2015 was a big year for startups in China. Everyone knows that. VC money was coming fast and easy – so easy that VCs were literally trying to convince people with jobs at China’s top tech companies to quit and do startups. And until the cracks started showing with the summer stock market crash, China’s economy was growing like a weed, too. It was a good time to found a startup, especially a tech startup. So just how startup crazy did China go?
According to state media, an average of 12,000 new companies were registered each day in China last year. Of course, not all of those were new tech startups, but the tech and internet sectors were among the hottest in a year that saw more than 4 million new companies hit the books in China.
That number comes courtesy of China’s State Administration for Industry and Commerce (SAIC), which credits recent government reforms that eliminated red tape for the significant growth. Two years ago before the reforms, SAIC says, China was barely registering half that many new companies.
Although government reforms definitely played a role, there were other major factors that also influenced the spike, especially in the subcategory of tech startups. VCs poured an absolutely ungodly amount of money into China in 2015, and even after the summer stock market crash, China’s venture capital market in Q3 was still seeing 315 percent more investment when compared to the year before. Seriously, this is pretty much what China’s VCs were up to in 2015:
And why shouldn’t tech investment numbers have grown? China gained almost 100 million new internet users in 2015, and that trend isn’t about to stop. Currently, China has around 700 million total web users, meaning that there are another 600-million-plus future internet users still waiting to enter the market. Given the massive growth over 2015 and the potential for significant future growth, it’s not hard to see why the venture capital floodgates opened.
It should come as no surprise, either, that the rampant spending in China’s startup scene has led many to wonder whether there’s a tech bubble in China that’s ready to pop. Nothing popped in 2015, but many in China’s startup scene warned that a slowdown was coming. It seems likely that even if no bubble pops in 2016, we may not see the same kind of crazy growth in the number and funding of tech startups this year.
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