Crunchbase (CB) analysis reported between almost 290bn in total global funding volume so far this year, almost double the whole of last year.

The US and Europe venture markets were up 130% and 190%, respectively, while Latin America increased 450% to reach $8bn.

China, meanwhile, was up about 60% with 10 new startups with $1bn-plus valuations (so-called unicorns).

However, when dealing with Chinese numbers it is always worth remembering Sun Tzu, China’s ancient master strategist’s advice, is often utilised: “Appear weak when you are strong, and strong when you are weak.”

Former China premier Deng Xiaoping espoused the wisdom in its foreign policy: “Hide your strength, bide your time.”

Now, the philosophy seems to be taken in the corporations’ approach to investing.

As Alexander Kremer, partner at Picus Capital, in a Medium post noted: “I felt all numbers were significantly lower than my personal perception.”

Kremer said this was due to many deals in China are never announced, or not captured by western media or misunderstood by them.

Kremer illustrated: “Chinese data-providers recorded 50+ deals for early-stage investor Plum Ventures to date while CB only captured five.”

He added: “[First six months of] 2021 was the strongest first-half in the past three years. Tracking a selection of 25 leading large funds, their numbers of deals is up YoY [year-on-year] 100%+ and the investment volume is up 80%+ (total of $35bn just for these large funds)….

“Tencent did more than 160 deals, closely followed by Sequoia China with ~150 announced deals so far this year, and, a bit behind, Matrix (~100)….

“China recorded around 40 new unicorns born in the first six months of 2021 (+13%)….

“Those numbers probably come closest to the overall sentiment in the industry.”

This is the opposite from the 2016 to 2018 high water mark for Chinese venture investing when many of the rounds were overhyped in terms of deal valuations. Then, there was competition among Tencent and Alibaba to attract many of the best entrepreneurs into their ecosystems and to promote the cash raised and valuations in a bid to attract industry partners in.

The change in public perceptions has probably most to do with China’s increasingly authoritarian regime reining in its global champions.

As the Economist said in its week’s issue: “President Xi Jinping appears bent on disconnecting them from Western capital markets and controlling their data. Tencent and Alibaba, an e-commerce behemoth, have between them lost $340bn in market value since the crackdown began late last year. Days after its $67bn New York flotation, Didi found its ride-hailing app banned by Chinese data regulators. ByteDance has scotched plans to go public in New York.”

The country has some 3,400 multinationals, almost as many as America and western Europe combined, according to Bain, a consultancy. Although only about 10% (360 firms) report these revenues, they amount to about $700bn in 2020, compared with 250 large firms earning a total of $400bn in 2012, according to data from Bloomberg used by the Economist.

These China-based multinationals are using corporate venturing and mergers and acquisitions to pick up talent and technology in a bid to be profitable overseas and retain the earnings there for use if currency restrictions limit capital flows into and out of China.

If more of them follow the lead of Tencent, Alibaba, Xiaomi and Huawei then China’s foreign direct investment could soar even higher than its-world-beating $133bn last year. The role model is Tencent.

Tencent’s foreign sales have risen at an annual rate of 40% for nearly a decade, and now make up 7% of its huge top line, the Economist added, saying it was “the master of mini-dealmaking” even before today’s £919m deal to buy the UK-based games developer Sumo Group and take majority ownership after its 8.75% stake purchase in November 2019.

James Mawson

James Mawson is founder and chief executive of Global Venturing.