Angel Investing in China

The following sections are included:

• What they say about the book …
• Foreword
• Preface
• Contents
• About the Authors

The following sections are included:

• The Charitable Origins of Angel Investment
• Angel Investment Introduced to Business Transactions
• The Global Spread of Angel Investment
• Notes

The following sections are included:

• Concepts of Angel Investment
• Angel Investment vs. VC Investment
• Financial Connotation of Angel Investment
• Notes

The following sections are included:

• The Valley of Death of Enterprises and Angel Investment
• Bottlenecks at the Early Development Stage of Enterprises
• Necessity of Developing Angel Investment
• Feasibility of Developing Angel Investment
• Notes

The following sections are included:

• Current Studies of Angel Investment in China
• Investigations and Secondary Data of Angel Investment in China
• Methodology of Research on China's Angel Investment
• Notes

The following sections are included:

• Pre-Financing Preparations
• Searching for Angel Investors
• Ways to Acquire Angel Investment
• Notes

The following sections are included:

• Project Source of Angel Investment
• Project Source of Angel Investment
• Pre-Investment Procedure for Angel Investment
• Post-Investment Management of Angel Investment
• Angel Investment Can Engage in the Management of the Invested Enterprise
• Exit Strategies for Angel Investment
• Notes

Individual investment model has shown limits in terms of information acquisition, the spreading of risk, efficiency of investment, etc. In contrast, angel investment derives a combination of group-based and institutionalized investment models from the individual investment models. The emergence of group-based and institutionalized investment models has helped speed up the appearance and development of the angel investment service providers.

In China, angel investment began at the end of the 20th century and its development accompanied the development of Internet and high-tech enterprises. In recent years, more and more entrepreneurs and industry experts have participated in this field. At the same time, with the development of normalized and institutionalized investment, more and more VC firms are paying attention to the early stage deals, setting up special angel investment funds. Also, there are some high-net-worth individuals that constitute as an angel group by joint investment. Apart from individual angel investment models, many other models like joint investment, institutional investment, combination with business incubator and crowd funding have all undergone extensive exploration and practice. With regard to government support, central and some local governments stress policies that “encourage developing angel investment,” “support to develop angel institution,” “establish angel investment funds” and so on.

The interactions between start-up, innovation and angel investment are not isolated, but coexist in the same ecological environment. Figure 9.1 indicates that the interaction of every part of start-up eco-network, start-up activities are sources of start-up education, every kind of start-up services effectively put forward the start-up activities, the start-ups both in school and in society create innovative enterprises, talents, technology and other marketing factors through the effects of external relationship network. On the whole, a good entrepreneurship atmosphere in China, a large number of entrepreneurship activities and the diversification of the entrepreneurship services contribute much to the excellent external environment of the entrepreneurs and angel investors.

Compared with the mature market in the West, angel investment in China is still in its infancy. Thus, China still has a long way to go in nurturing the concept of investors, regulating the development and formulating proper policies. Our research shows that there are three major obstacles to the development of angel investment in China, namely a shortage of professional personnel, limited professional knowledge and insufficient policy support. Therefore, it is suggested that China should proactively learn from developed countries so as to accelerate the development of angel investment and support the development of innovative economy.

In July 2013, we went to Hong Kong for an investigation and interviewed Mr. Allen Yeung, Chairman of Hong Kong Business Angel Network, Mr. John Y. Lo, Partner of Edwards Wildman Palmer, Dr. Dominic Chan from Dark Horse Investment and other senior experts.

According to the “2012 China Angel Investment Report” released by CYzone, angel investment projects have increased to 747 in total in China since 2011, most of which are based in Beijing, Guangdong, Shanghai, Zhejiang and Jiangsu. 224 among such projects are in Beijing, accounting for nearly 30% and mainly located in Zhongguancun Science Park where the number of Angel Investment projects ranks No. 1 nationwide. Since 2009, angel investors within Zhongguancun Demonstration Zone have increased over 60% to be approximately 200 active. By 2012, there were about 33 angel investment funds established in Zhongguancun Demonstration Zone, including 10 established in 2011 and 14 established in 2012.

The following sections are included:

• Development history of incubators in Zhongguancun
• Economic benefits of incubators in Zhongguancun
• Innovative development of incubators in Zhongguancun
• Case study of various innovative incubators in Zhongguancun
• Note

The idea of “crowd funding” has a long history which dates back to Germany in the 17th century when publishers came up with a business model called “Praenumeration”. Under such a model, publishers collected advance payment for subscription fee at a discount and used such prepayment to support subsequent operations…

The following sections are included:

• Appendix I: Selected Active Angels in China
• Appendix II: Interview Summary
• Appendix III: List of Selected Angel Investment Organizations and Agencies in China
• Appendix IV: List of Selected Policies for Promoting Angel Investment in China

The following sections are included:

• Afterword
• Index