Many VCs complain about valuation of Chinese Internet startups. In its latest round of fund raising, valued itself at US$800 million.

“And that is before the money of the new round of investment come in,” said a VC. is a  review website where consumers share their experiences of about restaurants, nightclubs, golf courses, and so on.  It was found in 2003 and currently it has over 1 million restaurants and other places reviewed in its database. It gets most of its revenue from advertising.  And recently, it also jumped onto the Groupon wagon, and launch its grouping buying business.

Whether US$800 million is a too expensive price tag for Dianping might be arguable.  But as the size of most VC funds grow, so as their appetites.  Rather than funding smaller startups, most of they prefer putting their money to later stage companies.  So that, the investment size can be larger and the risk of complete failure decrease.  The end result is everyone chasing the same few hot companies in the market, and valuation surge, to sometimes a ridiculous amount.

Author of Red Wired: China's Internet Revolution, the first book to completely survey the nature of China's internet. ( She previously was the lead China technology reporter...

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