On a weekday afternoon at Red Rock Coffee, the café known for spotting venture capitalists in Silicon Valley, one is likely to overhear a few conversations in Mandarin. With China reopening its borders this spring following three years of COVID-19 restrictions, managers of U.S. funds in the country have been flocking to the Bay Area. While these trips were routine before the pandemic, they have now taken on a fresh purpose of discovering deals beyond China. USD-denominated funds in China have long been drawing inspiration from Silicon Valley startups, using them as benchmarks for investment targets back home. They would seek out the equivalents of Facebook, Amazon and Uber on the other side of the Pacific Ocean and hope they become winners in the country’s largely untapped internet market. This dealmaking strategy of American funds in China has become less effective in the face of shifting global and domestic landscapes. Driven by a confluence of factors, from China’s crackdown on the tech industry to escalating U.S.-China tensions, some of these investors are now turning their gaze to opportunities abroad, tracing the footsteps of a new generation of Chinese-founded startups that are expanding overseas. Between a rock and a hard place Since their entry into China in the late 1990s, American venture capital firms, led by powerhouses like Sequoia Capital, IDG Capital and GGV, have played a major role in funding high-risk, high-reward startups in the country’s consumer internet sector. This two-decade-long mutually beneficial relationship… Click below to read the full story from TechCrunch
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Fate of US venture capital in China teeters on uncertainty
