main focus of the investments on the part of the Chinese VCs has been communications technology and biotech. It also comes as the White House under President Donald Trump has been trying to crack down on Chinese investments in U.S. tech companies. In addition to the $2.4 billion that went to startups this year, the Financial Times noted that lots of smaller deals that aren’t getting any notice are also happening.  “The vast majority of the investments have been traditional, passive venture capital investments and do not warrant much more attention from the U.S. government,” said Thilo Hanemann, a director at Rhodium Group, told the Financial Times. He noted that Chinese venture capitalists are usually private companies and that most of the small stakes don’t involve access to any technology. That doesn’t mean deals backed by the government aren’t happening and aren’t raising eyebrows.

In addition to companies, VCs and state-backed VC funds investing in U.S. startups, the paper pointed to universities in China as another way deal making is getting done. Beijing-based Tsing Capital is connected to the Tsinghua University in China and has made investments in battery technologies in the U.S. Meanwhile SAIC, the China-run carmaker, launched a VC unit that is located in Silicon Valley and has purchases U.S.-based transport, mapping and energy companies. The paper noted that Tencent, the Chinese Internet company, has participated in investment rounds for U.S. startups. “Demand is still very high for biotech investments and the level of competition among Chinese companies for US biotech licenses is very strong,” said Chen Bingyu, a partner at Hollyhigh International Capital, a Beijing-based investment adviser to Chinese biotech groups in the report.


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