China Wins VC Gold in 2Q08 as Investment Doubles to $1.37 Billion, Highest Quarterly Total Since 2003

   Dow Jones VentureSource: Total Boosted by $430M Mega-Deal; Information

  Services, Media & Content Remain Hot; VCs Doing More, Bigger Later-Stage

                                   Deals



    BEIJING and SHANGHAI, China, Aug. 19 /EMWNews/ -- The second quarter

of 2008 saw venture investment in Mainland China surge to its highest level

in five years as venture capitalists put nearly $1.37 billion into 71

deals, more than double the $662 million invested in 69 deals during the

same period last year, according to the China Quarterly Venture Capital

Report released today by Dow Jones VentureSource

(http://venturecapital.dowjones.com). One deal -- the $430 million

later-stage round for Beijing-based Oak Pacific Interactive, which provides

an Internet platform for Web 2.0 communities -- accounted for 31% of the

region's investment total.



    "Even when we remove the $430 million deal from our statistics, the

China region still recorded its highest level of venture capital investment

since the third quarter of 2003," said Jessica Canning, Global Research

Director for Dow Jones VentureSource.



    "In all, some $968 million, or 71% of all capital invested in China in

the second quarter, went to companies in the 'information services' and

'media, content and information' sectors." Ms. Canning added. "By

comparison, in the U.S., only 12% of venture capital investment went into

these areas during the second quarter."



    In total, the report found that China's Information Technology (IT)

industry accounted for the most deals and investment in the second quarter

with 28 deals garnering $899 million. This is a 184% increase over the $316

million invested in 34 IT deals in the second quarter last year. In

particular, China's "information services" sector, which is where Oak

Pacific Interactive falls, saw 17 deals completed in the quarter for $805

million, a five-fold increase over the $161 million invested in 15 deals in

the space during the second quarter of 2007.



    Elsewhere, Dow Jones VentureSource found that the Consumer Services

industry, which includes the "media, content and information" sector, saw

17 deals garner a record $246 million in the quarter, up 34% from $183

million invested in eight deals last year. The Business & Financial

Services industry saw 13 deals close in the quarter, garnering $99 million,

25% less than the $132 million invested into 17 similar deals over the same

period in 2007.



    Health Care still remains a small investment industry in China, as the

second quarter saw only three biopharmaceutical deals close, accounting for

$13 million. This is 28% below the $18 million invested in five health care

deals in the second quarter of 2007.



    "Larger deals drove investment in the second quarter as the median deal

size in China reached $10 million, the highest total we've seen to date,"

said Ms. Canning. "Nearly 98% of all capital invested during the quarter

went to companies that are already profitable or generating revenues. This

is due in large part to the significant amounts of capital China-focused

venture funds have raised over the past 18 months. VCs have to invest

larger and larger amounts and they're looking to back later-stage,

established companies which are seen as lower in risk than early-stage

companies."



    The majority of capital invested in the second quarter went to

developed and later-stage companies, according to the report. Even so,

smaller, early-stage deals were more prevalent, as seed and first rounds

made up 52% of all venture rounds in the quarter, which is down from 65% in

the second quarter of 2007. Second rounds made up 20% of the deal count, up

slightly from 19%, and later stage rounds accounted for 21%, up from 7%.



    For more information or to arrange a demonstration of Dow Jones

VentureSource, visit http://venturecapital.dowjones.com or call

866-291-1800.



    The investment figures included in this release are based on aggregate

findings of Dow Jones VentureSource's proprietary Chinese research. This

data was collected by surveying professional venture capital firms, through

in-depth interviews with company CEOs and CFOs, and from secondary sources.

These venture capital statistics are for equity investments into

early-stage, innovative companies and do not include companies receiving

funding solely from corporate, individual, and/or government investors. No

statement herein is to be construed as a recommendation to buy or sell

securities or to provide investment advice. Copyright (C) 2008, Dow Jones

Financial Information Services.



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