Entrepreneurship Foundation for Graduates, the official GEW China host, publishes a report each year providing insights on China’s angel investment ecosystem. The most recent report, released in the second quarter in 2016, shows the size of the angel investing market in China has reached approximately 234 million, with the most investments in Beijing, Shanghai, Shenzhen and Guangdong – the four Tier 1 cities in the country.
The biggest area of investment is in Internet & Information Technology at 39.3 percent of the overall investments. Mobile communication, media and culture, manufacturing, healthcare, and finance are other major areas for angel investors. The majority of China’s angel investors mainly focus on business-to-business and business-to-consumer platforms.
According to the report, angel investors in China find new investments through insider referrals, CEO self-recommendation, self-discovery, third party recommendations, as well as startup platforms and communities. In considering a new investment, angel investors are most concerned with management, followed by products, innovation, growth and the risk involved. The angel investors in China largely believe revenue can be grown and risk can be reduced by good governance and mentoring.
The report states that the angel investing ecosystem is still recovering from the hit the market took in late 2015, when the government intervened to cool down the market after the stock market was overheating early in 2015. Presently, after a decline in successful investments, the angel investors are focused on the sustainability of startups. Funds are focused more on the cash-flow, in order to control risk. Angel Investments are starting to come more and more from venture capital firms, instead of from individuals as in the past.
The report also gives insights on the exit strategies of investors as well as a timeline of major events/dates in angel investing in China.
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