Global Venture Capital Funds Fall 30% as China Drags Down Markets

(Bloomberg) Global Venture Capital Funding Falls 30% in Q1 Global venture capital investment continues to languish as investors remain cautious amid a sluggish economy and a downturn in stock market debuts.

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According to data collected by research firm Preqin, the Chinese market fell 401 TP3T and the U.S. market fell 291 TP3T. In the first three months, total aggregate funding for startups around the world shrank to $57.8 billion.

The figures show that investors are worried about a slowing economy and worsening inflation and the impact of these factors on young companies. While new technologies such as generative artificial intelligence have attracted capital, global venture capital investment fell last year to its lowest point since 2017.

According to Preqin, China's investment in AI companies nearly doubled to $4.2 billion in the first quarter, while China's entire risk investment bets fell to $11.8 billion. This is the lowest quarterly amount since the first quarter of 2020.

Read More Billionaires and Bureaucrats Mobilize China and U.S. in Artificial Intelligence Race

Two of China's 19 biggest deals in the first quarter were investments in emerging startups Moonshot AI and MiniMax, each valued at billions of dollars.

The Chinese government has made research in cutting-edge fields such as artificial intelligence a priority in the coming years, vowing to mobilize the country in an effort to reduce its dependence on Western technology. Both Beijing and Washington are particularly interested in AI because of its military and commercial applications.

Like their Silicon Valley counterparts such as Microsoft, Chinese tech giants from Alibaba Group Holding Ltd. to Tencent Holdings Ltd. are developing their own large-scale language models while investing in startups such as Baichuan and Zipu.

"China is looking to artificial intelligence to counteract obstacles to economic growth, including slowing productivity growth and a declining working-age population," said Shawn Xiong, a senior analyst at Moody's Ratings. " However, implementation will require significant investment and companies face execution risks."

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