China VCs raise US$3bn in second quarter

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Chinese venture capital firms had a record US$3bn in funds available to invest during the second quarter of 2008, according to a new survey.

More than US$1.2bn of that was invested in local firms, with IT and hi-tech companies receiving more than half, according to the Zero2IPO Group, a local venture capital consultancy.

During the quarter, 29 local and foreign venture capital firms set up a total of 40 VC funds, the company reported. IT related investments were up compared to the previous quarter.

Almost half the investments were of $1m or more. Thirteen major deals that involved an investment of US$20m or more comprised almost half of the total amount invested.

"Expansion-stage and late-stage enterprises both gained much more favour from VC, with expansion-stage firms accounting for over half of the total deals," the research firm said in a statement to media.

Of the US$3.02bn in funds raised during the quarter, US$1.69bn was controlled by foreign venture capital firms and US$1.18bn by local firms. With only seven foreign funds, compared to 31 funds established by local firms, the average size of foreign funds, sitting at US$241m, was considerably greater.

The total amount invested is growing at an average rate of 73.5 percent per year, according to Zero2IPO.

"VC firms prefer to invest either in start-ups or in elite, mature enterprises to share their stable revenue," the company said in a statement.

Zero2IPO gathers its data from 300 VC firms involved in the China market.
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