The increase of venture capital funding in promising new areas of China could put US startups at a disadvantage as they compete for funds, Business Week reported. Last year, VCs invested $920.7 million in information technology companies in China, up 34% from 2005. Venture capital players are increasingly betting on Chinese startups that supply the software, chips, and networks that feed the country's 400 million cell-phone users' desire for wireless data – which includes applications like instant-messaging, video-uploads, and mobile web searches. Analysts said the funding shift could pressure Silicon Valley startups to devise business models with extremely meager cost structures as a way to attract venture capital.
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