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China venture capital deal-making shows green shoots of recovery as funds hunt for bargains among coronavirus hit start-ups
- Investors wary after Luckin Coffee scandal, making extra channel checks
- Start-up valuations falling, down-rounds more common
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Nisa Leung, managing partner of venture capital firm Qiming, has just finished quarantining herself after travelling back to Hong Kong from the US after putting the finishing touches to a new US$1.1 billion fund to invest in Chinese start-ups.
Now Qiming is cashed up and ready to invest at a time when price tags on Chinese start-ups are falling.
“There is a great opportunity,” said Leung whose firm invested in high-flying smartphone maker Xiaomi and insulin supplier Gan & Lee Pharmaceuticals in the wake of the 2007-08 global financial crisis.
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Stock markets have tumbled since the start of the year as the novel coronavirus, that causes the Covid-19 disease, has killed upwards of 88,600 people and likely tipped the global economy into recession. The correction in publicly listed companies’ valuation has had a knock-on effect on the valuations that start-ups can negotiate privately.
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“Companies should expect more reasonable pricing and that raising capital will take them longer,” said Tony Zhang, a partner at China tech-focused investor Jeneration Capital that already has deals in an advanced state of preparation.
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