Startup fundraising in Greater China started off on a disappointing note in 2025 as escalating geopolitical tensions and stock market volatility dampened investor appetite.
Startups headquartered in mainland China, Hong Kong, Taiwan, and Macau raised less than $9.6 billion during January-March 2025, down 49% from Q4 2024, marking the second-lowest quarterly fundraising in recent years. The Q1 proceeds were only marginally higher than that of Q2 2024—which recorded a four-year low at $9.1 billion— according to DealStreetAsia – DATA VANTAGE’s latest report, Greater China Deal Review: Q1 2025.
On a year-on-year (YoY) basis, too, deal value was down 52.4% in the first quarter.
Deal value declines in Q1 amid trade tensions
Investors are seen reluctant to commit to big-ticket transactions amid profound macro uncertainty over the tariff war unleashed by Trump 2.0 on its global partners, particularly China.
The latest quarter failed to record a single billion-dollar investment amid a shortage of megadeals, or deals worth at least $100 million. At less than $4.2 billion, the overall funding into megadeals was at its lowest since Q2 2022.
In contrast, smaller-sized investments at the Series A and earlier stages hogged the limelight, accounting for 46.9% of the total deal count with 294 deals.
Sustained investor interest in early-stage transactions held up a fairly active dealmaking scene. With the completion of 627 deals in total, the deal count in Q1 grew 8.9% quarter-over-quarter (QoQ) and 2% year-over-year (YoY).
Semiconductor and auto deals continue to shine, but cheques get smaller
Despite market challenges, semiconductor startups continued their strong fundraising momentum with the completion of a record 120 deals in Q1, the highest since Q3 2023.
The deal count was up 25% QoQ and 11.1% YoY, making semiconductor the most popular industry among private-market investors in Greater China. However, investors were less generous in betting on the region’s homegrown chipmakers, as they funnelled just over $1.1 billion into these startups in the first three months, down 72.9% from the previous quarter and 58.1% from Q1 last year.
21 megadeals account for 43.8% of funds raised in Q1
In terms of overall deal value, auto & parts once again topped as the best-funded industry with 33 startups raising close to $1.9 billion in the quarter.
As electric and hybrid vehicle investing remains a thematic opportunity in Greater China, deep-pocket investors bankrolled a select few market leaders, creating four megadeals in the auto & parts space this quarter. Among them was new energy heavy trucks maker XCMG Auto Manufacturing, which secured 6.4 billion yuan ($886.9 million) in February to become the quarter’s biggest fundraiser.
IPOs in US, mainland China decline amid trade tensions and regulatory shifts
Trade tensions and domestic regulatory shifts have delayed a long-awaited recovery in initial public offering (IPO) activity by Greater China companies.
2025 started off slow with 46 IPOs raising short of $3.7 billion in Q1. The total IPO proceeds were down 40.1%, while the number of IPOs reduced by 27% from the previous quarter, according to Dealogic data analysed by DealStreetAsia.
The strict regulatory measures introduced in 2024 to raise the benchmark for IPOs in mainland China continued, setting a tepid pace for A-share IPO activity. In the US, IPOs by Greater China companies in 2025 also began cautiously against the backdrop of market uncertainties related to Trump’s punitive tariffs and other measures against China.
In Q1, overall IPO funds raised decline 40.1% from previous quarter
But there is a silver lining in Hong Kong, which retained fourth place in the competitive global IPO proceeds ranking in Q1. For IPO issuers from Greater China, Hong Kong’s Main Board remained their most favoured IPO location, with 12 new listings amassing over $1.6 billion in the quarter.
Building on an influx of large first-time share sales since late 2014, the city’s strong IPO market performance is expected to sustain despite heightened geopolitical tensions, as more Chinese businesses continue to seek international funds and global brand eminence.
The Greater China Deal Review: Q1 2025 report has extensive data on:
- Quarterly and yearly startup fundraising trends
- Top deals of Q1 2025
- Most favoured industries by venture investors
- Top IPOs by Greater China firms in Q1 2025 and pending large-cap IPOs
- Insights from prominent China-focused private market participants
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