ZhenFund, the angel investment fund founded by angel investor Xu Xiaoping and later joined by Sequoia Capital China, unveiled its findings on China’s tech startup ecosystem as of 2012.

There are 309 Chinese angel investors that did at least two deals, making the total to 747 deals, and committed over one million yuan in startup funding in 2012. For 20% of those deals, some of them took more than 50% of the company! ZhenFund, however, saw the strategy declining as Chinese angel investors were becoming more savvy. Mobile Internet, e-commerce and consumer services are still the top areas. 50% of them report returns of 30% and 18% report 200+%.

60% of angels would exit by selling shares to VCs. However, VC/PE market saw 40% – 50% YoY decline in both deals and amount of investments in 2012. The causes include poor performance of Chinese tech stocks on US markets, exit bottleneck, changes in macroeconomic and political climate, and that investors stopped burning money through in hot sectors such as group buy, according to ZhenFund.

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Tracey Xiang

Tracey Xiang is Beijing, China-based tech writer. Reach her at traceyxiang@gmail.com