Chinese startups say business conditions will improve
Although 8 in 10 Chinese startups think positively about 2019, reports of declining
access to capital suggest that growth may be tempered.
Describe your outlook on business conditions for your company this year compared with 2018.
Will be better
Will stay the same
Will be worse
Fundraising grows more difficult
A growing number of Chinese startups say it is harder to raise capital, with 28
percent calling it extremely challenging. In comparison, 13 percent of US startups say
it is extremely challenging. Investors may be pulling back somewhat, due in part to
government actions around financial risk, and that affects some Chinese VC
fundraising and investing. Companies with sustainable business models should still
find support.
What is your view of the current fundraising environment?
Most Chinese startups say M&A will increase
About two-thirds of Chinese startups believe that acquisitions will increase in 2019,
while nearly one-quarter expect M&A to decline. While the total fund raised decreased
and the overall China M&A market cooled down, the favorable policies issued by the
China Securities Regulatory Commission and the Asset Management Association of
China restored the confidence to some extent.
How do you think the M&A market will change in 2019?
More acquisitions
No change
Fewer acquisitions
VC is the expected next source of capital
Looking ahead, 51 percent of respondents expect their next source of funding to
come from venture capital — a more traditional form of financing in China,
particularly for later-stage companies.
What do you expect to be your company’s next source of funding?
Venture capital
Venture capital
Private equity
Private equity
Corporate investor
Corporate investor
IPO
IPO
Note: Asked of private companies that successfully raised capital. Other sources of funding include bank debt, organic growth, mergers, government grants,
crowdfunding and angel/micro VC/individual investors and represented 22% in 2017, 27% in 2018 and 9% in 2019.
Most startups say IPO is their long-term goal
The majority of Chinese startups say they expect to eventually
go public with an IPO. Fewer now expect to remain private. And, underscoring the
difficulty of planning an exit, 15 percent say they don’t know.
What is the realistic long-term goal for your company?
IPO
IPO
Acquisition
Acquisition
Stay private
Stay private
Don’t know
Don’t know