After Painful 2018, Chinese Blockchain VCs Are Getting Back Into the Market

During the first six months in 2019, Chinese blockchain startups raised $368 million via 71 funding deals, according to Chinese financial data tracker.

Fundamental Labs, a $500 million-under-management blockchain fund that has backed Coinbase, Canaan Creative and Binance, invested.

"Probably less than 10 percent of Chinese crypto investment funds have survived today ," estimates Howard Yuan, managing partner of Fundamental Labs.

By Yuan's count, there were probably nearly 1,000 early-stage blockchain investment funds during the peak in 2018, including non-institutionalized individual vehicles and informal cryptocurrency capital pool.

"At blockchain parties in Beijing last year, you could see people from over 50 funds mingling. Now, I can count all the funds in Beijing with less than my two hands."

Bonnie Cheung, a venture partner of 500 Startups, told Coindesk "Less than 50" blockchain early stage funds are based in China while Parallel Ventures' Yizhou Zhu puts the number at "Around 20.".

Many funds were established by blockchain veterans who made money from mining, trading, and operating exchanges.

Funds are struggling to find good investment targets, despite falling valuations for blockchain startups.

After the baptism by fire of the last market cycle, Chinese blockchain venture firms are maturing and evolving to find more sustainable paths, investors say.

"Before the market crash, investors didn't evaluate projects carefully because token prices kept going up," said Xin Jiang, an investment manager at Fenbushi Capital, one of the earliest and biggest venture funds in China established in 2015.