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AltAssets is the private equity news and research service from Almeida Capital
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PRINT THIS PAGE Venture capital investment in China at $560m in second quarter15/08/2007. Source: AltAssets. 
Venture capital firms invested a total of $560m in 55 deals in Mainland China in the second quarter of this year, up from the $375m invested in 41 deals in the first quarter and but down from the $661m invested across 70 deals in Q2 2006, according to the China Quarterly Venture Capital Report released by Dow Jones VentureOne and Ernst & Young.
Venture capital firms invested more money than ever before in IT companies, the research found. The report shows an almost 100 per cent increase over the first quarter in the amount of money invested in information services, which include blogs, social networks, wikis and other Web 2.0 companies, as investors put a record $209m to work in 22 deals.
Overall, the second quarter saw significant investment in IT companies with 36 deals raising $347m in financing. The largest reported IT deal for Mainland China was the $31.5m second round for Beijing-based ChinaCache, a profitable provider of network services for websites and other content providers.
'As investors move to monetise China's internet, we have seen a consistent increase in the amount of capital invested in IT deals,' said Bob Partridge, Ernst & Young's transaction advisory services leader - China. 'The median amount of capital put to work in IT deals in Mainland China now stands at $6.2m, the highest on record and up from the median of $5m seen in 2006.'
Early stage deals accounted for a greater percentage of the overall deal count as 53 per cent of deals in the second quarter were seed and first rounds. Most notably, there were 29 first rounds closed, up from 17 in the first quarter of the year. Second and later rounds remained virtually unchanged. Reflecting the quick development of 'Web 2.0' products and services, 50 of Mainland China's 55 total deals were for companies in advanced stages of development. Of these, eight deals were for companies already turning a profit and 42 had fully developed product offerings, according to the report.
Copyright © 2007 AltAssets
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