China has been experiencing a startup boom over the past couple of years thanks to how easy it is for these companies to secures series A and series B funding. However, reaching the almighty series C round may prove to be much, much harder. According to Chinese venture capitalist Ran Wang, hundreds of Chinese startups are going to be left without series C funding this year for a number of reasons.
Startups in China raising series A and series B rounds found it exceedingly easy to secure funding in the past two years. Evaluations skyrocketed and early stage startups repeatedly made headlines with their “tens of millions of dollars” in investment. It happened so often we couldn’t keep up with writing about them all. But the fortunes of all those startups lucky enough to fundraise in an overheated market are about to change, according to one prominent investor. Ran Wang, founder of Chinese venture capital firm ECapital, earlier this week published an article in China’s Entrepreneur Magazine that predicts tough times ahead for growth-stage startups in China. 90 percent of those startups who soared through their series A and series B rounds will not be able to raise series C rounds, Wang writes.