China Startup Industry Collapse Explained

The Most Important Thing

risk is largely a matter of opinion

Cyril

·2 years ago

shared a link post in group #The Most Important Thingvia#A Glance of China 行摄中国

“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/conten..

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

www.ft.com

How China has ‘throttled’ its private sector

Venture capital finance has dried up amid political and economic pressures, prompting a dramatic fall in new company formation

Todd Smith
"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?" 😳😱

Nate
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.

Tasia
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.

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China Startup Industry Collapse Explained

Cyril

How China has ‘throttled’ its private sector

Todd Smith"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?" 😳😱

NateState 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.

TasiaThis "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.

Todd Smith
"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?" 😳😱

Nate
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.

Tasia
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.