“The whole industry has just died before our eyes,” the executive continues. “The entrepreneurial spirit is dead. It is very sad to see.”  

In 2018, 51,302 start-ups were founded in China.  By 2023, that figure had collapsed to 1,202 and is on track to be even lower this year.

“I am like the Titanic, flying the flag as the ship goes down.” 

https://www.ft.com/content/1e9e7544-974c-4662-a901-d30c4ab56eb7

 #The Most Important Thing 
 #A Glance of China 行摄中国

A Glance of China 行摄中国

How China has ‘throttled’ its private sector

The Most Important Thing

“The whole industry has just died before our eyes,” the executive continues. “The entrepreneurial spirit is dead. It is very sad to see.”    In 2018, 51,302 start-ups were founded in China.  By 2023, that figure had collapsed to 1,202 and is on track to be even lower this year.  “I am like the Titanic, flying the flag as the ship goes down.”   https://www.ft.com/content/1e9e7544-974c-4662-a901-d30c4ab56eb7   #The Most Important Thing   #A Glance of China 行摄中国

Cyril

This "debt mindset" as described to me, is completely anathema to the spirit of VC investment, which is to take big bets and reap the rewards if it succeeds. 

That used to be how things worked in China. 

Until IPOs and M&A completely dried up.

This "debt mindset" as described to me, is completely anathema to the spirit of VC investment, which is to take big bets and reap the rewards if it succeeds.   That used to be how things worked in China.   Until IPOs and M&A completely dried up.

Tasia

State LPs (local govs and state-owned enterprises) are playing a more outsized role given the mass exodus of foreign investors and high net worth individuals. 

Under the shadow of anti-corruption, they are forcing VCs to guarantee returns, while slashing management fees.

State LPs (local govs and state-owned enterprises) are playing a more outsized role given the mass exodus of foreign investors and high net worth individuals.   Under the shadow of anti-corruption, they are forcing VCs to guarantee returns, while slashing management fees.

Nate

"Failed founders are getting dragged through the courts. One VC described the industry as a "debt chasing monster". Their spouses and parents can be implicated. They can be put on travel ban lists and find it difficult to find new work. Why take the risk?"

😳😱

"Failed founders are getting dragged through the courts. One VC described the industry as a "debt chasing monster". Their spouses and parents can be implicated. They can be put on travel ban lists and find it difficult to find new work. Why take the risk?"  😳😱

Todd Smith

Under such conditions, why would VCs make big bets on high risk companies doing pioneering research?

Bobby

At the crux of the problem is the execution of redemption clauses, which makes founders personally responsible to buy back shares from investors if the company doesn't go public. VCs are now checking founders' bank accounts to ensure they can return money.

Cyril

A group of likeminded people in The Most Important Thing are talking about this.