New | China’s booming start-up culture lures venture capitalists in search of the next US$1b unicorns
The world’s No 2 venture capital market has had limited success in spawning young companies worth at least US$1 billion
China, the world’s second largest venture capital market, may have seen a record number of new start-ups last year, but it’s struggled on another abstract metric of success -- the output of unicorns, or young companies with a valuation of at least US$1 billion.
“It is a fact that many newly set up companies would fail. It is not just the case in the mainland China but many start ups in Silicon Valley in the US also have a lot of failures. It is not easy to find the unicorns,” said Young Guo, general partner of IDG Capital Partners.
The world’s leading unicorns ranked by valuation are Uber, Xiaomi, Airbnb, Palantir Technologies and Didi Kuaidi, Uber’s main rival in China, according to data tracker CB Insights.
“Sometimes you have some companies you think are unicorns but they eventually fail. So the unicorns sometimes are just illusion. As a venture capital company, we are meeting many new start-ups to try to find the unicorns for investment opportunities. However, the process is just like hiring staff. You may interview several hundred people for a job but eventually you would only hire one or two,” Guo said during a presentation at the 7th Asian Leadership Conference in Seoul. The South China Morning Post is a media partner to the conference.
“We do believe unicorns exist but it is just very rare,” he said.
