AI-Sense’s Post

Friends in SE Asia and elsewhere take note: this interesting article documents the collapse of private venture capital in China, so that the number of start-ups in China has fallen from 51,302 in 2018 to just 1,202 in 2023. The article attributes the collapse to the slowdown in the Chinese economy; the Chinese government’s crackdown on technology companies; and US-based investors pulling out due to these trends and to US-China tensions. All of this reinforces the even more catalytic role that US tech companies will play in driving tech, AI and other innovation in SE Asia and elsewhere for the foreseeable future. https://lnkd.in/eV-jUPWn

Download: 'Building the Australia-Asia Tech Corridor - Australian Investment in Asia’s Startups', a discussion paper from the Tech Council of Australia and AsiaLink Business "Australia’s investment in Fintech in Asia receives less emphasis than its profile in Australia, comprising 9% of funding. Fintech is one of Australia’s strongest tech subsectors, with Australian VCs investing more into fintech than global VC funding allocations." https://lnkd.in/g2e2CUzt #australia #southeastasia #venturecapital #techstartups #vcnews #startupaustralia

A $2.5 billion fund was raised by HongShan Capital, formerly Sequoia Capital China. According to two sources, Sequoia Capital's former China branch, the venture capital firm, shuttered the renminbi fund in March. The report also said it was the largest fundraising by a privately owned #VC firm in China in the past year, demonstrating Neil Shen's impact as China's most influential tech investor. The people said the Hangzhou municipal government and other private and state-owned insurance companies support the new fund. The fund is less than HongShan's 2022 $9 billion US dollar fund. The #investment drive comes as Chinese startups face an economic and property crisis. A government crackdown on tech companies sank valuations and scuttled stock market listings. According to the report, Shen has invested in some of China's most successful internet companies, including ByteDance, DJI, Meituan, Alibaba Group, and Pinduoduo. FT reports that HongShan invested in Zhipu and Moonshot this year, two top local startups competing to become China's OpenAI. “As investors, particularly in venture capital, dealing with uncertainties is a constant reality. These uncertainties arise from multiple sources. Our portfolio companies face inherent business uncertainties, but broader challenges also play a significant role. Financial market fluctuations can impact even early-stage companies, affecting capital availability and venture funding.” He said, “Disruptive technologies add another layer of uncertainty. For our portfolio CEOs, the key is to anticipate and strategically position for such uncertainties. Much like adjusting speed to navigate potential hazards on a highway, being proactive, staying ahead of trends, and planning strategically are crucial.” “For companies aiming to establish their differentiation, it is crucial to delve deeply into one area to develop expertise. The first essential step is to become a dominant leader in a specific field before considering expansion,” he added. To share your startup story write us on - [email protected] #ventureCapital #China #HongShan #Financial

I found this FT article particularly concerning and alarming. While it’s difficult to fully gauge the long-term impact (...not sure how true all things written here are), one thing is clear—it’s time to be more careful and vigilant in how we approach investments in China. Here are the Key Takeaways: VC funding has dropped sharply—China's venture capital investments fell by over 40% in the first half of 2023, with startup funding at its lowest level in years. Fewer startups are emerging—the number of new startups has dropped by nearly 30%, largely due to increased regulatory scrutiny and government intervention. VC funds are struggling—many venture firms are finding it tough to raise new capital, with fund sizes shrinking by up to 50%, forcing a more cautious investment approach. Stagnation in key sectors—once-thriving areas like fintech, e-commerce, and AI are seeing slower innovation and fewer new players entering the market. Uncertainty about the future—ongoing government intervention has made investors increasingly wary, with doubts about the long-term stability of China’s startup ecosystem. #VentureCapital #Startups #China #Innovation #InvestmentTrends https://lnkd.in/dhBDEGhZ

The tiger is not that mighty after all. Part of the reasons in my view: 1. What happened to Jack Ma - how he was repressed by the regime. 2. Lack of Western cooperation: West is fed up with its tech being constantly poached by Chinese. And most of the innovation originates there. 3. Western money drain out of China. #investments #china #startups #techonology #techinvestments #jackma #VCs

Kjartan Rist wrote what I think is a very interesting article about the different #startup environments in US and EU. I often end up in conversations about how Silicon Valley keep attracting talents and capitals, compared to Europe, and I agree with Mr. Kjartan: EU should not emulate Silicon Valley’s approach, but leverage its own strengths. 《Europe Shouldn’t Emulate Silicon Valley - It Should Embrace Its Own Strengths. The temptation for Europe might be to try and emulate Silicon Valley’s success by copying its playbook. But this would be a mistake. Europe’s unique advantages - lower costs, a rich talent pool including high female labour participation, government support, and a resilient mindset - give it a distinct edge that doesn’t need to mimic the US approach.》 https://lnkd.in/e952yUYC

🌍 Thrilled to have participated in a panel (virtually) on “The Role of Finance in Fostering Real Business and the Path to a Startup Nation” 🇯🇵 hosted by Nikkei. We had a great discussion on what it takes to build a thriving startup ecosystem, and I was honored to share some key points based on my experiences and knowledge of both the Nordic and Japanese markets: 1️⃣ The importance of fostering an open economy that can attract foreign talent and risk capital, providing a solid foundation for growth. 2️⃣ The need to cultivate specialized investors with strong industry networks and insights, helping startups access not just capital but also valuable market knowledge. 3️⃣ Creating a diversified funding ecosystem with sources ranging from public/government funds to VCs, CVCs, and all the way to IPOs, offering startups a variety of paths to scale. 4️⃣ Encouraging ‘born global’ startups that focus on scale from the outset, underscoring the crucial role of attracting foreign talent and capital to accelerate growth. 5️⃣ Finally, the engagement of corporates and financial institutions is essential. By investing in VC/CVCs and partnering with tech startups, corporates can provide much-needed risk capital and drive innovation. I’m especially impressed by Mizuho's efforts in that area. 6️⃣ Close collaboration between public and private sectors can drive innovation. A strong culture of open collaboration between academia, government, and businesses accelerates growth, and finally transparency and trust also facilitate cross-sector innovation. While the Nordic countries are certainly frontrunners in some of these areas, Japan’s startup ecosystem is growing impressively, and the market is a rich opportunity for startups looking to expand internationally. However, it requires time and patience to navigate, and those willing to invest will find it incredibly rewarding. Japan has the potential to become a true Startup Nation, and I look forward to seeing how it continues to evolve! 🌱🚀 Also hope to be back soon to visit our partner NRI (Nomura Research Institute) and many other friends in Japan. Thank you for inviting me 🙏 #Japan #Innovation #NordicFintech #cphfintech Takeshi Kito, Pieter Franken, Bradley Busetto, Corinna Covini, Nicolette Tham, David Grundy, Simon Schou, Copenhagen Fintech, Nordic Fintech Week

This is a great article about what has happened to the Chinese venture capital market in the past 5 years-- a massive collapse in RMB denominated funds, and a significant decline in USD funds (although those firms are now all in the US looking for start-ups to back. Chinese state owned enterprises are rising as a share of the economy, reversing decades of entrepreneurial increase. This is quite bad for China h/t Camilo Botero Gaviria for sending this my way https://lnkd.in/esTQB9vB Good reporting by The Financial Times' Eleanor Olcott and Xueqiao Wang

China Drying Startup Ecosystem: What's Next Move? Said El Mansour Cherkaoui Ph.D. - Said Cherkaoui Ph.D. - 9 15 24 Impressive collapse of the Chinese startup ecosystem. According to some reports, the Chinese startup ecosystem has reached a level that is presented as literally on the verge of disappearing. One of the factors that these analysts put their finger on is the essentially dirigiste aspect of innovation having the national authorities as the first sponsor. India or Europe can still develop their ecosystems and take over through the pursuit of continuity of the game's rules other than that pursued by China. The development of rich and plural ecosystems also represents key factors that require sustainable and stable financing structures such as pension funds, which have played a key role at the global level. Details of this shattering news can be read in this article: The Big Read Chinese Business & Finance How China has ‘throttled’ its private sector Venture capital finance has dried up amid political and economic pressures, prompting a dramatic fall in new company formation https://lnkd.in/gDS_vciP #China #Startup #Funding #Pensionfunds #Capitalrisk #Angelinvestors #Venturecapital #Vulturecapital #Politicaleconomy #Business #Finance #Ecosystem #Startups #Saidelmansourcherkaoui #Triconsultingkyoto #Trickusa #India #Europe 9 15 24 - #Siliconvalley - Oakland East Bay of San Francisco - California - USA.

NYT [excerpt]: U.S. #venturecapital firms that once saw #China as the next frontier for innovation and #investment returns are backing away, with some separating their Chinese operations from their American #business and others declining to make new investments there. The about-face stems from the tense relationship between the United States and China as they jockey for geopolitical, economic and technological primacy. The countries have engaged in a #trade war amid a diplomatic rift, enacting tit-for-tat restrictions including U.S. moves to curb future investments in China and to scrutinize past investments in sensitive sectors. “It was an incredibly fruitful partnership for a long time,” Tomasz Tunguz, an investor at Theory Ventures, said of how U.S. venture firms had invested in China. Now, he said, most #investors are “looking for places to invest those dollars because that market is effectively closed.” ...In Washington, actions to limit investing in China have piled up. President Biden signed an executive order last year restricting investments from U.S. firms in Chinese start-ups working on #artificialintelligence, #quantumcomputing and #semiconductors. This month, a congressional committee investigation sharply criticized five U.S. venture firms in a report that outlined their investments in Chinese companies that helped facilitate #humanrights abuses and built weapons for the Chinese #military. The committee did not accuse the firms of breaking the #law, but urged lawmakers to pass #legislation further restricting such investments. “We can’t afford to keep funding our own destruction,” said Representative Mike Gallagher of Wisconsin, the Republican chairman of the House Select Committee on the Chinese Communist Party. Representative Raja Krishnamoorthi of Illinois, the top Democrat on the committee, said Congress might look at other areas where U.S. venture capitalists had invested in China, including #biotech and financial technology. ...Deals for Chinese start-ups that included U.S. investors declined 88 percent between 2021 and 2023, from $47 billion to $5.6 billion, according to PitchBook, which tracks start-ups. The moves are a painful step backward for the venture capital industry, which spent the last decade transforming from a cottage industry into a global force. China was an important part of that expansion, with firms including Lightspeed Venture Partners, Redpoint Ventures and Matrix Partners entering the country. Silicon Valley venture capitalists “made a whole bunch of bets that the U.S. and China were converging,” said Matt Turpin, a former director for China at the National Security Council and visiting fellow at the Hoover Institution. #news #geopolitics