Market Insights Financial Capital Raising Traditional Capital Raising

Venture Debt - China

China

The country in China is projected to see Total Capital Raised in the Venture Debt market market reach €9.02bn by 2024.
Traditional Venture Debt is the dominant player in the market with a projected market volume of €8.09bn by 2024.
When compared globally, the United States is expected to generate the most Capital Raised, with €20,780.0m in 2024.
Amid China's growing startup ecosystem, Venture Debt is gaining popularity as a strategic capital-raising tool for innovative companies in need of non-dilutive financing.

Key regions: Brazil, Germany, United Kingdom, Singapore, China

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Analyst Opinion

The Venture Debt market in China has been experiencing significant growth in recent years, driven by customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors. Customer preferences in China have played a key role in the development of the Venture Debt market.

Chinese entrepreneurs and startups are increasingly looking for alternative financing options beyond traditional bank loans or equity investments. Venture Debt provides an attractive solution as it allows companies to raise capital without diluting their ownership stake. This appeals to entrepreneurs who want to maintain control over their businesses while still accessing the necessary funds for growth.

Trends in the market have also contributed to the growth of Venture Debt in China. The country has seen a surge in entrepreneurial activity, with a growing number of startups emerging in various sectors. These startups often have high growth potential but may not yet be profitable or have significant assets to offer as collateral.

Venture Debt fills the financing gap by providing non-dilutive capital based on the future potential of the company. Additionally, the rise of venture capital and private equity investments in China has created a favorable ecosystem for Venture Debt, as these investors often require debt financing alongside their equity investments. Local special circumstances in China have further fueled the development of the Venture Debt market.

The Chinese government has been actively promoting innovation and entrepreneurship as part of its economic growth strategy. This has led to the establishment of various government-backed funds and initiatives to support startups and small businesses. Venture Debt has been recognized as a valuable tool to support these efforts, providing an additional source of capital for companies in need of financing.

Underlying macroeconomic factors have also contributed to the growth of Venture Debt in China. The country's strong economic growth and increasing middle class have created a favorable environment for entrepreneurship. As more individuals aspire to start their own businesses, the demand for alternative financing options has grown.

Additionally, the low interest rate environment in China has made debt financing more attractive, as companies can access capital at relatively low costs. In conclusion, the Venture Debt market in China has been growing rapidly due to customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors. As Chinese entrepreneurs and startups continue to seek flexible financing options, Venture Debt is expected to play an increasingly important role in supporting their growth and innovation.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.