Venture Capital Report

China | 4Q | 2014 Venture Capital Report The following report presents Dow Jones VentureSource’s quarterly findings for Chinese venture capital fundraising, investment, valuation, and liquidity. The included charts and graphs offer a comprehensive view of the trends currently affecting the venture capital market.

Highlights for 4Q 2014 include:

Chinese venture capital fundraising fails to improve on previous quarter, however, total fundraising for year more than doubles that of 2013;

Venture capital investment into Chinese companies more than doubles 3Q 2014 total;

Overall exit activity improves from 3Q 2014 despite fall in (M&As) as Initial public offerings (IPOs) rally in both number of offerings and dollars raised.

2 Venture Capital Report Chinese Venture Capital Fundraising Fails to Improve in 4Q 2014

Chinese venture fundraising declined to $339 million across 9 funds during 4Q 2014. The quarter represents FUNDRAISING the lowest fundraising accumulation since 2Q 2013 when six funds raised just $140 million.

In comparison with the same period last year, dollars raised fell by 57% while the number of venture funds completing closings declined by 25%.

Le Fund’s II fund and Arbor Ventures’ fund I were the joint largest of 4Q 2014, raising $100 million apiece, accounting for 59% of the total amount for the quarter combined.

Looking at the year as a whole, however, 2014 has surpassed the previous year both in terms of dollars raised and the number of completed closings, improving by 131% and 8% respectively.

Chinese VC Fundraising 30 $4.50 (2011 – 2014) Based on multiple closings $4.00 25 $3.50

20 $3.00

$2.50 15 $2.00

10 $1.50

$1.00 5 $0.50

0 $0.00 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 Amount Raised ($B) $3.92 $0.72 $0.37 $1.69 $1.26 $0.79 $0.14 $0.88 $0.78 $1.23 $4.04 $0.37 $0.34 Number of Funds 28 13 13 15 17 7 6 11 12 6 16 8 9

3 Venture Capital Report Largest VC Funds Raised in 4Q 2014

FUNDRAISING

Amount ($M) Offering Firm Name Fund Name Location Fund Type Fund Category Closing Type Closed in Status 4Q

Early-stage Le Fund Le Fund II $100.00 Beijing Closed Final venture capital Venture Capital

Early-stage Arbor Ventures Arbor Venture Fund I LP $100.00 Open First venture capital Venture Capital

Yahui New Material Venture Yahui New Material Early-stage $41.56 Yibin Closed Final Capital Fund Venture Capital Fund venture capital Venture Capital

Beijing Hongtai Tongchuang Early-stage Investment Management Angel Plus $32.72 Beijing Closed Final venture capital Venture Capital Co. Ltd.

Shandong Shandong Binhaichuangfu Multi-stage Binhaichuangfu Venture $24.46 Shandong Open First Venture Fund venture capital Venture Capital Fund

4 Venture Capital Report Venture Capital Investment in - 4Q 2014

Chinese venture-backed companies raised close to $6.8 billion in 243 deals during 4Q 2014, an increase of FINANCING 128% in capital invested from 3Q 2014 with a 17% rise in the number of deals completed.

Compared with 4Q 2013, dollars invested more than quadrupled while deal flow increased by 79%.

Investment in venture backed companies in 2014 dwarfs that of 2013, with $15.5 billion raised compared with $4.8 billion. Similarly, deal flow has also increased significantly, from 439 to 740, equating to an increase of 69%.

Equity Financings into China– $8.00 250 based, VC-backed Companies (2011 – 2014) $7.00 200 $6.00

$5.00 150

$4.00

100 $3.00

$2.00 50 $1.00

$0.00 0 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 Amount Raised ($B) $1.66 $1.19 $1.48 $0.88 $1.42 $0.72 $1.16 $1.49 $1.41 $2.38 $3.40 $2.97 $6.77 Number of Deals 112 89 80 65 86 76 101 126 136 132 158 207 243

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FINANCING

Equity Financings into China–based, VC-backed Companies, by Round Class (2011 – 2014)

Number of Deals

140 130 120 110 100 90 80 70 60 50 40 30 20 10 0 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 Seed 8 13 6 5 11 8 11 20 14 16 14 9 17 First 56 44 29 28 40 35 57 65 80 71 74 113 131 Second 16 7 19 13 18 14 13 20 18 23 40 49 53 Later 27 20 20 18 13 13 12 13 21 16 20 31 31 Restart 0 0 1 0 0 0 0 0 0 0 0 0 0

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FINANCING

Equity Financings into China–based, VC-backed Companies, by Round Class (Year over Year, 2004 – 2014 )

Number of Deals

400

300

200

100

0 2006 2007 2008 2009 2010 2011 2012 2013 2014 Restart 0 0 2 0 0 0 1 0 0 Later 35 73 87 112 148 114 71 59 98 Second 56 78 70 54 64 75 57 65 165 First 160 225 200 157 185 226 141 237 389 Seed 12 10 5 4 8 22 35 53 56

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FINANCING

Equity Financings into China-based, VC-backed Companies, by Round Class (2011 – 2014)

Amount Raised ($M)

$3,500

$3,000

$2,500

$2,000

$1,500

$1,000

$500

$0 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 Seed $14 $5 $4 $1 $7 $5 $12 $15 $10 $19 $20 $16 $15 First $466 $358 $349 $256 $173 $163 $303 $330 $446 $498 $565 $636 $1,110 Second $332 $120 $387 $141 $213 $220 $179 $278 $213 $557 $830 $1,081 $1,375 Later $748 $515 $702 $486 $1,027 $281 $407 $280 $721 $357 $1,490 $1,169 $3,868 Restart $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

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FINANCING

Equity Financings into China-based, VC-backed Companies (2011 – 2014)

Median Equity Deal Size ($M)

$12.00

$10.00

$8.00

$6.00

$4.00

$2.00

$- 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 Median Equity Deal Size ($M) $9.41 $7.10 $10.15 $6.00 $2.39 $3.94 $4.83 $3.51 $4.00 $5.00 $10.00 $5.00 $10.00

9 Venture Capital Report Equity Financings into China-based, VC-backed Companies, by Industry Group (4Q 2014)

FINANCING Consumer Services companies took $3.7 billion through 110 deals during 4Q 2014, a rise of 91% in dollars

invested from 3Q 2014 with a 10% increase in deals completed. The sector attracted 46% of all deals completed for the quarter and a 55% share of total amount invested.

The Information Technology sector placed second for investment, receiving $2.3 billion across 76 deals. Sector investment quintupled from 3Q 2014 as deal flow improved by 55% to a total of 32% of all deals completed for the quarter. The investment figure represents a 34% share of total equity financing into China-based VC- backed companies for 4Q 2014.

Business and companies raised the third highest proportion of investment during 4Q 2014. The sector garnered $469 million across 38 deals, generating 16% of all deals for 4Q 2014; a 23% rise in dollars invested from 3Q 2014 despite deal flow remaining flat .

4Q'14 Industry Breakdown 4Q’14 Industry Breakdown By Number of Deals By Amount Raised

7% Business and Financial 1% Business and Financial 16% Services Services Consumer Goods Consumer Goods 34% 32% 2% Consumer Services Consumer Services

Energy & Utilities (0%) Energy & Utilities (0%)

Healthcare Healthcare 4% 3% 55% Industrial Goods & Materials Industrial Goods & Materials 46% (0%) (0%) Information Technology Information Technology

10 Venture Capital Report Equity Financings into China-based, VC-backed Companies, by Industry Group (2014)

FINANCING

2014 Industry Breakdown 2014 Industry Breakdown By Number of Deals By Amount Raised ($B)

Business and Financial Services 10% Business and Financial Services 17% 2% 26% 24% Consumer Goods Consumer Goods 3% Consumer Services Consumer Services

5% 3% Energy & Utilities (0%) Energy & Utilities (0%) 4%

Healthcare Healthcare

49% Industrial Goods & Materials 61% Industrial Goods & Materials (0%)

Information Technology Information Technology

11 Venture Capital Report Top 5 Deals into China-based VC-backed Companies (4Q 2014)

FINANCING

Industry Industry Close Round Raised Round Investors Co. Name Industry Code Brief Description Group Segment Date Type ($M) (* denotes lead)

All-Stars Investment Ltd.*, Digital Sky Beijing Technologies Ltd., GIC Private Ltd., Information Communications Provider of mobile phones Technology Software 12/20/2014 5th $1,100.00 Hopu Investments Management Co. Technology Software and applications. Co. Ltd. Ltd., Yunfeng Capital Management Co. Ltd.

Beijing Xiaoju Digital Sky Technologies Ltd.*, GGV Consumer Consumer Provider of taxi Technology Shopping Facilitators 12/9/2014 4th $700.00 Capital, Temasek Holdings Pvt. Ltd.*, Services Information Services reservation services. Co. Ltd. Tencent Collaboration Fund*

Hangzhou Holding Ltd., Tiger KuaiZhi Consumer Consumer Provider of a mobile taxi Shopping Facilitators 12/31/2014 4th $600.00 Global Management LLC, Softbank Technology Services Information Services booking application. Corp. Co. Ltd.

Beijing Pocket DST Advisors, Falcon Edge, H Capital, Fashion Consumer Consumer Provider of e-commerce Tencent Holdings Ltd.*, Tiger Global Shopping Facilitators 10/23/2014 4th $350.00 Technology Services Information Services shopping guide solutions. Management LLC*, Vy Capital Co. Ltd. Management Co. Ltd.

Beijing Aiqiyi Consumer Consumer Provider of online video Baidu Inc., Shunwei China Internet Technology Entertainment 11/19/2014 Second $294.44 Services Information Services services. Fund LP*, Xiaomi Ventures* Co. Ltd.

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FINANCING

Most Active Investors for China-based, VC-backed Companies (4Q 2014)

Number of Deals

20 19

18

16

14 13 12 12 10 10 10

8

6

4

2

0 IDG Capital Partners Matrix Management Sequoia Capital GGV Capital GSR Ventures Corp.

13 Venture Capital Report Venture M&A and IPO Market Activity in China (4Q 2014)

M&A activity for venture-backed companies in China fell by 50% from the previous quarter and 43% from 4Q LIQUIDITY 2013 to three completed. 19 M&As have been completed in 2014 as a whole, a drop of 17% from 2013.

The largest M&A of the quarter was Wanda Group’s acquisition of online payment platform provider 99Bill Corp. in December for $326 million.

61 VC-backed companies went public during 2014 in China, thanks in large part to a flurry of listings in 1Q 2014 which accounted for 44% of the annual total. In contrast, just 15 IPOs took place in 2013.

Exit Opportunities for Chinese 4Q'14 VC-backed Companies 3Q'14 (2011 – 2014) 2Q'14 1Q'14 4Q'13 3Q'13 2Q'13 1Q'13 4Q'12 3Q'12 2Q'12 1Q'12 4Q'11 0 5 10 15 20 25 30 35 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 IPOs 15 17 15 12 4 0 2 1 12 27 11 9 14 M&As 2 3 3 3 2 7 3 6 7 3 7 6 3

14 Venture Capital Report Chinese VC-backed IPOs (2011-2014)

LIQUIDITY 14 VC-backed companies went public during 4Q 2014 in China, an increase of 56% on 3Q 2014 and 17% on 4Q 2013.

HuaDian Heavy Industries had the largest IPO of the quarter, raising $245 million for its December listing on the Stock Exchange. The material handling equipment provider’s IPO represents 19% of the total raised through VC-backed IPOs in China during 4Q 2014.

A total of $1.31 billion were raised through Chinese VC-backed IPOs in 4Q 2014, a rise of 24% from the previous quarter. A total of $7.2 billion has been raised through listings during 2014, dwarfing the $2 billion raised in 2013 and the most since 2011 when $15.7 billion were raised through 100 IPOs.

$3.00 30 Chinese VC-backed IPO Activity (2011 - 2014) $2.50 25

$2.00 20

$1.50 15

$1.00 10

$0.50 5

$0.00 0 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 Raised ($B) through IPO $1.66 $1.57 $1.63 $1.05 $0.48 $0.00 $0.29 $0.05 $1.63 $2.05 $2.75 $1.06 $1.31 Number of IPOs 15 17 15 12 4 0 2 1 12 27 11 9 14

15 Venture Capital Report Top 3 IPOs in China (4Q 2014)

LIQUIDITY

Raised Company Industry Industry Location Brief Description Industry Code Close Date through IPO Exchange Name Segment Group ($M)

HuaDian Heavy Provider of material General Industrial Machinery and Industrial Goods Beijing 12/11/2014 $244.65 SSE: 601226 Industries Co. Ltd. handling equipment. Machinery Industrial Goods and Materials

Shanghai La Provider of women's Clothing/Accessory Consumer Chapelle Fashion Shanghai wear both online and Retailers 10/9/2014 $218.89 HKEx: 06116 Retailers Services Co. Ltd. through retail stores.

Provider of a mobile- Consumer Online Consumer NASDAQ: Momo Inc. Beijing based social networking Information 12/11/2014 $216.00 Communities Services MOMO platform. Services

16 Venture Capital Report Dow Jones VentureSource helps venture capitalists, corporate development executives, investment bankers and service providers find deal and partnership opportunities, perform comprehensive due diligence, and examine trends in venture capital investment, fund-raising, and liquidity. It provides ABOUT US accurate, comprehensive data on venture-backed companies – including their investors and executives – in every region, industry, and stage of development throughout the world.

The investment figures included in this release are based on aggregate findings of Dow Jones' proprietary research and are contained in VentureSource. This data was collected through surveys of professional firms, interviews with company executives, and from secondary sources. These venture capital statistics cover equity investments into early stage, innovative companies and do not include companies receiving funding solely from corporate, individual, and/or government investors. Figures contained throughout the report current at time of editorial but are subject to change without notice. No statement herein is to be construed as a recommendation to buy or sell securities or to provide investment advice.

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