The social media market used to be fun to watch. A palpable excitement pervaded it, as rapid growth turned the likes of Facebook, Twitter and many others into household names. Enormous venture capital deals were cut – not that the recipients need the money. It looks like many were taking periodic cash-outs instead of having to wait for the big day.
Clearly, the Chinese venture capital market is hot right now. In addition to sinking some hefty scratch into local ventures — along with the Chinese and provincial governments — the VC community is on the prowl for more. When U.S. renewable energy producer GreenHunter Energy was ready to sell off its minority stake in Guangdong MingYang Wind Power Technology, it found a buyer in Chinese growth venture firm DT Capital Partners, which agreed to play for $9.1 million.
GreenHunter Energy picked up its stake in the Chinese manufacturer of industrial-scale wind turbines back in late 2007. It seems pretty safe to infer that the company made the move back then because the U.S. equivalent wasn’t far enough along. Now, says CEO Gary Evans, the U.S. wind turbine biz is far enough along, making it preferable to owning a piece of a Chinese company.
The Chinese government is committing $1.32 billion to launch venture capital funds jointly with several of its provinces, according to a Reuters report. Private investors will also be involved in the effort, the purpose of which is to bolster the growth of the high-tech sector across China. Specific sectors that will benefit include information technology, energy, pharma and environmental.
China isn’t spending all its money in one place. Rather, it’s spreading the cash across 20 venture capital funds. One billion yuan (slightly more than 10% of the capital) will come from the Chinese government, with 1.2 billion yuan coming from the local governments. The rest is being kicked in by the private sector.