Bulletins

China’s tech startups raised a record $131B in 2021 despite crackdown

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Image: Mathew Schwartz / Protocol

Many observers believed China was killing its tech golden goose and hurting its entrepreneurial future with year-long regulatory strikes against the country’s tech giants. But to their surprise, China’s startups not only held up but thrived in the past year: Together in 2021, they received a record $131.6 billion in VC funding, Bloomberg reported Sunday, about 50% higher than the 2020 figure.


The stunning growth was achieved despite regulatory crackdowns on the country’s Big Tech giants such as Alibaba, Meituan and Tencent, as well as the entire online learning industry. But startups and venture firms were quick to see which direction the regulatory wind was blowing: They doubled down in investments in key tech sectors, such as chips, robotics and SaaS products, and steered clear of the soft internet business that was no longer in favor.

According to Bloomberg data, China still lags behind Silicon Valley in VC funding: U.S. startups received their own record-smashing $296.6 billion in 2021, more than doubling their Chinese peers’ performance. However, in several key areas where China and the U.S. compete for innovations and resources, China has surpassed the U.S. in terms of VC investing. Chinese semiconductor makers, startups and integrated circuit designers received $8.8 billion from VC investors, according to Preqin data, significantly more than the $1.3 billion their U.S. peers raised during the same year.

Analysts believe the investing shift away from consumer internet platforms and toward expanding sectors such as semiconductors, health care, enterprise software and advanced manufacturing will continue in 2022 and in years to come as China diversifies its tech ecosystem. As tech experts told Protocol earlier, Beijing’s tough stance on Big Tech by no means threatened the country’s booming startup scene. Actually, “China's entrepreneurial fervor is at an all-time high,” said Rui Ma, a China tech investor and the creator of Tech Buzz China.

Correction: this story was updated on Jan. 10, 2022 to put the correct $131B figure in the headline.

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