LIVE FROM CES ASIA, SHANGHAI: The investment climate for technology startups in China over the past two to three years has been on a rollercoaster ride, with valuations of startups soaring beyond the level in Silicon Valley a year ago, only to enter a “winter” period last fall.

GGV Capital managing partner Jenny Lee said series C funding in the country is way down, for example requests for $1 billion in late-stage funding last year plunged to $500 million in Q1.

Lee, speaking yesterday on a panel discussing China’s investment climate, said the country has entered a winter, which impacts everyone. “It’s a tough market and more of a challenge to find the gems,” she stated, noting that it’s back to reality from the heady days when young entrepreneurs weren’t interested in mundane activities such as college.

“But it’s a great time to start; the quality of entrepreneurs has increased. I love the winter,” she gushed.

Having said that, Alan Song, managing partner at SBCVC, commented that while the Chinese economy is slowing to 6-7 per cent GDP growth, he still sees huge growth opportunities. “Chinese deals are still quite high compared with Silicon Valley. The potential is still high, especially in necessity sectors such as healthcare and renewable energy.”

Lee agreed that there is definitely still a premium for quality companies. The China market is two to three times larger than the US, thus the higher valuations.

Ben Bateman, director of strategic partnerships at Indiegogo, said that because of the lead time in completing deals, “we’re still in a bit of a bubble with advanced firms looking to go international. But the full impact [of the downturn] hasn’t been felt”.

He pointed out that he’s seen a shift away from a focus on the domestic market to a foreign market push.

Lee noted that unlike a decade ago, the US and China are now much more interlinked, which is part of the trend towards commerce globilisation.

E-commerce now accounts for 15 per cent of gross merchandising volumes (GMV) in China compared with just 7-8 per cent in the US. India is expanding rapidly in e-commerce and is learning from China’s experience, she said.

A second major trend she sees, which others at CES Asia have commented on, is online and offline service integration. We’re seeing this in car-hailing firms and room-sharing services, she said.