Taxi-booking apps experienced booming development in the past year. Investors are still bullish on the taxi app market and continue to invest heavily in the sector, despite the facts that the sprawling growth of the industry is highly dependent on capital injections and none of the leading companies generate any profit so far.

Why Chinese investors are still willing to invest in this sector? Zhuang Minghao, investor and analyst at Matrix Partners China, discussed this question on Zhihu, a Quora-like site.

According to Zhuang, two crucial considerations for venture capitalists in determining whether to invest in a company are team (background, experience, execution, and complementarity) and direction (market potential, policy and competitors). The investment rounds of domestic taxi apps can be explained from these aspects.

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Emma Lee

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com.