China’s Declining Funds: An Opinion

Volatile markets, tighter supervision regarding debt, and the threat of a trade war are evidently scaring away investors as funds are now becoming scarce for startups in China.

Capital raised by investment firms intended for seed and early funding -- before a startup seals its first round of financing -- plunged 53 percent to just 3.82 billion yuan ($559 million) in the first half, according to a survey of 36 funds by Chinese researcher Zero2IPO. More than 200 domestic venture capital firms saw money available for investment slide 44 percent, according to a second poll.

In China, startups are everywhere, from electric car manufacturers to english tutoring services such as VIPKid. Most startups are in the tech sector. A lack of funds, if continued, will undoubtedly hinder China’s economic growth and its ability to start catching up to the US from a technological aspect.

In my opinion, while funds are becoming scarce US investors could gain opportunities to jump into the tech startup scene in China, which will definitely grow long-term. Because there is still room for startups to develop into established tech giants, although this scarcity of funds may be only temporary, and China will likely rebound, it is all the more reason to become involved sooner than later.

What do you think about China’s current **startup scene and market valuations ** of their so-called “unicorn companies”?