In conjunction with our Q4 Venture Financing Report, I sat down with Nisa Leung from Qiming Venture Partners to get her take on the state of venture capital investing. It is worth acknowledging that at the time of drafting the interview questions, coronavirus was just beginning to appear in China. By the time we went to publish this interview, it was a significant factor in the state of venture capital investing and, more broadly, our global economy. This discussion spotlights the burgeoning impact of the coronavirus on the Chinese market, as well as how Qiming’s portfolio is assisting with the response.
Key insights
On how US/China trade tensions are impacting VC investing: China tech and healthcare investments into the US have dropped 90% as a result of trade tensions. In the meantime, more European and Southeast Asian companies are fund raising in China.
On the economic impact of coronavirus: Many businesses are adversely impacted given China and, increasingly, many countries across the globe are taking a cautious approach to control spread of the virus. The financial market had its biggest drop since 2008. In some sectors, we have seen an uptick in their business, including online education, food delivery and, in the healthcare sector, diagnostic and lab tests, to name a few. Companies that have filed for an IPO have delayed, as it is difficult for management teams to go on roadshows with the quarantine requirements. We had a Shanghai Stock Exchange Science and Technology Innovation Board (STAR Market) virtual IPO recently, where the official ceremony was postponed but the trading of the stock began and performed very well. We hope things will be back to normal soon.
VC deal terms favoring investors: The investment pace has definitely slowed down in Q1 in China, but we are still seeing activities as investors perform their due diligence online and through video conference. One of our companies just closed a $100 million round, and one received six term sheets last week.