A government crackdown on Chinese banks' riskier investments could lead to a "capital winter" as venture capitalists find it harder to raise funds, according to analysts. Q1 2018, investors poured CNY1.2tn ($180bn) into private Chinese firms, while Last year saw a 30% year-on-year drop to CNY206bn. Insiders have predicted investment levels could fall by 80% by the end of the year, with company valuations tumbling by 30%. The clampdown means more technology firms are turning to initial public offerings for funding, but analysts said Xiaomi's falling far short of its $100bn target demonstrated a similar cooling of appetite.
A government crackdown on Chinese banks' riskier investments could lead to a "capital winter" as venture capitalists find it harder to raise funds, according to analysts. Last year, investors poured CNY1.2tn ($180bn) into private Chinese firms, while Q1 2018 saw a 30% year-on-year drop to CNY206bn. Insiders have predicted investment levels could fall by 80% by the end of the year, with company valuations tumbling by 30%. The clampdown means more technology firms are turning to initial public offerings for funding, but analysts said Xiaomi's falling far short of its $100bn target demonstrated a similar cooling of appetite.