Billion dollar funding rounds in China’s alternative lending sector. All is well? Or is it not?
China leads the way in FinTech funding for Q1’16
The first quarter of 2016 saw a spurt in terms of funding in the FinTech space with a total of $6.7B being pumped into the sector globally. Interestingly, of the total dollar invested in the sector, over $3.37B accounted for the investments in China.
Alternative lending grabs over 60% of China’s FinTech funding
Of the $3.37B more than 60% of the funding has been into the Alternative Lending space with notable rounds like Lufax’s $1.2B raise and $1B raise by JD Finance, both the rounds coming in as early stage investments.
Taking a closer look at the Alternative Lending space in China, the sector saw a total of 14 investment rounds of which 12 were early stage investments. Evidently, investor interest in the segment is still high owing to the large number of early stage rounds the sector continues to see.
Below is a list of the early stage investments in the sector with funding rounds < $100M
| Company | Funding | Stage | Investors |
| Xiaogouqianqian | Undisclosed | series a | – |
| Roadoor | Undisclosed | series b | Saiccapital, Inesavc |
| Shoujidai | $35M | series b | Sequoia, Blue Lake Capital |
| Nongfadai | $13.9M | unattributed-early | – |
| STLC | $7.6M | series a | Tianshicapital |
| NewUnion | $7.6M | Series a | Kingsland.sg |
| Jiurong | $7.5M | Series a | Tian Ge |
| Renqidai | $3.07M | Angel | – |
| www.tracxn.com | |||
Investors betting big: Large early stage rounds
Of the 12 early stage rounds, Lufax and JD Financial’s raise of over $1B have been the most noticeable rounds in the sector for Q1’16
Below is a list of 4 Companies with $100M+ early stage rounds
| Company | Funding | Stage | Investors |
| Lufax | $1.2B | series b | Bank of China Group Investment, China Minsheng Banking Corp.ltd, Guotai Junan Securities Co, CDH Investments, Centennial Infant and Child Centre Foundation, BlackPine Private Equity Partners |
| JD Finance | $1B | series a | Ample-harvest, Sequoia, China Taiping Insurance, Javelin VP |
| Jiedaibao | $379.98M | series a | – |
| WeLab | $160M | series b | GVCGC, Khazanah Nasional Berhad, ING |
| www.tracxn.com | |||
Late stage funding rounds saw just two deals in Q1’16 for an undisclosed amount, namely Qufenqi & Damailicai.
All is not well?
Sources say everything is not as exhilarating as it seems. There have been multiple reports which have the following things to say:
- Multiple shocking frauds have occurred where it has been reported that P2P platforms absconded with investor’s money.
- One of China’s biggest P2P lending platform, Ezubao, turned out to be a ponzi scheme with over 95% of the projects being fake. Source
Inspite of all of the above happening, China’s Alternative Lending market has been able to attract investor interest, which shows the confidence investors have on this sector. How the sector is going to emerge is something that only future will decide.
Disclaimer: Reports tell that funding numbers announced by some companies in China are inflated. So read these with a pinch of salt. Funding activity is captured only for the rounds which were made public.