It seems that a lot of people don't know this, but China doesn't have the long term domestic capital it needs for its tech sector bc its funds are still primarily 3+2 or 5+2, not 10+2 (10 year life + 2 year extension) like most USD funds. VCs, tell me how you'd deploy a 3+2 fund?
Not to mention, LPs can be really unreasonable with terms and asking you to guarantee losses, high hurdles, etc. Govt LPs will typically have restrictions on geography of investment (ie, 50% must go to my district!). So, until those things change, USD will outstrip RMB funds.
And if you didn't know before, you probably know now after Didi fiasco that it's much harder to go public in China (aside from super illiquid OTC options) than in the US, so your exit mechanisms aren't there either. All hard problems to solve.
Anyways, just wanted to point this out bc I'm tired of reading all the "China is decoupling now that it's got a lotta money" takes that are just wrong. If it does want to, it's cuz of cyber/data security & prob tensions, like I've been saying.
PS I raised money as my job before.
PS I raised money as my job before.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
