Start-Ups in China- Pool of Companies with Billion-Dollar Valuations Grow

Louise Lucas reported yesterday at The Financial Times Online that, “China’s leading start-ups, which include everything from fintech and drone companies to vegetable-sourcers for restaurants, make up one of the world’s biggest pool of unlisted companies with billion-dollar valuations.

“Like their peers in Silicon Valley, these ‘unicorns‘ bleed money in the aggressive battle to win market share. But their funding keeps on flowing, and the latest way to cash out has given eager investors one more reason to pile in.

“Even before Ant Financial’s headline-grabbing $150bn valuation last week, China’s government claimed the country was home to 168 unicorns worth a total $628bn. Independent assessments, though more modest, still demonstrate the sector’s scale: CB Insights, which does not include Ant in its rankings, rates China second worldwide with 64 businesses valued at $277bn against America’s 114 at almost $400bn.”

“Boom time for China’s billion-dollar start-ups,” by Louise Lucas. The Financial Times Online (April 16, 2018).

The FT article noted that, “Investors cite two key attractions. The first is the combination of innovation and a vast market of consumers happy to adopt the latest trend. Paul Asel, managing partner at NGP Capital, which has investments in both countries, said that while more than half of US investments went into groups that serviced business, cash in China was primarily funnelled to consumer-oriented companies.

“The second is the healthy range of exit routes. Along with the well-trodden path of takeovers and fundraisings — including two multibillion-dollar acquisitions and a $600m funding round in the past fortnight alone — the options expanded last month when Beijing gave the green light for tech companies championed by the state to issue China depository receipts.”

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