The coronavirus pandemic has seen Chinese venture capital investors retreating to the safety of big names in favored sectors, thinning the ranks of tech start-ups in China, in a trend that is likely to continue this year, reported the Financial Times.
The number of early-stage financing deals fell 45% in 2020, halving the new tech start-up count from the previous year to 3,131, according to data from ITjuzi, a Chinese business information provider.
China’s tech sector has been chilled by a “capital winter” that began in late 2018 as a venture capital boom deflated. Last year, the number of investment deals fell for the fifth consecutive year, though start-ups’ cash haul ticked upwards, rising 12% to RMB 815 billion ($126 billion), reported the FT.
“It’s partly because potential founders are staying put in what are secure jobs, instead of taking the leap of faith,” said Zhao Chen, managing partner at start-up accelerator Plug and Play China.