China’s Startup Scene Collapses As Investors Pull Out

The number of new companies started in China has plummeted as venture capital (VC) fundraising in the country has collapsed, according to a recent Financial Times report.

The number of companies founded in China so far this year is only 260, far below 2023’s total of 1,202 and down a staggering 99% from a peak of 51,302 in 2018.

Founders, investors, and VCs are painting a grim picture of China's startup landscape, Jason Ma reported for Fortune.

“The whole industry has just died before our eyes,” a Beijing-based executive told FT. “The entrepreneurial spirit is dead. It is very sad to see.”

Data from IT Juzi shows that the number of companies founded in China so far this year is only 260, far below 2023’s total of 1,202 and down a staggering 99% from a peak of 51,302 in 2018.

VC fundraising has also taken a nosedive. Yuan-denominated funds have raised $5.38 billion year to date, compared to a peak of nearly $125 billion in 2017.

Dollar-denominated funds have raised less than $1 billion, a sharp drop from $17.3 billion in 2022, according to Preqin. The sharp decline in startup activity comes as China’s economy continues to slow, with recent data pointing to a broad-based economic cooldown.