Innovation drives angel investment growth in China








SHANGHAI  |  2015-02-07 13:29:17


Innovation drives

angel investment growth in China



By Cheng Lu, Liu Xue and Li Zhengwei



China’s encouragement for mass entrepreneurship and innovation has driven the growth of startups as well as angel investments., a P2P (peer-to-peer) lending platform for college students and alumni, said it obtained an investment of tens of millions of yuan this week.

It is among a wave of new companies benefitting from angel investment in China. Angel investment is made by affluent individuals or institutions which provide capital for a business startup, usually in exchange for convertible debt or ownership equity.

Launched in 2013, Surong360 is a platform to lend and borrow money, make small investments or purchase using installments. It had millions of registered users across 2,000 universities by the end of 2014.

“We made the investment decision immediately after knowing the project, which is unique and creative,” said Cha Li, an angel investor and co-founder of the fund company which invested in Surong

Although China’s broader economy is slowing, its young entrepreneurs are driving a wave of startups that have become a bright spot for the economic landscape and an important engine for future growth.

The number of newly founded companies in China surged almost 46 percent year on year to 3.65 million in 2014, which has been a boon for the country’s angel investments.

Zero2IPO Group, an integrated service provider in China’s venture capital and private equity industry, reported in late January that Chinese angel investment institutions had completed 766 investment deals last year, soaring 353 percent from the previous year.

The disclosed value of the deals reached more than 526 million U.S. dollars, a jump of 161.7 percent year on year, said the report.

China’s innovation policy and high returns are believed to be main reasons driving growth of angel investments, said Lin Dakun, an analyst of the group.

China has released a string of measures to create an amicable environment for innovation and entrepreneurship in order to power growth and generate jobs.

Over the past two years, many Chinese provinces and regions have set up angel investment funds led by the government to help private investment institutions provide financial support to startups.

Chinese angel investors prefer technology, media and telecom industries. These sectors made up 80 percent of the fund recipients in 2014, Lin said.

However, professional angel investors are still not enough in China. Compared with nearly 350,000 angel investors in the U.S., China only has around 500 angel investors who are actively engaged, said Guo Hong, chief of the management committee of Zhongguancun, a technology hub in Beijing.

In addition, Chinese startups need more connections and clearer vision, said Lan Ningyu, chief executive officer of the AngelCrunch, an online Chinese community that connects startup companies and angel investors.

“Once you have an innovative and advanced technology or business mode, investors are willing to support you,” he said.









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