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2019 Startup Outlook
China Report

CHINESE STARTUPS PLAN FOR TEMPERED GROWTH

The outlook for the tech sector is strong, with a large number of startups saying they expect more M&A opportunities. Access to talent and raising capital remain challenging. Compared to the US and UK, a higher percentage of Chinese startups have women in senior company roles and at least one woman on
the founding team.

Jump to Business Conditions | Funding | Hiring & Talent | Public Policy

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Business Conditions

Chinese startups say business conditions will improve

Although 8 in 10 Chinese startups think positively about 2019, reports of declining access to capital suggest that growth may be tempered.

Chart comparing business conditions for this year compared with previous years.
Funding

Fundraising grows more difficult

A growing number of Chinese startups say it is harder to raise capital, with 28 percent calling it extremely challenging. In comparison, 13 percent of US startups say it is extremely challenging. Investors may be pulling back somewhat, due in part to government actions around financial risk, and that affects some Chinese VC fundraising and investing. Companies with sustainable business models should still find support.

Chart comparing view of current fundraising environment for 2019 versus previous years.
 

Most Chinese startups say M&A will increase

About two-thirds of Chinese startups believe that acquisitions will increase in 2019, while nearly one-quarter expect M&A to decline.

Chart comparing how the M&A market will change in 2019.
 

VC is the expected next source of capital

Looking ahead, 51 percent of respondents expect their next source of funding to come from venture capital — a more traditional form of financing in China, particularly for later-stage companies.

Chart that comparing company’s next source of funding compared with previous years.
 

Most startups say IPO is their long-term goal

The majority of Chinese startups say they expect to eventually go public with an IPO. Fewer now expect to remain private. And, underscoring the difficulty of planning an exit, 15 percent say they don’t know.

Chart illustrating realistic long term goal for startup compared with previous year.
 

AI is the most promising sector now — and in the future

AI and life science are the top two areas that Chinese entrepreneurs say have the most promise today and a decade from now. Looking ahead, they say cleantech/energy innovation in particular will grow in promise.

Chart comparing what areas will be the most promising in 2019 and in a decade.
Hiring & Talent

Chinese startups plan for hiring

Six in 10 startups say they plan to add employees in 2019, but 32 percent recognize that it is extremely challenging to find talent with the necessary skills to grow their businesses. Another 60 percent say it is somewhat challenging. Startups are most in need of filling product development/R&D, technical and sales positions.

“I hope there are favorable taxes or training subsidies to develop high-level talent. It is critical to improve education policies.”

—Entrepreneur, information security company

Relative projections for hiring employees and how challenging it is to find skilled workers.
 

Most Chinese startups have a woman in an executive role

Women in China have long held tech leadership positions. Now, 70 percent of Chinese startups have at least one woman in an executive position, and half have at least one woman on the board of directors.

SVB will publish an in-depth report on Women in Technology Leadership in H1 2019.

Percentage of startups with at least one woman on the board of directors and in executive positions.
Public Policy

Taxes and access to talent are top policy concerns

Corporate taxes and access to talent are the top two public policy issues that Chinese startups say have the most impact on companies like theirs.

“Most of our budget is R&D to facilitate innovation and fuel industry breakthroughs. So we look forward to lower corporate taxes.”

—COO, software company

The most important public policy issues.
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Startups say China-US trade policy will impact their business

Two in three Chinese startups say they are concerned that trade policy between China and the US will have a negative impact on their businesses. By comparison, 40 percent of US startups say they are concerned about a negative impact on their businesses.

Relative concern about how trade policy between China and the US will negatively impact your business.
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