Vol. 54 July 31st , 2016

Latest Report

H1’16 Sees Growing Fundraising of Large Funds but Shrinking

Investments

By Emily Shen , Zero2IPO Research Center

Statistics from Zero2IPO Research Center, a well-known venture capital and private equity research

institution in Greater China, showed that in H1’16, although the VC fundraising slowed down, the huge

sums of money raised by big firms prevented the total amount from substantial decline. According to

PE data under Zero2IPO Group, inH1’16, Chinese and foreign venture capital firms raised 173 funds,

adding US$11.83B of new capital investible in Chinese mainland, and the average fund size rose

considerably from H1’15 and H2’15 toUS$93.88M. However, VC investments fell 33.3% Y-o-Y to

1,264 deals in H1’16, 1,052 of which disclosed the investment amount of US$8.77B in total, down

18% Y-o-Y, or US$8.34M on average. What’s more, 1,107 VC exit deals were completed, among

which 945exited through listing on the New Third Board, accounting for 85.4%. IPO and M&A exits

followed with 70 and 53 deals respectively. Excluding those via New Third Board listing, there were

162 deals in H1’16, offering little to celebrate.

Large Funds Sprang Up; Fundraising Dropped

InH1’16, Chinese and foreign venture capital firms raised 173 funds available for investment in

Chinese mainland, down 41.8% Y-o-Y and 42.3% from H2’15. Among them, 126 funds disclosed a

total investible amount of US$11.83B, down 19% Y-o-Y or 30.6% from H2’15, and the average

amount raised was US$93.88M, up 78.7% Y-o-Y or 51.4% from H2’15. After the fundraising boom in

the last year, Chinese and foreign venture capital firms slowed down their paces in H1’16, while some

big firms, such as IDG Capital Partners, still raised huge sums of money. In late-June 2016, IDG

Capital Partners and China Everbright Limited jointly established an industrial buyout fund with the

target size of US$3B, and it has raised US$1.5B in the first round of financing.

2

InH1’16, RMB funds remained dominant in venture capital fundraising. There were160 RMB funds,

accounting for 92.5% of the total, while only 13 foreign currency funds were raised, or 7.5% of the

total. Among US$11.83B of VC fundraising, RMB funds garnered US$8.23B or 69.6%, and foreign

currency funds US$3.59B or 30.4%.However, foreign currency funds, with US$326.85M of average

size, far exceeded RMB ones with US$71.55M.

3

VC Investments Declined and Tended to be Rational

4

H1’16saw 1,264 VC investments concluded in China, down 33.3% Y-o-Y, 1,052 of which disclosed

the investment amount of US$8.77B in total, down 18% Y-o-Y, or US$8.34M on average. After the

boom in 2015, the venture capital investments in H1’16 tended to be more rational. VC firms focused

mainly on early-stage projects, while late-stage startups needed large sums of money. For example,

Lianjia.com raised US$900M in Series B round financing and Meituan, Dianping also completed the

financing ofUS$495M in H1’16.

5

Internet, IT and Telecom & Value-added Services Continued to Be Top Three; Beijing

Represented Nearly 1/3 of Startup Financing

1,264VC investments took place in 22 Grade 1 industries in H1’16. In terms of the number of deals,

Internet, IT and telecom & value-added services ranked the first three places with 380, 204 and 115

deals respectively. In terms of investment amount, Internet still topped the list with US$3.29B,followed

by IT with US$1.12B and telecom & value-added services withUS$653.38M.

6

Geographically, Beijing, Shanghai and Shenzhen and other tier-1cities remained major target regions.

Beijing took the lead with 403 deals andUS$4.26B. Shanghai came next with 190 deals and US$1.13B.

Shenzhen ranked the third place with 114 deals and US$452.37M. The three places garnered 55.93% of

total deals and 66.56% of total investment amount. Zhejiang, Jiangsu and Guangdong (excl. Shenzhen)

followed behind.

7

8

New Third Board Was Main Exit Channel; VC Firms Would Still Face Great Pressure

InH1’16, Chinese and foreign venture capital firms concluded 1,107 exit deals, up47.6% from H1’15.

Specifically, 945 exited through listing on the New Third Board, representing 85.4%. IPO exit came

next with 70 deals or 6.8% and then M&A exit with 53 deals or 4.8%. Although the number of deals

surged up, most of them were completed via the New Third Board listing and the remaining162 exits

were completed via IPO, M&A and equity transfer. Many VC firms now bet on the New Third Board,

but its liquidity has not yet improved much. In this sense, venture capital firms will be confronted with

great exit pressure.

9

10

BPEA News

The third training about the belt &road’ and investing in Europe held successfully

On July 22nd

, 2016, the third training about ‘the belt & road’ and investing in Europe was held

successfully in Beijing, organized by CAPE, BPEA, Cathay global legal service network and Cathay

Associates. The theme of this training is investment and acquisitions in Holland, Ukraine and India. Mr.

Li Weiqun, Secretary-General of CAPE, expressed our warm welcome to foreign legal consultants

from Cathay Associates. >Read more

The 56th BPEA Monthly Training held successfully

On July 21st, 2016, the 56th BPEA Monthly Training held successfully in our meeting room. This

month’s training focused on the topic of ＂2016 H1 VC/PE market review＂. Mr. Ji Li, director of

Research of Zero2IPO Research Center, shared his experiences with the attendees. >More

BPEA NEEQ Committee ＂Roadshow of smart city projects＂ held successfully

On July 19th

, 2016, BPEA NEEQ Committee ＂Roadshow of smart city projects ＂ held successfully

at our meeting room. About 40 people attended it. Three leading enterprises focused on different

segments of smart city industry were introduced to attending investors. >Read more

BPEA NEEQ Committee ＂Roadshow of energy conservation and environmental protection＂

held successfully

On July 14th

, 2016, BPEA NEEQ Committee ＂Roadshow of energy conservation and environmental

protection ＂ held successfully at our meeting room. About 20 people attended it. Three leading

enterprises focused on different segments of energy conservation and environmental protection industry

were introduced to attending investors. >Read more

No. 39th

of ＂SmartMatch roadshow＂- A special roadshow of Sports industry successfully held

in BPEA

No. 39th of SmartMatch roadshow – a special roadshow of sports industry successfully took place in

Beijing on July 13th, 2016. About 7 projects focused on sports industry were introduced to investment

professionals who attended this meeting. >Read more

Zhuhai Hengqin delegation pay a visit to CAPE

On July 7th

, 2016, Zhuhai Hengqin delegation pay a visit to CAPE. Mr. Li Weiqun, Secretary-General

of CAPE, and Mr, Lu Pengfei, Deputy Director of Information Department, received them. >Read

more

11

No. 38th

of ＂SmartMatch roadshow＂- A special roadshow of New materials and Biotechnology

successfully held in BPEA

No. 38th of SmartMatch roadshow – a special roadshow of New materials and Biotechnology

successfully took place in Beijing on July 7th, 2016. About 4 projects focused on New materials and

Biotechnology industry were introduced to investment professionals who attended this meeting. This is

the third time that BPEA cooperate with Beijing equity trading center to organize smartmatch

roadshow. More than 40 investment professionals attend this event. >Read more

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协会主要成员：

单祥双 创始人、董事长兼总裁中科招商集团Shan Xiangshuang Founder,Chairman and President of CSC GROUP

BPEA main members include:

吴尚志 董事长鼎晖投资Wu Shangzhi, Chairman of CDHInvestments

邵秉仁 原国家经济体制改革委员会副主任Former Deputy Director of theState Economic System ReformCommission

方风雷 董事长厚朴投资Fang Fenglei, Chairman ofHOPU Investment

刘乐飞 首席执行官 中信产业基金投资管理有限公司Liu Lefei,CEO of CITIC Private Equity Funds Management Co., Ltd.

赵令欢 弘毅投资总裁联想控股有限公司常务副总裁John Zhao, CEO of Hony Capital, Executive Vice President of Legend Holdings

沈南鹏 创始及执行合伙人红杉资本中国基金Neil Shen, Founding Managing Partner of Sequoia Capital China

衣锡群 常务副会长中国股权投资基金协会Yi Xiqun, Executive Vice Chairman of CAPE

李爱庆 董事长北京科桥投资Li Aiqing, Chairman of Beijing Co-Bridge Investment Advisor Ltd.

张懿宸 首席执行官中信资本Zhang Yichen, CEO of CITIC Capital

靳海涛 董事长 深圳创投Jin Haitao, Chairman of Shenzhen Capital Group Co.Ltd

于剑鸣 管理合伙人 新天域资本Yu Jianming, Managing Partner of New Horizon

刘晖 合伙人 太盟产业基金Allan Liu, Partner of PAG Capital

殷荣彦 董事长北京股权投资发展管理有限公司Yin Rongyan, Chairman of Board, Beijing Equity Investment Development Management Company

田溯宁 创始合伙人、董事长宽带资本Edward Suning Tian, Founder and Chairman of CBC Capital

阎焱 首席合伙人 赛富亚洲投资基金Andrew Y.Yan, Managing Partenr of SAIF Partners

熊焰 董事长、总裁北京金融资产交易所

杨向东 董事总经理凯雷投资集团凯雷亚洲基金联席主管

唐葵 总裁、合伙人方源资本

Xiong Yan,Chairman and President of China Beijing Financial Assets Exchange

Xiang-Dong (X.D.)Yang, Managing Director and Co-Headof Carlyle Asia Partners ("CAP")

Frank Tang, CEO and Managing Partnerof FountainVest Partners

何小锋 教授、博导北京大学经济学院金融系Professor and Doctoral Advisorof the Finance Department of theEconomics School at Peking University

熊晓鸽 创始合伙人IDG 资本Hugo Shong , Founding General Partner of IDG Capital Partners

北京股权投资基金协会成立于2008 年 6 月 20 日

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导，基金注册、备案，商务会议、培训等服务。

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维护会员合法权益 研究行业发展动向

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BPEA committed to:Promote the issuance of preferential policies for PE industryBuild the self-regulatory discipline of PE industrySafeguard the legitimate rights of membersResearch development trends of PE industryTrain relevant professional individualsCooperate with domestic and overseas institutions

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Beijing Private Equity Association (BPEA) was established on Jun 20, 2008