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Venture Capital Report

China | 2Q | 2015

Venture Capital Report The following report presents Dow Jones VentureSource’s quarterly findings for Chinese

venture capital fundraising, investment, valuation, and liquidity. The included charts and

graphs offer a comprehensive view of the trends currently affecting the venture capital

market.

Highlights for 2Q 2015 include:

Chinese venture capital fundraising halved from previous quarter despite an increase in fund closings;

Venture capital investment into Chinese companies eclipses amount raised in each of the previous two

quarters to reach record high;

Exit activity improves as mergers and acquisitions (M&As) rise and initial public offerings (IPOs) surge

to highest number since 4Q 2010.

2


FUNDRAISING

3

2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15

Amount Raised ($B) $0.37 $0.95 $1.07 $0.64 $0.14 $0.50 $1.24 $0.99 $3.25 $0.48 $0.35 $2.46 $1.23

Number of Funds 12 12 16 5 6 10 15 9 14 10 8 12 18

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$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50Chinese VC Fundraising

(2012 – 2015) Based on multiple closings

Chinese Venture Capital Fundraising Falls in 2Q 2015 Despite Rise in Closings

Chinese venture fundraising fell to $1.2 billion across 18 funds during 2Q 2015, a decline of 50% in dollars

raised despite a 50% increase in the number of fund closings.

In comparison with the same period last year, dollars raised fell by 62%. However, the number of venture funds

with closings improved by 29%.

Huochai Kuailu Investment Fund was the largest of 2Q 2015, raising $484 million and accounting for 39% of the

total amount raised in funds for the quarter.

Venture Capital Report Largest VC Funds Raised in 2Q 2015

FUNDRAISING

4

Firm Name Fund Name

Amount ($M)

Closed in 2Q

Location Offering Status

Fund Type Fund Category Closing Type

Shanghai Kuailu Investment Group

Huochai Kuailu Investment Fund

$484.14 Shanghai Open Multi-stage

venture capital

Venture Capital First

Ant Financial Service Group

Ant Ecosystem Co-win Fund

$160.94 Hangzhou Open Multi-stage

venture capital

Venture Capital First

Source Code Capital Source Code Fund II

(USD) LP $150.00 Beijing Closed

Early-stage venture capital

Venture Capital

Final

Shenzhen Fukun Venture Capital Co.

Ltd.

Shenzhen Qianhai Tianhe Cultural

Investment Fund $80.47 Shenzhen Open

Multi-stage venture capital

Venture Capital

First

Qiming Venture Partners

Qiming Venture Partners III Annex

Fund LP $75.00 Shanghai Closed

Multi-stage venture capital

Venture Capital

Final


FINANCING

5

Equity Financings into China–

based, VC-backed Companies

(2012 – 2015)

2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15

Amount Raised ($B) $1.54 $0.96 $1.45 $0.83 $1.18 $1.53 $1.51 $2.43 $3.65 $3.58 $7.13 $6.87 $8.47

Number of Deals 85 68 91 87 110 137 153 146 192 272 315 251 359

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400

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$8.00

$9.00

Venture Capital Investment in China - 2Q 2015

Chinese venture-backed companies raised $8.5 billion in 359 deals during 2Q 2015, a rise of 23% in capital

invested and 43% in number of deals completed from 1Q 2015.

Compared with 2Q 2014, dollars invested more than doubled while deal flow improved by 87%.

Consumer Services was the strongest sector of the quarter in terms of attracting investment with Business and

Financial Services in second. The sectors garnered 60% and 26% of all dollars invested during 2Q 2015

respectively.


FINANCING

6

Equity Financings into China–based, VC-backed Companies, by Round Class

(2012 – 2015)

Number of Deals

2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15

Seed 6 5 11 8 13 20 17 22 20 22 27 13 7

First 31 29 45 41 60 74 86 80 94 149 173 130 192

Second 20 13 18 15 14 21 19 24 44 57 63 56 81

Later 21 20 13 14 12 13 25 13 22 36 36 41 53

Restart 1 0 0 0 1 0 0 0 0 0 0 0 0

0

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40

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120

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160

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FINANCING

7

2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15

Seed $3 $1 $8 $5 $13 $16 $19 $25 $29 $26 $31 $14 $9

First $358 $269 $219 $184 $309 $355 $489 $536 $669 $792 $1,374 $850 $1,715

Second $384 $132 $170 $284 $194 $288 $233 $596 $866 $1,186 $1,537 $1,506 $2,168

Later $750 $555 $1,048 $297 $408 $280 $749 $322 $1,671 $1,503 $3,756 $4,436 $3,452

Restart $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

$0

$500

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$4,500

Equity Financings into China-based, VC-backed Companies, by Round Class

(2012 – 2015)

Amount Raised ($M)


FINANCING

8

Equity Financings into China-based, VC-backed Companies

(2012 – 2015)

Median Equity Deal Size ($M)

2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15

Median Equity Deal Size ($M) $10.15 $6.28 $2.39 $4.74 $3.63 $3.26 $4.00 $5.00 $10.00 $4.84 $8.18 $7.98 $9.66

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00


FINANCING

9

28%

2%

48%

5%

1%

16%

Business and FinancialServices

Consumer Goods

Consumer Services

Energy & Utilities (0%)

Healthcare

Industrial Goods & Materials

Information Technology

2Q'15 Industry Breakdown

By Number of Deals

Equity Financings into China-based, VC-backed Companies, by Industry Group

(2Q 2015)

Consumer Services companies took just over $5 billion through 173 deals during 2Q 2015, a rise of 11% in

dollars invested and 47% in deals completed from 1Q 2015. The sector attracted 48% of all deals completed for

the quarter and a 60% share of total amount invested.

Business and Financial Services companies raised the second highest proportion of investment during 2Q

2015. The sector garnered $2.2 billion across 99 deals; a 52% increase in dollars accrued and a 77%

improvement in deal flow from the prior quarter.

The Information Technology sector placed third for investment, receiving $852 million across 57 deals. Sector

investment rose by 54% from 1Q 2015 while deal flow improved by 21%. The sector’s investment figure

represents 10% of the total equity financing into China-based VC-backed companies for 2Q 2015.

26%

2%

60%

2%

10% Business and FinancialServices

Consumer Goods

Consumer Services

Energy & Utilities (0%)

Healthcare

Industrial Goods & Materials(0%)


2Q’15 Industry Breakdown

By Amount Raised


FINANCING

10

Co. Name Industry Group

Industry Segment

Industry Code Brief Description Close Date

Round Type

Raised ($M)

Round Investors (* denotes lead)

Tongcheng Network

Technology Co. Ltd.

Consumer Services

Travel and Leisure

Travel Arrangement/Tourism

Provider of an online platform for travel

services. 6/30/2015 Corporate $577.35 Dalian Wanda Group *

Zhubajie Network Management

Co. Ltd.

Consumer Services

Consumer Information

Services Online Communities

Provider of an online trading platform for users to post tasks and projects and find people to solve

the tasks.

6/15/2015 Second $419.31 Chongqing Boen Technology Co. Ltd.,

Cybernaut Capital Management*

Tongcheng Network

Technology Co. Ltd.

Consumer Services

Travel and Leisure

Travel Arrangement/Tourism

Provider of an online platform for

travel services. 6/30/2015 3rd $390.28

CITIC Capital Holdings Ltd., Tencent Collaboration Fund

Shenzhou Ucar (Tianjin) Co. Ltd.

Consumer Services

Travel and Leisure

Transportation Services

Provider of chauffeured car services in China.

6/30/2015 First $250.00 CAR Inc.*, Legend Capital Co. Ltd.,

Warburg Pincus LLC

Lakala.com Inc. Business and

Financial Services

Financial Institutions and

Services

Payment/ Transactional

Processing

Provider of offline e-payment services in

China. 6/22/2015 Corporate $241.91

China Continent Property & Casualty Insurance Co. Ltd., China RE, China Taiping, Civil Aviation Development

Fund

Top 5 Deals into China-based VC-backed Companies (2Q 2015)


FINANCING

11

18 17

16

13

8 8

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22

Sequoia Capital IDG CapitalPartners

MatrixManagement

Corp.

Source CodeCapital

Shunwei CapitalPartners

MorningsideGroup (Holdings)

Ltd.

Most Active Investors for China-based, VC-backed Companies (2Q 2015)

Number of Deals


LIQUIDITY

12

Exit Opportunities for Chinese

VC-backed Companies

(2012 – 2015)

Venture M&A and IPO Market Activity in China (2Q 2015)

17 M&As were completed by venture-backed companies in China during 2Q 2015, eight more than in the

previous quarter and nine more than in 2Q 2014.

The largest M&A of the quarter was Jiangsu Sanyou Group’s reverse merger with healthcare check-up services

provider Meinian Onehealth Healthcare Group in April for $894 million.

44 VC-backed companies went public during 2Q in China, the most in a single quarter since 50 IPOs were

completed during 4Q 2010.

0 10 20 30 40 50 60 70

2Q'12

3Q'12

4Q'12

1Q'13

2Q'13

3Q'13

4Q'13

1Q'14

2Q'14

3Q'14

4Q'14

1Q'15

2Q'15

2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15

IPOs 15 12 4 0 2 1 12 27 11 9 15 22 44

M&As 3 3 2 7 3 6 7 3 8 6 6 9 17


LIQUIDITY

13

Top 3 M&As in China (2Q 2015)

Company Name

Location Brief Description Industry Code Industry Segment

Industry Group

Close Date

Round Type

Amount Paid ($M)

Acquirer

Meinian Onehealth Healthcare

(Group) Co. Ltd.

Shanghai Provider of preventive healthcare check-up

services in China. Outpatient Facilities Healthcare Services Healthcare 4/30/2015

Reverse Merger

$894.04 Jiangsu Sanyou Group Co. Ltd.

Nineyou Information Technology

(Shanghai) Co. Ltd.

Shanghai

Provider of an interactive

entertainment portal site.

Entertainment Consumer

Information Services

Consumer Services

6/11/2015 Acquisition $660.37

Hunan TV & Broadcast

Intermediary Co. Ltd.

Hefei Guoxuan High-tech Power Energy Co. Ltd.

Hefei Manufacturer of

lithium batteries in China.

Power Supplies Electronics and

Computer Hardware


5/31/2015 Reverse Merger

$539.33

Jiangsu Dongyuan

Electrical Group Co. Ltd.


LIQUIDITY

14

Chinese VC-backed IPO Activity

(2012 - 2015)

Chinese VC-backed IPOs (2012-2015)

44 VC-backed companies went public during 2Q in China, doubling the number for 1Q 2015 and quadruple the

number completed in 2Q 2014. Dollars raised through listings more than tripled the previous quarterly total to

reach $5.6B. The figure doubled the $2.75 billion raised through IPOs during 2Q 2014 and is the highest

quarterly figure since 1Q 2011 ($6B).

China National Nuclear Power Co. Ltd. had the largest IPO of the quarter, raising over $2.1 billion for its June

listing on the Shanghai Stock Exchange. The nuclear power provider’s IPO represents 38% of the total raised

through VC-backed IPOs in China during 2Q 2015.

2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15

Raised ($B) through IPO $1.63 $1.05 $0.48 $0.00 $0.29 $0.05 $1.63 $2.05 $2.75 $1.06 $1.44 $1.72 $5.56

Number of IPOs 15 12 4 0 2 1 12 27 11 9 15 22 44

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LIQUIDITY

15

Company Name

Location Brief Description Industry Code Industry Segment

Industry Group

Close Date Raised

through IPO ($M)

Exchange

China National Nuclear Power Co.

Ltd. Beijing

Provider of nuclear power services across

China. Nuclear Energy

Non-Renewable Energy

Energy and Utilities

6/10/2015 $2,127.26 SSE:601985

Jiangsu Broadcasting

Cable Information Network Co. Ltd.

Nanjing

Provider of digital television and pay-

television (TV) programs.

General Media/Content

Media and Content

Consumer Services

4/28/2015 $527.00 SSE: 600959

Yunnan Water Investment Co.

Ltd. Kunming

Provider of municipal wastewater treatment

and water supply facilities in Yunnan,

China.

Environmental Engineering/Services

Construction and Civil Engineering

Business and Financial Services

5/27/2015 $215.12 HKEx:06839

Top 3 IPOs in China (2Q 2015)


ABOUT US

Dow Jones VentureSource helps venture capitalists, corporate development executives, investment bankers and service providers find deal and partnership opportunities, perform comprehensive due diligence and examine trends in venture capital investment, fund-raising and liquidity. It provides accurate, comprehensive data on venture-backed companies – including their investors and executives – in every region, industry and stage of development throughout the world. The investment figures included in this release are based on aggregate findings of Dow Jones' proprietary research and are contained in VentureSource. This data was collected through surveys of professional firms, interviews with company executives, and from secondary sources. These venture capital statistics cover equity investments into early stage, innovative companies and do not include companies receiving funding solely from corporate, individual, and/or government investors. Figures contained throughout the report current at time of editorial but are subject to change without notice. No statement herein is to be construed as a recommendation to buy or sell securities or to provide investment advice.

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