Flag of China. Picture: SCREENGRAB VIA YOUTUBE
Flag of China. Picture: SCREENGRAB VIA YOUTUBE

Hong Kong — Megadeals in China helped bring a record $31bn in venture-capital investment to the country in 2016 despite a sluggish global economy and a sharp drop in the number of deals, a report showed on Friday.

Venture-capital investment in China rose 19% to account for about a quarter of the global total of $127bn last year, even though the number of deals fell 42% to just 300, according to KPMG’s quarterly report on global VC trends.

China had its two biggest deals for the year in the first half of 2016: $1.2bn in funding for peer-to-peer lending platform Lufax and Apple’s $1bn investment in taxi-hailing app Didi Chuxing.

Despite cautious investor sentiment shown in a 9.4% drop in global investment value and a 24% slide in deal count in 2016, average investments in China are getting bigger. China’s deal count more than halved in the past three years, but investment tripled from 2014’s $12bn. Beijing alone attracted $37.3bn in venture capital since that year, including $18.5bn in 2016.

The strong performance in China is expected to go on in 2017 with artificial intelligence investment "growing by the day" in a new focus for investors, KPMG said. It expected Chinese-outbound VC investment, especially in the US, to grow at a solid pace driven by Chinese companies wanting to acquire technologies for use in the home market.

"Investors in Asia are shifting their investment focus," said Philip Ng, Partner and Head of Technology, KPMG China.

Artificial intelligence, robotics and big data are replacing online-to-offline to be what is grabbing investing attention, while there is also increased focus on fintech, education and healthcare related start-ups, he said.


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