Venture Capital funding in China stares at a sharp drop of 26.8% during Jan-Oct while India shines: GlobalData

India sees surge in Venture Capital funding as China experiences sharp decline

India has witnessed a significant increase in Venture Capital (VC) funding, contrasting with a sharp 26.8% decline in funding value in China during the first ten months of this year, according to a new report.

Between January and October 2024, India has seen a surge in investor interest, with the country drawing a substantial share of global venture capital. Meanwhile, in China, 2,116 venture capital deals were announced, totaling $28.2 billion — marking a steep drop in funding value compared to previous years.

This trend highlights a shift in regional investment dynamics, with investors increasingly focusing on emerging markets like India, while China’s once-dominant position in venture capital funding faces challenges amidst economic uncertainties and regulatory pressures.

An analysis revealed that between January and October 2023, China saw the announcement of 2,731 venture capital deals, with a total disclosed funding value of $38.5 billion. However, the number of VC deals valued at $100 million or more dropped significantly, from 70 in the same period of 2023 to just 50 in January-October 2024.

“This represents a year-on-year (YoY) decline of 22.5 percent in VC deal volume, whereas the total disclosed funding value fell by 26.8 percent,” according to GlobalData, a leading data and analytics company.

“Crackdown on companies coupled with the ongoing conflicts, uncertain market conditions, and economic challenges have weighed heavily on investor sentiment,” said Aurojyoti Bose, lead analyst at GlobalData.

This can also be understood from the fact that China witnessed a decline in the number of big-ticket deals during January-October 2024 compared to January-October 2023, Bose mentioned.

China accounted for 15.4% of the total number of VC deals announced globally from January to October 2024, while its share of the total funding value stood at 12.9%.

Despite a decline in funding, China continues to hold a significant position in the global VC landscape, ranking just behind the United States in both deal volume and value, according to Bose.

In contrast, venture capital investors in India are increasingly focused on traditional sectors such as fintech, electric vehicles, and consumer technologies. The country’s strong demographics, robust economy, and vibrant capital markets are key drivers of this growing investor confidence.

In October 2024, India saw private equity and venture capital investments totaling $4.7 billion across 91 deals, marking a 40% increase from September. Credit investments led the deal types, followed by growth investments, as noted in the IVCA-EY monthly PE/VC roundup.

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