2024 Chinese Corporate Venture Capital (CVC) Development Report: Backing Half of Unicorns, Dominating One-Third of IPOs, Zhejiang and Guangdong Lead in Fund Registration

BEIJING, March 15, 2025 /PRNewswire/ -- The below content is excerpted from Cyzone's "2024 China Corporate Venture Capital (CVC) Development Report". For more detailed content and data analysis, please visit BESTLA to obtain the full report.

Core Findings of the Report:

The number of newly registered Corporate Venture Capital (CVC) funds remains low, with an overall proportion maintaining at 4.4%. In 2024, there were 193 newly registered CVC funds, a decrease of 41.7% compared to 2023, marking a low level in the past decade. However, CVC's share of privately registered funds has remained stable, hovering around 4.4% since 2021. Regionally, Zhejiang and Guangdong, where private enterprises are well-developed, saw the highest number of newly registered CVC funds.

CVC investments have entered an adjustment phase, focusing on emerging sectors and early-stage investments. In 2024, the number of investment events involving CVC was 1,027, a year-on-year decrease of 42% compared to 2023. Investments were heavily concentrated in the early stage, totaling 735 investments, accounting for 71.6% of the total, highlighting the focus on innovative areas. Meanwhile, CVC actively invested in sectors such as intelligent manufacturing and artificial intelligence, with 192 and 134 investments respectively. The automotive and transportation sector saw the largest total financing scale.

Large investments accounted for nearly 40% of the total and participated in half of the unicorn investments. In 2024, there were 83 large investment events in the primary equity investment market with investment amounts exceeding US100 million , of which 31 involved CVC , accounting for 37.4100 million in 2024. In terms of unicorn growth, CVC played a significant role, with 11 out of the 20 newly identified unicorns in China in 2024 having received CVC investment, accounting for 55%.

The mergers and acquisitions (M&A) market was active, with an IPO penetration rate exceeding 30%. CVC plays an important role in China's capital market and as a participant in the M&A market. In 2024, CVC participated in 5.6% of M&A events as a bidder, particularly active in intelligent manufacturing, traditional industries, and energy and power sectors. Meanwhile, in the IPO market, out of the 228 IPO enterprises in China in 2024, 76 had received CVC investment, with a CVC penetration rate of 33.3% among IPO enterprises in 2024.

Performance of CVC Registered Funds

Newly registered CVC funds in the past decade: Experiencing a transition from a boom to an adjustment period

Over the past decade, the number of newly registered CVC funds has undergone a transition from a boom to an adjustment period. In 2021, the number of newly registered CVC funds reached a high point of 408, but subsequently declined gradually under the influence of market conditions and policy regulations. 193 new CVC funds registered under the filing-based system in 2024, a decrease of 41.7% compared to 2023, representing a low level in the past decade.

Despite the significant drop in the number of newly registered funds, the proportion of CVCs among private equity funds remained stable , since 2021, the proportion of newly registered CVC funds has basically remained at around 4.4%.

Number of Newly Registered CVC Funds in 2024: Lingering at a Low Point, with a Year-End Recovery

In 2024, the number of newly registered CVC funds remained low amid a complex and volatile global economic environment, significantly increased uncertainty in capital markets, and the strict implementation of new regulations（Regulation on the Supervision and Administration of Private Investment Funds） in the private equity industry, among other factors. The monthly distribution was uneven. In January, influenced by corporate layouts and project implementations, the number of newly registered funds reached 30, marking one of the peaks. Subsequently, the market cooled down, especially during the spring and autumn, with the number fluctuating between 10 and 14 in most months from March to October, and hitting a low of 8 in May.

The situation improved in the fourth quarter. Domestic favorable policies emerged frequently, A-share markets stabilized, and market confidence was boosted. The number of newly registered funds rebounded to 19 in November and reached 26 in December, second only to January, indicating a notable recovery at the end of the year. Although the CVC market faced numerous challenges in 2024, the year-end recovery brought positive signals. With policy optimizations and the restoration of market confidence, CVCs are expected to contribute to enterprise innovation and industrial upgrading in the future.

Provincial Distribution of Newly Registered CVC Funds: Zhejiang and Guangdong Rank Top

In terms of the geographical distribution of funds in 2024, a total of 18 provinces were involved, with Zhejiang and Guangdong having the highest number of newly registered CVC funds, at 41 and 40 respectively. Zhejiang and Guangdong boast developed private economies and are home to numerous large enterprises. Many of these enterprises have established CVCs to create a second growth curve. At the policy level, Zhejiang and Guangdong have actively introduced a series of venture capital support policies in recent years, ranging from tax incentives to project support, to comprehensively encourage the vigorous development of private equity investment.

Listed Company LP Participation: Active in Intelligent Manufacturing, Traditional Industries, and Healthcare Sectors

According to the analysis data from BESTLA, the trend of listed companies serving as Limited Partners (LPs) remains robust in 2024, with 326 listed companies participating in the funding of 456 funds, with a total committed capital of RMB 71.2 billion.

From the perspective of the industry distribution of listed companies participating in fund investments, intelligent manufacturing, traditional industries, and healthcare sectors show high levels of activity, with 66, 57, and 44 listed companies investing respectively. In terms of geographical distribution, listed companies participating in fund investments are mainly concentrated in Guangdong, Jiangsu, Zhejiang, Shanghai, and Beijing. These regions, with their solid economic foundations, active capital markets, and abundant industrial resources, have attracted numerous listed companies to participate in fund investments.

Performance of CVC Equity Investments

China's CVC Investment Trend in the Past Decade: Entering a Period of Adjustment, with Participation Reaching a 10-Year Low

After experiencing two peaks of investment activity in 2016 and 2021, China's CVC development is currently entering a period of adjustment due to external factors such as the cooling of the primary and secondary equity investment markets and policy regulations. According to BESTLA data, in 2024, the number of investment events involving Chinese CVCs was 1,027, a year-on-year decrease of 42% compared to 2023. The proportion of investment events involving Chinese CVCs in China's primary market has declined to 13.8%, a decrease of 4.9 percentage points compared to 2023.

Regional Distribution of CVC Participation Events: The Investment Layout in New Tier-1 Cities Such as Suzhou and Hangzhou is Worth Noting

According to BESTLA data, domestic CVCs showed a significant preference for investing in economically developed provinces and municipalities with strong technological innovation capabilities such as Jiangsu (171 events), Guangdong (155 events), Shanghai (144 events), Beijing (142 events), and Zhejiang (124 events) in their investment layouts in 2024.

In terms of the city distribution of CVC participation in investment events, Shanghai topped the list with 144 events, followed by Beijing with 142 events, and Shenzhen ranked third with 90 events. Meanwhile, new Tier-1 cities such as Suzhou and Hangzhou are on the rise. Suzhou attracted 77 investments due to its manufacturing clusters and emerging industry layout, while Hangzhou saw 67 investment events leveraging the vitality of the digital economy. These cities have enhanced their attractiveness to CVCs through their unique industries and innovative ecosystems, driving regional development.

Distribution of CVC Participation Events by Round: Focus on Early-Stage Investments

In terms of investment stages, CVC participation was concentrated more in the early and growth stages in 2024. Specifically, there were 735 investment events in the early stage, accounting for the highest proportion of 71.6%; followed by the growth stage with 244 events, accounting for 23.8%; and the later stage with 48 events, accounting for 4.7%.

From the perspective of specific funding rounds, the series A round was the round with the most CVC participation, with a total of 423 events in 2024 and an average single investment amount of RMB 250 million. CVCs continue to focus on early-stage projects that may carry high risks but have unlimited potential, reflecting their preemptive tendency towards the innovation frontier and the future industrial landscape.

Large-Scale Investment Events Involving CVC: Participation Rate Reaches 37.4%

According to data from BESTLA, in 2024, there were 83 large-scale investment events in the primary equity investment market with investment amounts exceeding USD 100 million. Among them, a total of 31 large-scale investment events involved CVC participation, accounting for 37.4%. The total disclosed amount for large-scale investment events in the primary market was RMB 273.27 billion, while the total disclosed amount for large-scale investment events involving CVC participation was RMB 107.09 billion, accounting for 39.2%.

CVC Investments in New Unicorn Companies: Participation Ratio as High as 55%

In the growth process of unicorn companies in China, Corporate Venture Capital (CVC) plays a significant role, and it has also played a crucial part in investing in and incubating emerging startups. As of the end of December 2024, there were a total of 512 unicorn companies in China, of which 371 had received investments from Chinese CVCs, accounting for 72.5%. In 2024, a total of 20 new unicorn companies emerged in China, among which 11 had Chinese CVC participation, accounting for 55%.

M&A Performance of CVC

Domestic M&A Data: CVC Participated in 5.6% of M&A Deals as a Bidder

According to BESTLA data, there were a total of 2,479 domestic M&A deals in 2024, of which 138 involved CVC as the buyer, accounting for 5.6%. The total transaction value of domestic M&A deals amounted to RMB 1,130.53 billion, with CVC-led deals accounting for RMB 218.56 billion, or 19.3% of the total.

From the perspective of the industry distribution of target companies acquired in M&A deals, the top ten industries in which CVC participated as a buyer are mainly in intelligent manufacturing, traditional industries, and energy & power, with 19, 18, and 17 deals respectively. The top ten industries in terms of the total transaction value of M&A deals in which CVC participated as a buyer are focused on traditional industries, healthcare, and intelligent manufacturing. The total transaction value of M&A deals in traditional industries reached up to RMB 133.15 billion.

IPO Performance of CVC

In 2024, the penetration rate of CVCs in IPO enterprises in China reached 33.3%

According to BESTLA data, in 2024, a total of 228 Chinese enterprises completed IPOs both domestically and internationally, among which 76 enterprises had CVC participation before their IPOs, resulting in a penetration rate of 33.3%. Looking at the top 5 industries, IPO enterprises with CVC investment are mainly concentrated in Automotive & Transportation (10 enterprises), Healthcare (10 enterprises), and Enterprise Services (9 enterprises), followed by Traditional Industries and Intelligent Manufacturing with 8 and 6 enterprises respectively.

In terms of the stock exchanges where these enterprises were listed, among the 76 enterprises with CVC investment, the Hong Kong Stock Exchange had the highest number of listed enterprises with 29, followed by the Shanghai Stock Exchange with 19 and the Shenzhen Stock Exchange with 14. Additionally, the US stock market is also an important listing avenue, with 10 enterprises listed on the Nasdaq Stock Exchange and 2 on the New York Stock Exchange.

SOURCE cyzone