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c OMMUNITY NEWS

Following a Different Leader: e

Global In uence of China’s Venture

Capital-Backed Businesses

By the Stanford Center on China’s Economy and Institutions (SCCEI)

• Analysis of over 169,000 venture deals from 2000 to entrepreneurialism during this period. Finally, they
2019 across 88,267 firms in 152 countries reveals that assess the broader impacts of entrepreneurial
following the sharp rise of China’s domestic venture growth in emerging markets on local innovation and
capital industry in the 2010s, venture deals in other socioeconomic wellbeing.
emerging markets increased by between 26% and 42%.
Rise of the venture capital industry in China
• Growth in entrepreneurialism in other developing drives entrepreneurship in other emerging
countries occurred primarily in sectors where markets. The analysis finds that as China’s venture
sector capital industry rose in scale relative to the U.S.
China. throughout the 2010s, emerging market venture
deals also increased by between 26% and 42%.
• Only 2.5% of emerging market venture deals involve a This growth in emerging market entrepreneurialism
Chinese investor, and just 0.5% are backed exclusively those
by a Chinese investor. New entrepreneurship in sectors where China’s share of global venture
emerging markets is instead led by local investors U.S.
China.

in
other developing markets is characterized by a rise
and
where
led.

n 2001, 88% of global venture capital was invested
Iin U.S firms. By 2019, China accounted for 38% of the
worldwide total, while the U.S. accounted for 42%, even
though the level of investment in the U.S. increased Share of global venture capital investment
throughout the period. China’s sharp rise in the industry is
unprecedented for a developing country. China’s venture-
backed firms have often focused on solving different
last
regulatory
use
problems
the
influenced
entrepreneurship in other developing countries?

The data. The researchers used the Pitchbook database
to compile data on over 169,000 venture deals from 2000
to 2019 across 88,267 firms in 152 countries. The data Value of global venture capital investment
describe each company and information about each
financing round. They then compare trends in emerging Emerging market entrepreneurship occurs in
market entrepreneurialism before and after the sharp rise China.
of China’s domestic venture capital industry in the 2010s. The researchers compiled nearly 1,500 country-level
They use machine learning tools to categorize companies indicators from the World Bank’s World Development
into 266 sectors, grouped into 15 broader macro-sectors, Indicators database to create a “suitability index”
such as education technology and financial technology, to that measured how closely a developing country
assess which sectors drive changes in emerging market sector matched the socioeconomic conditions of its

37 AMCHAM SOUTH CHINA