China VCs raise $3bn in second quarter

More than $1.2bn of venture capital funding was invested in local Chinese firms

Chinese venture capital firms had a record $3bn in funds available to invest during the second quarter of 2008.

More than $1.2bn of that was invested in local firms, with IT and hi-tech companies receiving more than half, according to local venture capital consultancy Zero2IPO Group.

During the quarter, 29 local and foreign venture capital firms set up a total of 40 venture capital funds. IT related investments were up compared to the previous quarter.

Almost half the investments were of $1m or more. Thirteen major deals that involved an investment of $20m or more comprised almost half of the total amount invested.

"Expansion-stage and late-stage enterprises both gained much more favour from venture capital, with expansion-stage firms accounting for over half of the total deals," the research firm said in a statement.

Of the $3.02bn in funds raised during the quarter, $1.69bn was controlled by foreign venture capital firms and $1.18bn by local firms.

With only seven foreign funds, compared to 31 funds established by local firms, the average size of foreign funds was considerably greater at $241m.

The total amount invested is growing at an average rate of 73.5 per cent per year, according to Zero2IPO.

"Venture capital firms prefer to invest either in start-ups or in elite, mature enterprises to share their stable revenue," the company said in a statement.

Zero2IPO gathers its data from 300 venture capital firms involved in the Chinese market.