Are Chinese Blockchain Venture Capital Firms Back In The Crypto Game?


Most Chinese blockchain-focused venture capital firms deserted the market following the crypto crash of 2018. A large majority are set to return as blockchain adoption in China booms.

Chinese blockchain venture capital firms are set for a resurgence, that will help make up for the tragedies of last year’s crypto crash. This comes after the Chinese government advocated for increased blockchain adoption all over the massive country.

Good results are already being recorded. For instance, in the first half of 2019, Chinese blockchain startups were able to raise no less than $368 million through 71 funding deals. This data comes from 01Caijing, one of the more respected Chinese financial data tracking firms.

Chinese Blockchain Firms Fly High!

Compared to the previous years, Chinese VCs can more easily raise the money needed for their operations and expansion. An example is Kinetic, which began operations in 2016 and is based in Hong Kong. According to reliable reports, it is on track to receive a sum in the 8 figures sometime next month.

Other Chinese crypto firms are also busily expanding and usually getting the funds to do so. The sense of optimism in the Chinese crypto sector is palpable and there is a widespread feeling that right now the only way to go is up. Chinese VC firms are also spreading out and diversifying into areas like bitcoin mining and secondary trading.

A prime example is Fundamental Labs. It boasts an impressive half a billion-dollar blockchain fund that backed the likes of Binance, Coinbase, and Canaan Creative. In May this year, Fundamental Labs plunked down $44 million on bitcoin mining. This amount can potentially boost the total hash rate of the bitcoin network by a minimum of 1,000 peta hashes per second (PH/s).

Not to outdone, Parallel Ventures founded by Yizhou Zhu has poured heavy money into the purchase of bitcoin mining equipment. The amount invested is said to be around $15 million and the purchased equipment is reputed to have a computing power of around 300 PH/s.

The Crash Of 2018

While the new deals and capital inflows/outflows are encouraging, they fail to impress when compared to the deals of 2018. The 71 deals recorded this year represent a 67% drop when measured by dollar value. And what’s more, the number of firms in active operation has dropped and most are cautious about engaging in new investments. The present value of deals has decreased too.

Professionalism By Force

One unintended consequence of the crash is that it forced the surviving firms to be more professional and take proper account of risks. It also compelled them to find a sustainable method of doing business and instilled in them the importance of due diligence in all business transactions.

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