VentureSource

China -- 1Q 2014

VentureSource

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The following report presents Dow Jones VentureSource’s quarterly findings for Chinese

venture capital fundraising, investment, and liquidity. The included charts and graphs

offer a comprehensive view of the trends currently affecting the venture capital market.

Highlights for 1Q 2014 include:

Chinese venture capital fundraising rose by over a third from the previous quarter albeit through fewer

fund closings;

Despite deal flow dropping by a fifth from the previous quarter, quarterly investment into venture-

backed companies reached its highest quarterly level since 1Q 2010;

While venture-backed mergers and acquisitions (M&As) fell slightly, China experienced the most initial

public offerings (IPOs) in a single quarter since 3Q 2011.

To view Dow Jones VentureSource’s U.S. data for 1Q 2014, please click here

VentureSource

FUNDRAISING

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1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14

Amount Raised ($B) $0.96 $3.82 $3.78 $3.48 $1.29 $0.29 $1.61 $1.08 $0.79 $0.14 $0.88 $0.78 $1.07

Number of Funds 12 33 24 23 13 11 13 15 7 5 11 11 6

0

5

10

15

20

25

30

35

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50Chinese VC Fundraising

(2011 – 2014) Based on multiple closings

Chinese Venture Capital Fundraising Improves in 1Q 2014

Chinese venture fundraising rose to $1.07 billion across six funds during 1Q 2014. Despite the number of funds

dropping by five from the previous quarter, dollars raised experienced an upswing of 37% from 4Q 2013.

Venture fundraising compared favourably with 1Q 2013 too, displaying a 35% increase in dollars raised despite

the number of funds falling by one. The $1.07 billion raised during 1Q 2014 represents the highest figure for a

single quarter since 4Q 2012 when a total of $1.08 billion were raised.

Qiming Venture Partners’ IV fund was the largest of 1Q 2014, raising $500 million and accounting for 47% of

the total amount for the quarter.

VentureSource Largest VC Funds Raised in 1Q 2014

FUNDRAISING

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Firm Name Fund Name

Amount ($M)

Closed in 1Q

Location Offering Status

Fund Type Fund Category Closing Type

Qiming Venture Partners Qiming Venture Partners

IV LP $500.00 Shanghai, China Closed

Multi-stage venture capital

Venture Capital

Final

DCM DCM Ventures China

Fund (DCM VII) LP $330.00

Menlo Park, CA, United States

Closed Early-stage

venture capital

Venture Capital Final

Banyan Capital Banyan Partners Fund I $206.00 Shanghai, China Closed Multi-stage

venture capital

Venture Capital Final

Guangfa Xinde Investment Management Co.

Zhuhai GF Xinde Alpha Industry Fund I

$16.30 Guangzhou, Guan, China

Closed Early-stage

venture capital

Venture Capital Final

Cybernaut Capital Management

Wuhan Cybernaut Women's Venture Fund

$16.30 Hangzhou,

Zhejiang, China Open

Multi-stage venture capital

Venture Capital

First

VentureSource

FINANCING

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Equity Financings into China–

based, VC-backed Companies

(2011 – 2014)

1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14

Amount Raised ($B) $1.72 $1.76 $1.57 $1.52 $1.08 $1.46 $0.93 $1.58 $0.66 $0.62 $0.93 $1.31 $2.04

Number of Deals 90 116 112 98 73 75 59 69 58 80 107 113 90

0

40

80

120

160

200

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

Venture Capital Investment in China Improves in 1Q 2014

Investment into Chinese venture-backed companies continued to improve in 1Q’14, as companies raised $2

billion from 90 deals. Despite a 20% decline in the number of deals from the previous quarter, capital invested

rose by 55%.

Compared with 1Q’13, deal flow improved by 55% while investment increased threefold.

1Q’14 represents the largest quarterly investment total for Chinese VC-backed companies since 1Q’10 when

$2.4 billion were raised for 78 deals.

VentureSource

FINANCING

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Equity Financings into China–based, VC-backed Companies, by Round Class

(2011 – 2014)

Number of Deals

1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14

Seed 3 3 6 5 8 6 3 5 3 9 13 9 5

First 37 64 56 55 38 29 26 33 26 49 61 65 47

Second 17 19 24 13 7 16 13 19 13 11 16 16 14

Later 27 20 22 22 17 18 17 11 12 9 13 20 19

Restart 0 0 0 0 0 1 0 0 0 0 0 0 0

0

10

20

30

40

50

60

70

VentureSource

FINANCING

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1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14

Seed $4 $2 $5 $10 $5 $4 $1 $1 $1 $6 $9 $5 $4

First $442 $604 $545 $460 $361 $362 $255 $162 $125 $225 $292 $389 $388

Second $233 $344 $445 $274 $129 $357 $161 $229 $205 $143 $214 $262 $258

Later $762 $464 $569 $675 $449 $697 $512 $1,187 $278 $243 $278 $537 $748

Restart $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

Equity Financings into China-based, VC-backed Companies, by Round Class

(2011 – 2014)

Amount Raised ($M)

VentureSource

FINANCING

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Equity Financings into China-based, VC-backed Companies

(2011 – 2014)

Median Equity Deal Size ($M)

1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14

Median Equity Deal Size ($M) $15.00 $10.00 $10.00 $9.43 $7.52 $10.30 $6.28 $3.21 $5.02 $4.45 $3.63 $5.00 $7.85

$0

$2

$4

$6

$8

$10

$12

$14

$16

VentureSource

FINANCING

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22%

2%

48%

5%

2%

21%

Business and Financial Services

Consumer Goods

Consumer Services

Energy & Utilities (0)

Healthcare

Industrial Goods & Materials

Information Technology

1Q'14 Industry Breakdown

By Number of Deals

Equity Financings into China-based, VC-backed Companies, by Industry Group

(1Q 2014)

Consumer Services companies took $1.4 billion through 43 deals during 1Q’14, a 74% increase in dollars

invested from 4Q’13 despite a 16% dip in deal flow. The sector attracted 48% of all deals completed for the

quarter and a 67% share of total amount invested. The investment figure is the highest it has been for a single

quarter since 1Q’10.

The Information Technology sector raised the second highest proportion of investment during 1Q’14. IT

companies garnered $398 million across 19 deals; a drop of 32% in deal flow from 4Q’13 but dwarfing the $144

million raised during the prior period.

Business and Financial Services companies received $221 million across 19 deals for 1Q’14. While deal flow

registered a 10% fall from the previous quarter, capital invested in the sector declined by 30%. The investment

figure represents an 11% share of total equity investment into China-based VC-backed companies for the

quarter.

11%

1%

67%

2%

18% Business and FinancialServices

Consumer Goods

Consumer Services

Energy & Utilities (N/A)

Healthcare

Industrial Goods & Materials(0.1%)

Information Technology

1Q’14 Industry Breakdown

By Amount Raised

VentureSource

FINANCING

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Co. Name Industry Group

Industry Segment

Industry Code Brief Description Close Date

Round Type

Raised ($M)

Round Investors (* denotes lead)

Shanghai Hantao Information

Consultancy Co. Ltd.

Consumer Services

Consumer Information Services

Online Communities

Provider of a communication platform for consumers to make free comments on

restaurants, shopping malls, and other leisure places.

2/17/2014 Corporate $400.00 Tencent Holdings Ltd.*

Xunlei Network Technologies

Ltd.

Information Technology

Software Multimedia/Streaming

Software

Provider of an online platform for digital media content in

China. 2/26/2014 Later $310.00

IDG Capital Partners, Kingsoft Corp. Ltd., Morningside Group (Holdings) Ltd.,

Xiaomi Inc.*

JD.com Inc. Consumer Services

Retailers Mixed Retailing Provider of an online retail

website for consumer electronics and goods in China.

3/10/2014 Corporate $214.70 Tencent Holdings Ltd.*

Shanghai Ule Trading Co. Ltd.

Consumer Services

Retailers Mixed Retailing Provider of an online shopping platform for consumer goods.

1/17/2014 First $110.00 Access Industries*

Tongcheng Network

Technology Corp.

Consumer Services

Travel and Leisure Travel

Arrangement/Tourism Provider of an online platform

for travel services. 2/15/2014 Second Round $82.63

Boyu Capital Advisory Co. Ltd., Oriza Holdings, Tencent Holdings Ltd.*

Top 5 Deals into China-based VC-backed Companies (1Q 2014)

VentureSource

FINANCING

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6

4 4 4

0

1

2

3

4

5

6

7

8

9

10

Sequoia Capital IDG Capital Partners Fosun Kunzhong Capital Shenzhen Capital GroupCo. Ltd.

Most Active Investors for China-based, VC-backed Companies (1Q 2014)

Number of Deals

VentureSource

LIQUIDITY

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Exit Opportunities for Chinese

VC-backed Companies

(2011 – 2014)

Venture M&A and IPO Market Activity in China (1Q 2014)

M&A activity for venture-backed companies in China fell slightly in 1Q’14 with four completed in all, one less

than in 4Q’13, and three fewer than in 1Q’13.

27 VC-backed companies went public during 1Q’14 in China, the highest figure in a quarter since 3Q’11.

The largest IPO of the quarter was Shaanxi Coal Industry Co. Ltd., which raised $662 million for its January

listing on the Shanghai Stock Exchange.

0 5 10 15 20 25 30 35

1Q'11

2Q'11

3Q'11

4Q'11

1Q'12

2Q'12

3Q'12

4Q'12

1Q'13

2Q'13

3Q'13

4Q'13

1Q'14

1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14

IPOs 31 24 29 15 17 15 12 3 0 2 1 12 27

M&As 2 2 4 2 3 3 3 2 7 3 5 5 4

VentureSource

LIQUIDITY

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VC-backed M&As in China (1Q 2014)

Company Name

Location Brief Description Industry Code Industry Segment

Industry Group

Close Date

Round Type

Amount Paid ($M)

Acquirer

Yunnan Dihon Pharmaceutical Group Co. Ltd.

Kunming

Provider of over-the-counter (OTC) and herbal traditional

Chinese medicine (TCM) products.

Pharmaceuticals Biopharmaceuticals Healthcare 3/28/2014 Acquisition $586.79 Bayer AG

Ovation Entertainment Ltd.

Shanghai Operator of an online

cosmetics discount retailer.

Specialty Retailers Retailers Consumer Services

2/14/2014 Acquisition $132.50 Vipshop

Holdings Ltd.

Beijing Xintai Interactive

Technology & Beijing

Operator of an online group purchasing

platform.

Shopping Facilitators

Consumer Information

Services

Consumer Services

1/26/2014 Acquisition $10.00 Suning

Commerce Group Co. Ltd.

Ningbo Qinyuan Group Co. Ltd.

Ningbo Provider of water

purification equipment in China.

Water Utilities Utilities Energy and

Utilities 3/9/2014 Acquisition Undisclosed Unilever

VentureSource

LIQUIDITY

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Chinese VC-backed IPO Activity

(2011 - 2014)

Chinese VC-backed IPOs (2011-2014)

27 VC-backed companies went public during 1Q’14 in China, the highest figure in a quarter since 3Q’11.

A total of $2.05 billion were raised through IPOs during 1Q’14, an increase of 26% from 4Q’13 and the largest

amount raised in a single quarter since 3Q’11.

Of the 27 companies that listed during 1Q’14, 12 are categorized under the Industrial Goods and Materials

industry group. A total of $802 million were raised through these IPOs, accounting for 39% of the overall

quarterly total.

1Q'11 2Q'11 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14

Raised ($B) through IPO $6.02 $3.30 $4.62 $1.66 $1.57 $1.63 $1.05 $0.17 $0.00 $0.29 $0.05 $1.63 $2.05

Number of IPOs 31 24 29 15 17 15 12 3 0 2 1 12 27

0

5

10

15

20

25

30

35

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

VentureSource

LIQUIDITY

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Company Name

Location Brief Description Industry Code Industry Segment

Industry Group

Close Date Raised

through IPO ($M)

Exchange

Shaanxi Coal Industry Co. Ltd.

Xi'An, Shaanxi Provider of coal. Coal Non-Renewable

Energy Energy and

Utilities 1/28/2014 $661.81 SSE: 601225

Neway Valve (Suzhou) Co. Ltd.

Suzhou, Jiangsu

Manufacturer of industrial valves.

General Industrial Goods

Machinery and Industrial Goods

Industrial Goods and Materials

1/17/2014 $146.10 SSE: 603699

Chenzhou City Jingui Silver Industry Co.

Chenzhou, Hunan

Provider of silver, silver products, and silver

bases.

Industrial Metals Processing

Materials and Chemicals

Industrial Goods and Materials

1/28/2014 $124.81 SZSE: 002716

Anhui Yingliu Electromechanical

Co. Ltd. Hefei, Anhui

Manufacturer of casting, forging, and machining related

products.

General Industrial Goods

Machinery and Industrial Goods

Industrial Goods and Materials

1/22/2014 $109.61 SSE: 603308

NSFocus Information Technology

Co. Ltd.

Beijing Provider of network

security devices.

Wired Communications

Equipment

Communications and Networking

Information Technology

1/29/2014 $65.12 ChiNext: 300369

Top 5 IPOs in China (1Q 2014)

VentureSource

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 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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