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Venture capital providers invest $1.89bn in Chinese companies in 200614/02/2007. Source: AltAssets. 
 Venture capital investment in companies headquartered in Mainland China reached the highest point in three years with 214 deals completed and $1.89bn invested in 2006, according to the China Quarterly Venture Capital Report released by Dow Jones VentureOne and Ernst & Young. Deal flow was up 37 per cent from 156 deals and the invested capital increased 55 per cent from $1.22bn 2005.
Bob Partridge, China leader of Ernst & Young's Venture Capital Advisory Group, said, 'In 2006, venture capital investment in China was dominated by a progressive development of the venture capital ecosystem and a diversification of the industries that were attracting investors.
'On the other hand, while investment was up in the fourth quarter 2006 compared to the fourth quarter 2005, we saw a slowdown in the fourth quarter compared to the third quarter, which might be attributed to the introduction of the new M&A rules in September 2006 or a similar seasonal trend in developed markets. We will continue to monitor the activity in the upcoming quarters to better assess the reasons for this decline,' Partridge continued.
By industry, 131 IT companies were financed in 2006, receiving $920.7m - an increase of 34 per cent from the $86.4m in 2005. The business, consumer and retail industry category posted 57 deals and $613.3m in investment in 2006, which is 40 per cent more capital than in 2005 ($438.7m).
While healthcare is a relatively small investment industry in China, particularly in comparison to the US and Europe, it did see ten deals in 2006 and $47.5m invested, up from six deals and $5.8m in 2005. The energy segment also climbed with ten deals, up from one in 2005, and $212.6m invested, up from $80m in the preceding year.
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