I’ve been following the China tech industry on and off for almost ten years. In that time, I’ve seen quite a few booms and busts, but surprisingly, the conversation follows a clear pattern:

Looking at this phenomenon, I was struck by how little the public is aware of where VCs themselves get money. Who exactly is funding the funders? What impact do they have on startups?

Bottom line: After 15 years of rapid growth, government money (usually in the form of guidance funds) is drying up and VC firms themselves are finding it harder to close new funds. State-backed guidance funds are becoming pickier about who they work with, while non-government backers are also concerned more with cash flow and less with rate of return.

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John Artman is the Editor in Chief for TechNode, the leading English information source for news and insight into China’s tech and startups, and co-host of the China Tech Talk podcast, a regular discussion... More by John Artman