Chinese Startup Executives Seek Venture Capital, Plan for IPOs
Chinese innovators are seeking venture capital to prime growth and say their long-term goal is to go public. They are also navigating challenges similar to those of other startups around the world. Entrepreneurs expect continued difficulty raising funds and finding the talent they need to move their businesses forward.
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Venture capital is the top funding source for Chinese startups
As the Chinese government takes steps to move from an industrial economy to an innovation economy, startups plan to tap venture capital as their top funding source. Thirty-eight percent of Chinese startups expect their next source of funding to come from venture capital. Numbers are similarly high in other parts of the world: 42 percent of U.S. startups and 40 percent of U.K. startups expect to use venture capital.
Fundraising is hard worldwide. Among the Chinese startups surveyed, 81 percent said the fundraising environment is extremely or somewhat challenging, compared with 82 percent in the U.S. and 80 percent in the U.K.
Of the Chinese startups surveyed, 62 percent said their long-term exit strategy is an IPO, while 5 percent planned to be acquired. Startups in the U.S. and U.K. have a different end goal. Some 56 percent of U.S. startups and 59 percent of U.K. startups said they are setting a course toward acquisition.
While an IPO may be their long-term goal, Chinese startups are looking for M&A opportunities inside and outside the country as a way to access technology know-how and new markets. Among the Chinese startups surveyed, 90 percent believed there will be as many or more acquisitions than there were last year.
Startups struggle to fill jobs with the right talent
Finding the right talent is difficult no matter where entrepreneurs live. Among the Chinese executives surveyed, 98 percent said it is challenging to hire. In the U.S. and U.K., 95 percent of entrepreneurs said it’s challenging to find workers with the necessary skills.
Chinese startups outpace their U.S. and U.K. counterparts when it comes to the number of women in leadership positions. Among the startups surveyed, 79 percent have women in C-level roles, compared with 54 percent of U.S. startups and 53 percent of U.K. startups.
Cybersecurity is the No. 1 policy concern for Chinese startups
Among the Chinese startups surveyed, 47 percent said cybersecurity regulation is the policy issue with the most impact on companies like theirs. Corporate taxes, consumer privacy regulations and banking regulation are also key concerns.
A third-party firm, Peerless Insights Survey, conducted the Innovation Economy Outlook 2016 survey online on Silicon Valley Bank’s behalf from November 12, 2015, to January 6, 2016.
This material, including without limitation to the statistical information herein, is provided for informational purposes only and is compiled from the survey that we worked on with Peerless Insights, a third-party source. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decision. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation, offer or recommendation to acquire or dispose of any investment or to engage in any other transaction.
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