VentureSource

China -- 3Q 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 3Q 2014 include:

Chinese venture capital fundraising sees substantial decline, falling to its lowest dollars raised level

since 2Q 2013;

Quarterly venture investment takes dip from 2Q 2014; however, deal flow continues upward trend to

reach record high;

Venture exit activity declines as number of mergers and acquisitions (M&As) and initial public offerings

(IPOs) fall from 2Q 2014. Exit activity still surpasses that of the year-ago period, however.

To view Dow Jones VentureSource’s U.S. data for 3Q 2014, please click here

To view Dow Jones VentureSource’s Europe data for 3Q 2014, please click here

VentureSource

FUNDRAISING

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

Amount Raised ($B) $3.66 $3.83 $0.72 $0.37 $1.69 $1.26 $0.79 $0.14 $0.88 $0.81 $1.23 $3.78 $0.40

Number of Funds 26 27 13 13 15 17 7 6 11 11 6 15 9

0

5

10

15

20

25

30

$0.00

$0.50

$1.00

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$2.50

$3.00

$3.50

$4.00

$4.50Chinese VC Fundraising

(2011 – 2014) Based on multiple closings

Chinese Venture Capital Fundraising Experiences Substantial Decline in 3Q 2014

Chinese venture fundraising declined significantly to $403 million across 9 funds during 3Q 2014. The quarter

represents the lowest fundraising accumulation since 2Q 2013 when six funds raised just $136 million.

In comparison with the same period last year, dollars raised fell by 54% while the number of venture funds

completing closings declined by 18%.

Olympus Capital Holding Asia’s Environmental Partners II fund was the largest of 3Q 2014, raising $152.85

million, accounting for 38% of the total amount for the quarter.

VentureSource Largest VC Funds Raised in 3Q 2014

FUNDRAISING

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Firm Name Fund Name

Amount ($M)

Closed in 3Q

Location Offering Status

Fund Type Fund Category Closing Type

Olympus Capital Holdings Asia

Asia Environmental Partners II LP

$152.85 Hong Kong,

China Open

Multi-stage venture capital

Venture Capital

First

Source Code Capital Source Code Fund I $100.00 Beijing, China Closed Early-stage

venture capital

Venture Capital Final

Shenyang Investment Financing Management

Shenyang Venture Investment Guidance

Fund $80.64 Shenyang, China Open

Early-stage venture capital

Venture Capital

First

Acer Inc. Acer Venture Capital

Fund $33.30

Santa Clara, CA, United States

Closed Early-stage

venture capital

Venture Capital Final

Shenzhen Qianhai Chuangxiang Times

Investment Management Limited Partnership

Shenzhen Qianhai Ourpalm Chuangxiang

Equity Investment Fund $16.11 Shenzhen, China Open

Early-stage venture capital

Venture Capital

First

VentureSource

FINANCING

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Equity Financings into China–

based, VC-backed Companies

(2011 – 2014)

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

Amount Raised ($B) $1.74 $1.64 $1.17 $1.47 $0.91 $1.40 $0.71 $1.05 $1.48 $1.60 $2.39 $2.94 $2.79

Number of Deals 123 108 82 79 65 78 68 93 121 123 117 130 195

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40

80

120

160

200

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

Venture Capital Investment in China - 3Q 2014

Chinese venture-backed companies raised $2.8 billion in 195 deals during 3Q 2014, a 5% decline in capital

invested from 2Q 2014 despite a 50% increase in the number of deals completed.

Compared with 3Q 2013, however, dollars invested rose by 88% while deal flow increased by 61%.

Investment for the nine-month period dwarfs that of the equivalent 2013 timeframe, with $8.1 billion raised

compared with $3.2 billion. Similarly, deal flow has also risen, from 282 to 442, equating to an increase of 57%.

VentureSource

FINANCING

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

(2011 – 2014)

Number of Deals

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

Seed 7 7 11 6 5 8 4 10 17 12 10 8 6

First 59 56 41 29 28 36 33 53 65 71 62 64 106

Second 24 16 7 19 13 18 14 13 19 18 21 31 49

Later 27 25 18 19 18 13 12 11 13 20 18 20 30

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

0

10

20

30

40

50

60

70

80

90

100

110

120

VentureSource

FINANCING

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

Seed $6 $12 $4 $3 $1 $2 $3 $10 $12 $8 $10 $8 $15

First $556 $454 $359 $347 $257 $157 $159 $274 $336 $652 $448 $479 $581

Second $451 $332 $120 $387 $163 $213 $225 $181 $274 $221 $546 $643 $1,036

Later $712 $734 $499 $690 $487 $1,026 $277 $332 $275 $705 $436 $1,326 $1,086

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

$1,400

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)

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

Median Equity Deal Size ($M) $10.00 $9.44 $7.93 $10.71 $6.14 $3.21 $4.91 $4.85 $3.63 $8.00 $7.85 $16.00 $8.03

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

VentureSource

FINANCING

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18%

2%

48%

1%

5%

1%

25%

Business and FinancialServices

Consumer Goods

Consumer Services

Energy & Utilities

Healthcare

Industrial Goods & Materials

Information Technology

3Q'14 Industry Breakdown

By Number of Deals

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

(3Q 2014)

Consumer Services companies took $1.8 billion through 91 deals during 3Q 2014, an increase of 40% in deal

flow but a dip of 1% in dollars invested from 2Q 2014. The sector attracted 48% of all deals completed for the

quarter and a 66% share of total amount invested.

The Business and Financial Services sector placed second for investment, receiving $414 million across 35

deals. Sector investment declined by 18% compared with 2Q 2014 despite deal flow improving by 46%. The

investment figure represents a 15% share of total equity financing into China-based VC-backed companies for

3Q 2014.

The Information Technology sector raised the third highest proportion of investment during 3Q 2014. IT

companies garnered $377 million across 48 deals; a 9% rise in dollars invested from the prior quarter and a

66% increase in the number of deals completed.

15%

1%

66%

3%

1%

14% Business and FinancialServices

Consumer Goods

Consumer Services

Energy & Utilities (0.4%)

Healthcare

Industrial Goods & Materials

Information Technology

3Q’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)

Youxin Hulian (Beijing)

Information Technology

Co. Ltd.

Consumer Services

Consumer Information Services

Shopping Facilitators Provider of a platform for second-hand car bidding.

9/16/2014 Second $260.00 Tiger Management, Warburg Pincus LLC

Shanjing Kechuang Network

Technology (Beijing) Co.

Ltd.

Consumer Services

Consumer Information Services

Online Communities Operator of an online

classified ads platform. 8/12/2014 5th $200.00

The Carlyle Group, Tiger Global Management LLC

COFCO Womai E-Commerce

Co. Ltd.

Consumer Services

Retailers Food/Drug Retailers Operator of a business to

customer (B2C) e-commerce website.

8/4/2014 Second $100.00 IDG Capital Partners*, SAIF Partners

Beijing Oriental Car

Cloud Information Technology

Co. Ltd.

Consumer Services

Travel and Leisure Transportation

Services Provider of taxi and car

rental services. 9/15/2014 4th $100.00 GIC Private Ltd.*

Beijing Secoo Co. Ltd.

Consumer Services

Retailers Specialty Retailers Provider of a platform for the sale of luxury goods.

7/21/2014 4th $100.00

Bertelsmann Asia Investment, CMC Capital Partners*, Crehol Meaningful Capital, IDG Capital Partners, Vangoo Capital Limited Co. Ltd., Ventech SA

Top 5 Deals into China-based VC-backed Companies (3Q 2014)

VentureSource

FINANCING

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16

12

11

9

7

0

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4

6

8

10

12

14

16

18

20

IDG Capital Partners GSR Ventures Sequoia Capital Matrix ManagementCorp.

Morningside Group(Holdings) Ltd.

Most Active Investors for China-based, VC-backed Companies (3Q 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 (3Q 2014)

M&A activity for venture-backed companies in China fell in 3Q 2014 to six from seven completed during the

previous quarter, but stayed flat compared with 3Q 2013. A total of 17 M&As have been completed in the first

nine months of 2014, one up from the equivalent 2013 period.

The largest M&A of the quarter was Chinese Universe Publishing & Media’s acquisition of mobile games

platform developer Beijing Elex Technology Co. Ltd. in July for $429 billion.

Nine VC-backed companies went public during 3Q 2014 in China, a decline of 18% from the previous quarter.

Total dollars raised in VC-backed IPOs fell substantially from 2Q 2014, by 61% to $1.06 billion.

0 5 10 15 20 25 30 35

3Q'11

4Q'11

1Q'12

2Q'12

3Q'12

4Q'12

1Q'13

2Q'13

3Q'13

4Q'13

1Q'14

2Q'14

3Q'14

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

IPOs 29 15 17 15 12 4 0 2 1 12 27 11 9

M&As 4 2 3 3 3 2 7 3 6 7 4 7 6

VentureSource

LIQUIDITY

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Top 3 M&As in China (3Q 2014)

Company Name

Location Brief Description Industry Code Industry Segment

Industry Group

Close Date

Round Type

Amount Paid ($M)

Acquirer

Beijing Elex Technology Co.

Ltd. Beijing

Developer of a mobile games platform.

Entertainment Consumer

Information Services

Consumer Services

7/24/2014 Acquisition $429.03

Chinese Universe

Publishing & Media

Shenzhen Globalegrow E-Commerce Co.

Ltd.

Shenzhen

Developer of a cross-border online business-

to-consumer (B2C) platform that sells consumer goods.

Shopping Facilitators Consumer

Information Services

Consumer Services

8/16/2014 Acquisition $165.93 Shanxi Baiyuan Trousers Chain Management

Adsage Inc. Beijing Provider of digital

advertising services. Advertising/Marketing

Business Support Services

Business and Financial Services

8/19/2014 Acquisition $100.00 BesTV New

Media Co. Ltd.

VentureSource

LIQUIDITY

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Chinese VC-backed IPO Activity

(2011 - 2014)

Chinese VC-backed IPOs (2011-2014)

Nine VC-backed companies went public during 3Q 2014 in China, two fewer than in 2Q 2014 but eight more

than the single listing completed during the third quarter of 2013.

A total of $1.06 billion were raised through Chinese VC-backed IPOs in 3Q 2014, representing a decrease of

61% from the previous quarter. A total of $5.9 billion have been raised in IPOs during the first nine months of

this year, the most since the equivalent period of 2011 when $13.9 billion were raised.

Guangdong Ellington Electronics Technology Co. Ltd. had the largest IPO of the quarter, raising $222 million

for its July listing on the Shanghai Stock Exchange. The printed circuit board manufacturer’s IPO represents

21% of the total raised through VC-backed IPOs in China during 3Q 2014.

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

Raised ($B) through IPO $4.62 $1.66 $1.57 $1.63 $1.05 $0.48 $0.00 $0.29 $0.05 $1.63 $2.05 $2.75 $1.06

Number of IPOs 29 15 17 15 12 4 0 2 1 12 27 11 9

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VentureSource

LIQUIDITY

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Company Name

Location Brief Description Industry Code Industry Segment

Industry Group

Close Date Raised

through IPO ($M)

Exchange

Guangdong Ellington

Electronics Technology Co.

Ltd.

Zhongshan Manufacturer of

printed circuit boards (PCB).

Electronic Components/

Devices

Electronics and Computer Hardware

Information Technology

7/1/2014 $222.24 SSE: 603328

Tian Ge Interactive Holdings Ltd.

Hangzhou Operator of a live social video platform in China.

Online Communities

Consumer Information

Services

Consumer Services

7/9/2014 $207.29 HKEx: 01980

China Shengmu Organic Milk Ltd.

Inner Mongolia

Producer of organic dairy products in China.

Dairy Products Food and Beverage Consumer Goods 7/15/2014 $137.17 HKEx: 01432

Top 3 IPOs in China (3Q 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 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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