Venture Capital Report

China | 2 Q | 2018

VENTURE CAPITAL REPORT VENTURE CAPITAL REPORT

The following report presents Dow Jones VentureSource’s quarterly findings for Chinese venture capital fundraising, , valuation, and liquidity. The included charts and graphs offer a comprehensive view of the trends currently affecting the venture capital market.

Highlights for 2Q 2018 include: • venture capital fundraising increased, both in capital raised and the number of funds; • Capital flowed into venture-backed Chinese companies reached a fresh record; • Amount collected through (M&As) climbed significantly; • The transaction number via initial public offerings (IPOs) climbed, while the money raised declined.

VENTURE CAPITAL REPORT 2 CHINESE VENTURE CAPITAL FUNDRAISING IMPROVED IN 2Q 2018 FUNDRAISING

Chinese VC Fundraising (2015–2018) In 2Q 2018, 12 Chinese venture funds collected $2.53 billion. Based on multiple closings 25 $6.00 The capital raised is more than five times as many as the amount collected in the prior quarter, and the number of $5.00 funds is more than doubled. 20

In comparison to the same period last year, amount raised $4.00 increased by 5%, while deal number dropped by 20%. 15 $3.00 • Qiming Venture USD Fund VI LP was the largest Chinese venture fund in 2Q 2018, raising $935 million and 10 $2.00 representing a 37% of the total amount raised in venture capital funds during the quarter. 5 $1.00

0 $0.00 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 Amount Raised ($B) $1.70 $2.07 $1.69 $3.91 $2.12 $2.09 $0.75 $1.06 $2.41 $3.57 $0.79 $0.38 $2.53 Number of Funds 24 22 19 14 18 12 14 14 15 14 8 5 12

VENTURE CAPITAL REPORT 3 LARGEST VC FUNDS RAISED IN 2Q 2018

FUNDRAISING

Amount ($M) Firm Name Fund Name Location Offering Status Fund Type Fund Category Closing Type Closed in 2Q

Multi-stage venture Qiming Venture Partners Qiming Venture USD Fund VI LP $935.00 Closed Venture Capital Final capital

Early-stage venture Sinovation Ventures Sinovation Fund IV LP $500.00 Closed Venture Capital Final capital

Loyal Valley Capital Advantage Fund Multi-stage venture Loyal Valley Innovation Capital $370.00 Shanghai Open Venture Capital First LP capital

VENTURE CAPITAL REPORT 4 INVESTMENT INTO CHINESE VENTURE-BACKED COMPANIES INCREASED DURING 2Q 2018 FINANCING

Equity Financings into China-based, VC-backed Companies (2015–2018)

50.00 1200 Due to an enormous $14 billion raised by Ant Financial Services 45.00 Group, the capital flowed into venture-backed Chinese companies 1000 surged in 2Q 2018, accumulating more than $45 billion via 963 40.00 35.00 transactions. Compared to the prior quarter, the amount raised 800 increased dramatically by 59%, along with 3% climb in the number 30.00 of deals. 25.00 600 Business and Financial Services is the strongest in terms of deal 20.00 400 value. 15.00 10.00 200 5.00

0.00 0 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 Amount Raised ($B) 17.52 17.50 21.49 22.05 21.27 12.38 15.07 35.38 19.76 16.52 29.11 28.46 45.32 Number of Deals 778 874 911 742 813 815 832 734 794 873 992 934 963

VENTURE CAPITAL REPORT 5 EQUITY FINANCINGS INTO CHINA-BASED, VC-BACKED COMPANIES, BY ROUND CLASS (2015–2018] FINANCING

Number of Deals 400

350

300

250

200

150

100

50

0 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 Seed 94 141 133 101 121 151 122 81 102 97 98 70 75 First 344 352 338 282 295 295 315 252 267 284 316 298 334 Second 115 151 162 129 146 122 126 141 163 152 198 189 214 Later 139 129 159 137 157 142 148 153 160 223 288 290 229 Restart 1 1 2 1 2 2 1

VENTURE CAPITAL REPORT 6 EQUITY FINANCINGS INTO CHINA-BASED, VC-BACKED COMPANIES, BY ROUND CLASS (2015–2018) FINANCING Amount Raised ($M) $35,000

$30,000

$25,000

$20,000

$15,000

$10,000

$5,000

$0 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 Seed $91 $154 $103 $114 $124 $162 $112 $86 $107 $117 $167 $74 $95 First $5,191 $3,777 $2,662 $1,921 $1,627 $1,988 $1,982 $2,929 $2,077 $1,789 $2,124 $2,860 $4,928 Second $4,213 $3,131 $2,351 $2,073 $2,014 $2,178 $1,655 $2,049 $2,584 $2,057 $2,673 $3,687 $3,395 Later $6,335 $9,571 $13,847 $16,826 $16,682 $6,349 $8,823 $28,193 $10,886 $9,099 $20,491 $18,843 $31,547 Restart $20 $2 $60 $0 $128 $48 $4

VENTURE CAPITAL REPORT 7

EQUITY FINANCINGS INTO CHINA-BASED, VC-BACKED COMPANIES, MEDIAN DEAL SIZE [$M] (2015–2018) FINANCING Median Equity Deal Size ($M) $16.00

$14.00

$12.00

$10.00

$8.00

$6.00

$4.00

$2.00

$0.00 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 Median Equity Deal Size ($M) $4.84 $3.87 $4.55 $4.00 $3.14 $3.00 $4.21 $7.23 $4.40 $5.90 $7.56 $10.00 $10.00

VENTURE CAPITAL REPORT 8 EQUITY FINANCINGS INTO CHINA-BASED, VC-BACKED COMPANIES, BY INDUSTRY GROUP [2Q 2018)

FINANCING Business and Financial 2Q'18 Industry Services 21% Breakdown 26% Consumer Goods By Number During 2Q 2018, Business and Financial Services ranked the first in terms of deal of Deals Consumer Services value. This sector grabbed $24.33 billion through 202 deals, taking a 54% share of 5% Energy & Utilities the total investment flowed into Chinese companies during the quarter. By 1% comparison with the last quarter, the deal value is more than doubled, with the 12% Healthcare transaction number dropped by 17%. 0% 33% Industrial Goods & Consumer Services placed the second, collecting $9.54 billion through 319 deals. Materials Information Technology This sector’s investment figure takes a 21% share of the total amount raised during 2Q 2018, and it attracted the highest number of transaction. Business and Financial 2Q’18 Industry Services Information Technology sector won third place, receiving $6.29 billion across 255 Breakdown 14% Consumer Goods By Amount 0% deals. Compared to 1Q 2018, both capital raised and deal volume climbed, by 47% Raised Consumer Services and 18% respectively. 0%8% Energy & Utilities 54% Healthcare 21% Industrial Goods & Materials 3% Information Technology

VENTURE CAPITAL REPORT 9 TOP 3 DEALS INTO CHINA-BASED VC-BACKED COMPANIES (2Q 2018)

Industry Round Raised Round Investors Co. Name Location Industry Code Industry Group Brief Description Close Date Segment Type ($M) (* denotes lead) Warburg Pincus LLC, The Carlyle Group, Temasek Holdings Pvt. Ltd., T. Rowe Price Group Inc., Silver Lake Management LLC, Financial Primavera Capital Group, Business and Provider of financial services Ant Financial Payment/Transaction Institutions Khazanah Nasional Berhad, Hangzhou Financial to individuals and micro and 6/7/2018 VC 4th 14,000.00 Services Group al Processing and Janchor Partners, GIC Private Ltd., Services small businesses. Services General Atlantic LLC, Discovery Capital Management Corp., Canada Pension Plan Investment Board, Boyu Capital Advisory Co. Ltd., Baillie Gifford & Co. Ltd.

Walnut Street Consumer Group Holding Consumer Operator of an online group Tencent Holdings Ltd.*, Sequoia Shanghai Shopping Facilitators Information 4/11/2018 VC 3rd 3,000.00 Ltd. Services purchasing platform. Capital Services (Pinduoduo)

Financial Business and Provider of a lending platform TPG Capital LP*, The Carlyle Du Xiaoman Institutions Beijing Lending Financial based on artificial intelligence 4/28/2018 VC 1st 1,900.00 Group*, Taikang Life , Financial and Services (AI). ABC International Services

VENTURE CAPITAL REPORT 10 MOST ACTIVE INVESTORS FOR CHINA-BASED, VC-BACKED COMPANIES (2Q 2018) FINANCING

Number of Deals

35 33

30

26 24 25 23

20 18 18

15

10

5

0 GSR Ventures IDG Capital Partners ZhenFund Legend Capital Co. Ltd. Capital Group Co. Ltd.

VENTURE CAPITAL REPORT 11 VENTURE M&A MARKET ACTIVITY IN CHINA (2Q 2018) LIQUIDITY

China VC-backed M&A Activity (2015 - 2018)

14 mergers and acquisitions (M&As) for venture-backed $18.00 25

Chinese companies occurred in 2Q 2018, accumulating $16.00

USD 15.45 billion. $14.00 20

Compared with the prior quarter, the amount increased $12.00 four-fold, though the deal volume is only four more. 15 $10.00

• The largest M&A was Shanghai Lazhasi Information $8.00 Technology Co. Ltd. (Ele.com), which was acquired 10 $6.00 by Alibaba Group Holding Ltd. (NYSE: BABA) on April 1, 2018 for USD 9.5 billion. $4.00 5 $2.00

$0.00 0 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 Amount Paid ($B) $16.69 $1.30 $3.42 $0.49 $2.40 $2.86 $1.26 $3.75 $2.74 $2.99 $3.23 $2.88 $15.45 Number of M&As 21 7 14 4 6 14 6 12 11 10 13 10 14

VENTURE CAPITAL REPORT 12 TOP 3 CHINA M&As (2Q 2018) LIQUIDITY

Post Value Close Company Name Location Brief Description Industry Code Industry Segment Industry Group Acquirer Round Type through M&A Date ($M)

Shanghai Lazhasi Information Operator of an online food Food / Drug Alibaba Group Shanghai Retailers Consumer Services 4/1/2018 M&A $9,500.00 Technology Co. Ltd. ordering site. Retailers Holding Ltd. (Ele.me)

Beijing Mobike China Internet Provider of a bike sharing Transportation Technology Co. Ltd. Beijing Travel and Leisure Consumer Services Plus Holding 4/3/2018 M&A $3,400.00 service. Services (Mobike) Ltd.

Shanghai Luoxin Business Facilities / WeWork Operator of co-working Business Support Business and Management Shanghai Operations Companies 4/11/2018 M&A $400.00 spaces in Asia. Services Financial Services Consulting Co. Ltd. Management Inc. (Naked Hub)

VENTURE CAPITAL REPORT 13 CHINESE VC-BACKED IPOs (2015-2018) LIQUIDITY

Chinese VC-backed IPO Activity (2015-2018)

12 Chinese VC-backed companies collected $1.62 10.00 60 billion through public offering during 2Q 2018. 9.00 50 • Although the number of deals rose 20% compared 8.00 7.00 to the prior quarter, the amount raised fell by 64%. 40 6.00 • The largest IPO of this quarter was Talent Information Technology Co. Ltd. (Liepin.com) 5.00 30 which completed a $ 370.18 million through the 4.00 20 listing on HKEX . 3.00 2.00 10 1.00

0.00 0 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 Raised ($B) through IPO 5.61 0.22 0.70 0.77 0.74 9.36 7.63 2.70 2.31 2.96 2.88 4.49 1.62 Number of IPOs 45 2 13 12 10 32 53 43 40 17 13 10 12

VENTURE CAPITAL REPORT 14 TOP 3 CHINA IPOs (2Q 2018) LIQUIDITY

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

Wise Talent Provider of an online talent Information Human Resources Business Support Business and Beijing acquisition services 6/29/2018 IPO $370.18 HKEX: 6100 Technology Co. Ltd. / Recruitment Services Financial Services platform. (Liepin.com)

Vehicle Parts Provider of a used car e- Uxin Ltd. Beijing Retailers / Vehicle Retailers Consumer Services 6/27/2018 IPO $225.00 Nasdaq: UXIN commerce platform. Dealers

Vertical Market Huifu Payment Ltd. Provider of payment Information Shanghai Applications Software 6/15/2018 IPO $215.36 HKEX: 1806 (PnR Network) services. Technology Software

VENTURE CAPITAL REPORT 15 ABOUT US

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 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 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.

VENTURE CAPITAL REPORT 16 ABOUT DOW JONES

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VENTURE CAPITAL REPORT 17