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KEY STAT | China first quarter equity investment rebounds due to biggest average ticket size in five years

Fewer deals, but bigger ticket size.

China saw 61% fewer equity investment deals made in Q1 2020 than in the same period last year, marking the fifth consecutive quarter of declining since Q1 2019. That said, higher averaged ticket size per investment drove the first quarter’s total investment value to USD 55.7 billion (RMB 394.3 billion), 54% higher than last year, a research report on China equity investment by 36Kr Research shows.

“This suggests that some niche companies have been lucky enough to raise capital amidst the turmoil, with some of them bagging whopping single round financings,” said the researcher institute in an article published on 36Kr.

In March, for example, AI solution provider Mech-Mind Robotics collected USD 14.2 million from round B financing led by Sequoia, while Yuanfudao bagged USD 1 billion in the largest-ever edtech fundraising deal in China.

China's equity investment market, 2020 Q1

The report noted that, up till May, fundraising activities across all sectors were interrupted by the COVID-19 epidemic, with an average decline of 24.07% across the board. The only two sectors got spared are medical & health and photoelectric. Hardware, agriculture, and entertainment were the worst-hit industries.

“The COVID-19 outbreak has totally cooled down China’s primary market, which has been going through peaks and troughs,” said the report. “Investors’ focus for the next one or two years will be riding with and adjusting to the time, as well as a return to the idea of value investing.”

Amid the “capital freeze”, enterprise services and medic & health remain to be the most popular sectors by the number of investments. Not just that, enterprise services, one of the VC favorites since 2015, also started attracting corporate venture capitals (CVC) in recent years such internet magnates like Alibaba (NYSE: BABAHKEX: 9988) and Tencent (HKG: 0700) that backed a bevy of AI, big data, and cloud computing startups.

Meanwhile, strategic investments and mergers & acquisitions have gained momentum in medic & health, while early-stage investments, including angel investments and series A, are fallen in the sector.

36Kr is the parent company of KrASIA.