What slowdown? China’s flagging economy hasn’t affected startup fundraising

There’s no denying that China’s economic growth isn’t what it used to be. In fact, in 2015 China grew at its slowest rate in 25 years. And of course, in the past year we’ve seen China’s stock markets crash twice – once in the summer of 2015 and then again at the beginning of 2016.

By mid-2015, many experts were warning that winter was coming for Chinese startups, or even that winter was already there. The general consensus has been that the slowing Chinese economy means lower valuations and a slowing investment pace, especially when it comes to big-money rounds.

But is that general consensus wrong? Tech in Asia data shows that there’s still plenty of VC money up for grabs in China’s tech scene, and China’s macroeconomic situation doesn’t seem to have influenced the scene much at all.

Money keeps flowing

If China’s economic were seriously affecting the capital available in the startup scene, we would naturally expect to see less money being thrown around as the economic issues became more apparent. But thus far, Tech in Asia data shows, that hasn’t been the case.

If you look at the gray moving-average trendline, it’s apparent that China’s market crashes may have caused some minor dips, but overall there’s still significantly more VC capital flowing to China’s startups than there was a year ago. China’s VCs followed the market bubble up, but they don’t seem to have followed it back down. This chart, which maps the above chart against the Shanghai Composite Index during the same time period, may help demonstrate that:

Take a gander at the trendline here, and you can see that while the Shanghai Composite sunk back to below early 2015 levels after both market crashes, VC funding to China’s tech startups hasn’t come even close to seeing that sort of drop.

Early-stage dropoff?

OK, so China’s economic slowdown hasn’t really affected how much VCs are putting into tech startups. But has it affected where they’re putting that money? You might be inclined to guess that the slowdown has VCs more cautious, inspiring them to put more of their money into later-stage startups while investing less frequently in seed and series A rounds. But again, the data suggest that simply isn’t the case.

Zooming in

Are startups winter-proof?