The article discusses the decline of US venture capital (VC) activity in China, as well as the growing trend of Chinese VCs venturing into the US market. Here are some key points:
Decline of US VC activity in China:
- PitchBook reports that VC activity with US participation in China will hit a nine-year low in 2023 and a decade low in 2024.
- This decline is attributed to increased regulatory scrutiny, geopolitical tensions, and the challenging market conditions for Chinese tech firms.
Chinese VCs venturing into the US:
- Many Chinese VCs are now investing in the US, with some setting up offices in the Bay Area.
- These investors are looking to gain access to cutting-edge technologies, particularly in AI, and to hedge against uncertainties at home.
- However, they face challenges in terms of information arbitrage, networking, and adapting to local market conditions.
USD fund managers’ motivations:
- Many USD fund managers are not necessarily "pivoting" from China to the US, but rather looking for opportunities to diversify their portfolios during a tepid market.
- Some are contemplating career changes due to difficulties in finding suitable roles that match their salaries.
Alternative markets for Chinese startups:
- Japan is becoming an increasingly popular destination for Chinese SaaS startups venturing abroad.
- Other markets may also offer opportunities for Chinese VCs and startups, particularly if they can deliver strong growth and returns under the new stringent regulatory regime.
Overall, the article suggests that while US VC activity in China is declining, Chinese VCs are adapting by venturing into the US market to access new technologies and opportunities. However, they face challenges
