China's start-up funding is still booming, $37 billion ploughed in during first half of year

The flood of money comes despite concerns in some quarters that Chinese start-ups are overvalued, reports Tech in Asia

It’s hot, steamy, and sometimes stormy right now in China as rainy season segues into summer – and the nation’s tech industry is feeling pretty much the same way as more money than ever is flooding into its start-ups.

Investors put a record $37.2 billion into China’s young tech firms in the first six months of the year, shows the Tech in Asia Database. That’s just over double the tally in the same period last year.

The flood of money comes despite concerns in some quarters that Chinese start-ups are overvalued — see the ease with which Uber arch-rival Didi Chuxing pulls in multi-billion-dollar funding rounds every couple of months so far this year. That creates a situation in which it’s tough for institutional investors to make returns on their inputs.

“Rising tide raises all boats — so in this situation, even winners have to raise more capital in order to ward off losers,” says Kay-Mok Ku, a partner at Shanghai-based Gobi Ventures. And so even the losing start-ups “now have access to competitive capital which may not have been available before”.

Despite all that extra cash flying around, the experienced venture capitalist sees it as simply part of the ebb and flow of the economy.

“The global macro environment is in a period of enhanced liquidity so any asset class that has the promise of generating potentially attractive returns will draw in investors,” Kay-Mok says, adding, “Start-up investment is probably in that situation although we have no way of knowing if we are in a bubble until after the fact.” This is an excerpt from Tech in Asia. You can read the full article here