China’s changing regulatory environment isn’t stopping a venture capital frenzy

Investments are keeping one step ahead with a flurry of early-stage deals

Headlines from China concerning its technology market haven’t been kind in recent months. Not that they have been unfair.

The Chinese technology market has been rocked by a wave of regulatory actions in recent quarters that changed the business landscape amid crackdowns by the country’s government on other areas of national activity. Tech titans were hit with fines and business model shakeups — business model terminations, in the case of many edtech companies — while certain cultural items like celebrity fan culture and media were also taken to task.

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You might imagine that a broad push by a central government to more control both its national economy and mind wouldn’t be conducive to overall startup fundraising and activity. And yet.

When The Exchange recently looked into the Chinese venture capital market in the wake of some of its national government’s regulatory actions, things appeared surprisingly stable. Since then, data from CB Insights covering the full Q3 period has made an even stronger case: Putting aside a single outsized 2018 round, the third quarter of 2021 was the best three-month period for Chinese startups ever.

And not just in the value of the rounds they raised — they also raised more rounds.

Subscribe to TechCrunch+We were surprised. But that’s what makes data useful: No matter what you expect, what actually happened will set your thinking straight.

This morning, we’re digging into the data, looking at leading rounds to better understand where the money is going, and — with some help from TechBuzzChina’s Chinese technology analyst and angel investor, Rui Ma — trying to get our heads around what’s going on.

Let’s talk China!

China’s monster Q3

Sure, the value of Alibaba stock fell from a 52-week high of $319.32 per share to just $166.82. Didi dropped from a recent local maxim of $18.01 to $8.24. And the value of Tencent Music collapsed from $32.25 — its last 52-week high — to just $7.72 per share (all data via Yahoo Finance).

But leading tech companies’ plummeting stock prices have done seemingly nothing to blunt interest in Chinese technology startups.