China > USA + RoW
Investments in which corporate venture capital (CVC) has participated set another 6-month record in the first half of 2018 at a total of $87B. If one looks just below the surface of this, it quickly becomes apparent that that loud sucking sound you hear is most of that money being pulled into China. Historically, North America, and more specifically the United States, has been the unrivaled king of companies receiving venture investment dollars. Not any more. The 800 lb gorilla has been replaced by the 1600 lb dragon.
The total amount invested in Chinese portfolio companies in 2018 to-date is equal to the rest of the world combined, INCLUDING the U.S.!! Investments in China slightly surpassed those in the US back in 1H 2016, but quickly returned to the U.S being the unrivaled leader. Now we see this trend not only continuing but actually accelerating to the point that U.S.-based companies are now in a distant second, receiving only 60% of the amount invested in Chinese companies.
This trend is even more evident when we look at the relative percentages of investment dollars for each half year, as below. The U.S. has been on a steady decline from 2012 until 2018 to-date. The rest of the world (RoW) has remained relatively constant (as a percentage of the total investments) in the range of 13% to 30%, whereas China has gone from 6% to over 50% in the most recent six-month interval.
In subsequent posts we'll dive into where this money is being invested in China, as well as the countries and investors that are the source of this huge influx of investment money.