When China’s government launched a sweeping crackdown on the technology industry over the summer, panicky venture capital investors stopped writing checks and startup valuations began to plummet. It looked like the country’s historic innovation boom was over.
Then a strange thing happened: In just a matter of weeks, the startup machine kicked back into gear. In fact, venture capital investments in China reached $130.6 billion for 2021, according to the research firm Preqin. That set a new record for the country — about 50% higher than the $86.7 billion total the year before.
The performance is stunning given the devastation wrought on the industry’s marquee players. Alibaba Group Holding Ltd., Tencent Holdings Ltd., ByteDance Ltd. and ride-hailing provider Didi Global Inc. were all battered in turn over the past few months. The entire online tutoring sector, once a hot spot for venture dollars, was forced to turn nonprofit.