China Touted As Birthplace Of Mega-Unicorns

Ant Financial
Chinese startups have attracted more funding than their counterparts in the Silicon Valley, making the Asian powerhouse the birthplace of some of the “mega-unicorns” in the world.
(Photo: REUTERS/Jason Lee)

For the first time, Chinese startups have generated more financial support than their counterparts in the U.S. Silicon Valley, according to a new report released by Preqin, a financial and alternative assets market data provider, and INSEAD, a graduate business school with campuses in Europe, Asia, and the Middle East.

The report, titled "The Year of the Red Unicorns" published in November, said Chinese startups generated $56 billion of funding compared with the $42 billion accumulated by U.S. startups.

The multi-billion cash flowing into China was driven by funding rounds held for Ant Financial, Mobike, Manbang Group, Pinduoduo, and Ping An Healthcare.

Ant Financial recorded the largest single funding round in history with its Series C funding generating a whopping $14 billion, the report said.

The report also found that of all unicorns, 31 percent or 98 out of 321 came from China. The United States may still have the most unicorns at 162 out of the 321, Preqin data suggested that the Asian powerhouse is rapidly catching up.

"Unicorn" is a term given to privately held, venture-backed companies with a valuation in excess of billion dollars.

China, however, is the birthplace of what termed as "mega-unicorns" or what Preqin defined as unicorns with a valuation of $10 billion and above.

The Asian powerhouse had so far birthed five out of 10 mega-unicorns. Ant Financial is currently valued at $150 billion, Did Chuxing at $56 billion, Tongcheng Network Technology Co. Ltd. at $30 billion, Toutiao at $20 billion and China Shanghai Lujiazui International Financial Asset Exchange Co., Ltd. at $18.5 billion.

China is also home to three largest IPOs of unicorns in terms of company valuation at its initial public offering. Alibaba Group was valued at $231 billion at IPO and raised $25 billion. Jack Ma's company, in fact, remained the largest ever IPO to date. Meituan Dianping was at $55 billion valuations at IPO and raised $4.2 billion while Xiaomi was valued at $53.9 at IPO.

Preqin data also showed that of the 465 worldwide investors who spent in 98 Chinese unicorns, 66 percent have local presence Mainland China while 9 percent has a presence in Hong Kong. Only 13 percent, meanwhile, have invested from the US and from Europe.

The report from Preqin and INSEAD highlighted that China's success was driven primarily by its willingness and aggressive expansion of what it called the "high technology zones." As of 2017, the Asian powerhouse has 146 high technology zones, including the Zhongguancun Science Park that is popularly being called the "Silicon Valley of China."

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