17Startup, a program that started collecting Chinese startups from 2011, reports its findings as of 2012. Its site added 3595 startups in 2012 alone. Below are top ten categories,

  1. Online/mobile travel. Of a total of 231, 11 received funding.
  2. Mobile games. 11 out of 209 obtained funding.
  3. Infant & Kids. Of a total of 158, 66% are for kids and 34% for newborn babies. 15, approaching 10%, received funding.
  4. Health & Medical services. 8 out of 106 received funding.
  5. Social e-commerce. 7 of 103 received funding.
  6. Online education. 7 out of 93 received funding.
  7. Enterprise software. 4 of 92 received funding.
  8. Picture services. 13 out of 72 received funding.
  9. Dating. 5 of 68 received funding.
  10. Coupon services. 4 of 67 received funding.

Out of the total of over six thousand startups it collected in the past two years, 27% are e-commerce sites, 25% on mobile and 13% social media.

Chinese Startups by Category

Locations

Beijing, Shanghai and Guangdong province have been the top three areas in terms of numbers of startups. Beijing’s coverage, still No.1 though, declined from 49.5% in 2011 to 42%. Shanghai takes 18%, the same with one year before, and Guangdong takes 14%, with 2% in increase.

Since costs in first-tier cities are high and it gets harder to get investments, more entrepreneurs turn to second-tier cities. Preferential policies by local governments, such as Sichuan, Jiangsu and Zhejiang provinces, also attractive to entrepreneurs.

Investments

Only 4.62%, 303 startups, of the total on 17startup obtained investments in 2012. Most investments went to early-stage companies. Of all the investments, 36% are from angel investors, 33% are series B, and 15% are series B.

7% are acquisitions and 4% are strategic investments by big companies. Both of which didn’t happen often in China previously but are expected to happen more in the future.

Mobile and e-commerce lured a combined 45% of the total investments. Below are investments as percentage in different categories:

Investments by Category

 

Top ten investment organizations by numbers of investment cases:

  1. Innovation Works:  50 startups or products.
  2. Sequoia China:  36
  3. IDG Capital Partners:  35
  4. Tisiwi:  32
  5. PreAngel:  29
  6. GSR Ventures:  28
  7. Zhenfund:  26
  8. KPCB China:  25
  9. DCM:  21
  10. Matrixpartners:  18

Only a small number of Chinese startups went public in 2012. YY (NASDAQ:YY), VIPshop (NYSE:VIPS) and China Mobile Games and Entertainment Group (NASDAQ:CMGE) went listed in the U.S.. TTG went public in Australia. Ourpalm (SZ:300315) and Jiangsu Hoperun Software (SZ:300339) went listed in mainland China.

Death & Pivot

10.37% of startups, 680, on 17Startups stopped operation in 2012. The 58 dead sites 17Startups tracked have an average life of 13.47 months. Of all the dead services, 26% are on mobile, 25% on e-commerce and 19% social media.

52 startups, 0.8% of the total, pivoted in 2012. Changba, a mobile karaoke app, is included and is one of the most successful. The app was built by a team led by Chenhua, a serial entrepreneur, who dumped the social e-commerce service that were launched one year earlier than Changba.

Papa is another example that was developed after the team found they couldn’t go any further with Dianidan, a tumblr copy, they built previously.

Startups set up by big company alumni

A majority of well-known Chinese startups are founded by people from old, big internet companies, Alibaba, Baidu, Tencent, Netease, Shanda, Sohu, Sina, Kingsoft, Huawei and Google China.

Below are numbers of startups set up by those alumni,

  1. Alibaba: 60 startups
  2. Tencent: 35
  3. Baidu: 34
  4. Shanda: 52
  5. Netease: 38
  6. Huawei: 21
  7. Google China: 34
  8. Kingsoft: 30
  9. Sohu: 27
  10. Sina: 37