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November 14, 2006

China Venture Investing Up 47% This Year to $1.1 billion

posted by MR WAVETHEORY at 11/14/2006 06:27:00 AM
E&Y and DowJones VentureOne are saying that venture capital investing in China is hot. Venture capital activity in companies headquartered in mainland China is on course for a record-breaking year, with 54 deals and $361.1 million invested in the third quarter of 2006, according to the China Quarterly Venture Capital Report released by Ernst & Young and Dow Jones VentureOne, the publisher of the VentureSource database. Deal flow rose by 16 deals from the same quarter of last year and capital investment increased 47% from the same period.

Through the first three quarters of the year, there has now been $1.18 billion directed to 145 deals, putting 2006 on a clear path to surpass 2005's year-end total of 151 deals and $1.20 billion, and evidencing China's growing maturity in the global venture capital market.

That's a very brisk pace. Majority of the deals are seed or first round.

While seed- and first-round deals continued to make up the majority (70%) of deal flow in the third quarter, there were 14 second or later round deals this quarter, up from 10 in the same quarter a year ago. In addition, the amount of capital directed toward these later rounds, $139.7 million, was 57% more than was invested in similar rounds last year. On the other side, there were 38 seed- and first-round deals in the third quarter, an increase from the 25 that occurred in the third quarter of 2005. The capital investment to these rounds was $216.6 million, a 65% increase in capital from a year ago.

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