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display: block !important; /* 12u Graphics Standalone */ @media all and (min-width: 586px) and (max-width: 665px) body.template-standalone:not(.nc-exp) .wsj-ai2html-1522812684334show-12u, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522812684334show-12u-wrap, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522812684334show-12u-margin, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522812684334show-12u-bleed, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522812684334show-12u-header, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522812684334show-12u-inline max-width: 540px; display: block !important; /* 16u Graphics Standalone */ @media all and (min-width: 746px) body.template-standalone:not(.nc-exp) .wsj-ai2html-1522812684334show-16u, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522812684334show-16u-wrap, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522812684334show-16u-margin, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522812684334show-16u-bleed, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522812684334show-16u-header, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522812684334show-16u-inline max-width: 700px; display: block !important; body.at4units .wsj-ai2html-1522812684334show-4u, body.at4units .wrap .wsj-ai2html-1522812684334show-4u-wrap, body.at4units .margin .wsj-ai2html-1522812684334show-4u-margin, body.at4units .bleed .wsj-ai2html-1522812684334show-4u-bleed, body.at4units .header .wsj-ai2html-1522812684334show-4u-header, body.at4units .inline .wsj-ai2html-1522812684334show-4u-inline max-width: 300px; .wrap .wsj-ai2html-1522812684334show-8u-wrap, .wrap .wsj-ai2html-1522812684334show-12u-wrap, .wrap .wsj-ai2html-1522812684334show-16u-wrap, .margin .wsj-ai2html-1522812684334show-8u-margin, .margin .wsj-ai2html-1522812684334show-12u-margin, .margin .wsj-ai2html-1522812684334show-16u-margin max-width: 300px; body.at4units .wsj-ai2html-1522812684334show-4u, body.at8units .wsj-ai2html-1522812684334show-8u, body.at12units .wsj-ai2html-1522812684334show-12u, body.at16units .wsj-ai2html-1522812684334show-16u, body.at4units .bleed .wsj-ai2html-1522812684334show-4u-bleed, body.at8units .bleed .wsj-ai2html-1522812684334show-8u-bleed, body.at12units .bleed .wsj-ai2html-1522812684334show-12u-bleed, body.at16units .bleed .wsj-ai2html-1522812684334show-16u-bleed, body.at4units .header .wsj-ai2html-1522812684334show-4u-header, body.at8units .header .wsj-ai2html-1522812684334show-8u-header, body.at12units .header .wsj-ai2html-1522812684334show-12u-header, body.at16units .header .wsj-ai2html-1522812684334show-16u-header, body.at4units .inline .wsj-ai2html-1522812684334show-4u-inline, body.at8units .inline .wsj-ai2html-1522812684334show-8u-inline, body.at12units .inline .wsj-ai2html-1522812684334show-12u-inline, body.at16units .inline .wsj-ai2html-1522812684334show-16u-inline, body.at4units .offset .wsj-ai2html-1522812684334show-4u-offset, body.at8units .offset .wsj-ai2html-1522812684334show-8u-offset, body.at12units .offset .wsj-ai2html-1522812684334show-12u-offset, body.at16units .offset .wsj-ai2html-1522812684334show-16u-offset, body.at4units .wrap .wsj-ai2html-1522812684334show-4u, body.at4units .wrap .wsj-ai2html-1522812684334show-4u-wrap, body.at8units .wrap .wsj-ai2html-1522812684334show-8u-wrap, body.at12units .wrap .wsj-ai2html-1522812684334show-12u-wrap, body.at16units .wrap .wsj-ai2html-1522812684334show-16u-wrap, body.at4units .margin .wsj-ai2html-1522812684334show-4u, body.at4units .margin .wsj-ai2html-1522812684334show-4u-margin, body.at8units .margin .wsj-ai2html-1522812684334show-8u-margin, body.at12units .margin .wsj-ai2html-1522812684334show-12u-margin, body.at16units .margin .wsj-ai2html-1522812684334show-16u-margin display: block !important; 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#wsj-ai2html-1522812684334 position: relative; overflow: hidden; width: px; display: none; .wsj-ai2html-1522812684334aiAbs position: absolute; .wsj-ai2html-1522812684334aiImg display: block; width: 100% !important; #wsj-ai2html-1522812684334 p font-family: Arial,Helvetica,sans-serif; font-size: 13px; line-height: 18px; margin: 0; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-4-0 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 20px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-4-1 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; text-align: center; color: #323232; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-4-2 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; text-align: right; color: #ffffff; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-4-3 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #323232; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-4-4 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; text-align: center; color: #ffffff; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-4-5 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 700; text-align: right; color: #ffffff; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-4-6 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-4-7 font-family: “Retina Narrow”,Helvetica,Arial,sans-serif; font-size: 13px; line-height: 16px; font-weight: 300; color: #333333; margin-top: 1px;

Venture capital by place of origin, in billions

Dot-com bubble

$67

U.S.: $2.3

$87

$38

China

U.S.

Japan

Mixed

Europe

Other Asia

Others

’04

’06

’08

’10

’12

’14

’16

2000

’98

’96

1992

’02

’94

#wsj-ai2html-1522812684334 position: relative; overflow: hidden; width: px; display: none; .wsj-ai2html-1522812684334aiAbs position: absolute; .wsj-ai2html-1522812684334aiImg display: block; width: 100% !important; #wsj-ai2html-1522812684334 p font-family: Arial,Helvetica,sans-serif; font-size: 13px; line-height: 18px; margin: 0; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-3-0 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 20px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-3-1 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; text-align: center; color: #323232; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-3-2 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; text-align: right; color: #ffffff; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-3-3 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #323232; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-3-4 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; text-align: center; color: #ffffff; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-3-5 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 700; text-align: right; color: #ffffff; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-3-6 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-3-7 font-family: “Retina Narrow”,Helvetica,Arial,sans-serif; font-size: 13px; line-height: 16px; font-weight: 300; color: #333333; margin-top: 1px;

Venture capital by place of origin, in billions

Dot-com bubble

$67

U.S.: $2.3

$87

$38

China

U.S.

Japan

Mixed

Europe

Other Asia

Others

1992

’94

’96

’10

’08

’98

’06

’04

’02

2000

’16

’12

’14

#wsj-ai2html-1522812684334 position: relative; overflow: hidden; width: px; display: none; .wsj-ai2html-1522812684334aiAbs position: absolute; .wsj-ai2html-1522812684334aiImg display: block; width: 100% !important; #wsj-ai2html-1522812684334 p font-family: Arial,Helvetica,sans-serif; font-size: 13px; line-height: 18px; margin: 0; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-2-0 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 20px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-2-1 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; text-align: center; color: #323232; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-2-2 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; text-align: right; color: #ffffff; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-2-3 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #323232; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-2-4 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; text-align: center; color: #ffffff; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-2-5 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 700; text-align: right; color: #ffffff; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-2-6 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-2-7 font-family: “Retina Narrow”,Helvetica,Arial,sans-serif; font-size: 13px; line-height: 16px; font-weight: 300; color: #333333; margin-top: 1px;

Venture capital by place of origin, in billions

Dot-com bubble

$67

U.S.: $2.3

$87

$38

China

Japan

U.S.

Mixed

Europe

Other Asia

Others

’10

’08

’06

’04

’02

’16

’98

’96

’94

1992

’12

’14

2000

#wsj-ai2html-1522812684334 position: relative; overflow: hidden; width: px; display: none; .wsj-ai2html-1522812684334aiAbs position: absolute; .wsj-ai2html-1522812684334aiImg display: block; width: 100% !important; #wsj-ai2html-1522812684334 p font-family: Arial,Helvetica,sans-serif; font-size: 13px; line-height: 18px; margin: 0; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-1-0 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 20px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-1-1 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; text-align: right; color: #ffffff; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-1-2 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #ffffff; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-1-3 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 700; text-align: right; color: #ffffff; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-1-4 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #323232; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-1-5 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1522812684334 .wsj-ai2html-1522812684334-aiPstyle-1-6 font-family: “Retina Narrow”,Helvetica,Arial,sans-serif; font-size: 13px; line-height: 16px; font-weight: 300; color: #333333; margin-top: 1px;

Venture capital by place of origin, in billions

$67

$30

$38

U.S.

Japan

China

Europe

Mixed

Others

Other Asia

’09

’16

’15

’14

’13

’10

’11

’12

2007

’08

’17

Note: Bands represent the amount of investment led by investors of each country, ranked in order from the top for each year.

Source: WSJ analysis of VentureSource data

Silicon Valley, long the undisputed king of venture capital, is now sharing its throne with Asia.

A decade ago, nearly three-quarters of the world’s financing of innovative, tech-heavy startups and young companies took place in the U.S., with American investors plowing money into mostly U.S.-based venture firms.

Now, a surge of new money—mostly from China—has helped drive funding totals into the stratosphere and has transformed the venture landscape, according to an exclusive Wall Street Journal analysis of venture funding data.

Asian investors directed nearly as much money into startups last year as American investors did—40% of the record $154 billion in global venture financing versus 44%, the Journal’s analysis of data from private markets data tracker Dow Jones VentureSource found. Asia’s share is up from less than 5% just 10 years ago.

/* 4u Graphics Standalone */ @media all and (max-width: 585px) body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-4u, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-4u-wrap, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-4u-margin, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-4u-bleed, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-4u-header, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-4u-inline display: block !important; max-width: 300px; body.template-standalone:not(.nc-exp) .djai2html-tagline float: left; body.template-standalone:not(.nc-exp) .djai2html-foot, body.template-standalone:not(.nc-exp) .djai2html-headline, body.template-standalone:not(.nc-exp) .djai2html-leadin max-width: 300px; margin-left: auto; margin-right: auto; /* 8u Graphics Standalone */ @media all and (min-width: 666px) and (max-width: 745px) body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-8u, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-8u-wrap, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-8u-margin, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-8u-bleed, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-8u-header, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-8u-inline max-width: 620px; display: block !important; /* 12u Graphics Standalone */ @media all and (min-width: 586px) and (max-width: 665px) body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-12u, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-12u-wrap, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-12u-margin, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-12u-bleed, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-12u-header, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-12u-inline max-width: 540px; display: block !important; /* 16u Graphics Standalone */ @media all and (min-width: 746px) body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-16u, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-16u-wrap, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-16u-margin, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-16u-bleed, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-16u-header, body.template-standalone:not(.nc-exp) .wsj-ai2html-1522725992007show-16u-inline max-width: 700px; display: block !important; body.at4units .wsj-ai2html-1522725992007show-4u, body.at4units .wrap .wsj-ai2html-1522725992007show-4u-wrap, body.at4units .margin .wsj-ai2html-1522725992007show-4u-margin, body.at4units .bleed .wsj-ai2html-1522725992007show-4u-bleed, body.at4units .header .wsj-ai2html-1522725992007show-4u-header, body.at4units .inline .wsj-ai2html-1522725992007show-4u-inline max-width: 300px; .wrap .wsj-ai2html-1522725992007show-8u-wrap, .wrap .wsj-ai2html-1522725992007show-12u-wrap, .wrap .wsj-ai2html-1522725992007show-16u-wrap, .margin .wsj-ai2html-1522725992007show-8u-margin, .margin .wsj-ai2html-1522725992007show-12u-margin, .margin .wsj-ai2html-1522725992007show-16u-margin max-width: 300px; body.at4units .wsj-ai2html-1522725992007show-4u, body.at8units .wsj-ai2html-1522725992007show-8u, body.at12units .wsj-ai2html-1522725992007show-12u, body.at16units .wsj-ai2html-1522725992007show-16u, body.at4units .bleed .wsj-ai2html-1522725992007show-4u-bleed, body.at8units .bleed .wsj-ai2html-1522725992007show-8u-bleed, body.at12units .bleed .wsj-ai2html-1522725992007show-12u-bleed, body.at16units .bleed .wsj-ai2html-1522725992007show-16u-bleed, body.at4units .header .wsj-ai2html-1522725992007show-4u-header, body.at8units .header .wsj-ai2html-1522725992007show-8u-header, body.at12units .header .wsj-ai2html-1522725992007show-12u-header, body.at16units .header .wsj-ai2html-1522725992007show-16u-header, body.at4units .inline .wsj-ai2html-1522725992007show-4u-inline, body.at8units .inline .wsj-ai2html-1522725992007show-8u-inline, body.at12units .inline .wsj-ai2html-1522725992007show-12u-inline, body.at16units .inline .wsj-ai2html-1522725992007show-16u-inline, body.at4units .offset .wsj-ai2html-1522725992007show-4u-offset, body.at8units .offset .wsj-ai2html-1522725992007show-8u-offset, body.at12units .offset .wsj-ai2html-1522725992007show-12u-offset, body.at16units .offset .wsj-ai2html-1522725992007show-16u-offset, body.at4units .wrap .wsj-ai2html-1522725992007show-4u, body.at4units .wrap .wsj-ai2html-1522725992007show-4u-wrap, body.at8units .wrap .wsj-ai2html-1522725992007show-8u-wrap, body.at12units .wrap .wsj-ai2html-1522725992007show-12u-wrap, body.at16units .wrap .wsj-ai2html-1522725992007show-16u-wrap, body.at4units .margin .wsj-ai2html-1522725992007show-4u, body.at4units .margin .wsj-ai2html-1522725992007show-4u-margin, body.at8units .margin .wsj-ai2html-1522725992007show-8u-margin, body.at12units .margin .wsj-ai2html-1522725992007show-12u-margin, body.at16units .margin .wsj-ai2html-1522725992007show-16u-margin display: block !important; 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Growing Competition

U.S. investors now lead less than half of all venture finance, while China’s share is nearly a quarter and growing fast.

#wsj-ai2html-1522725992007 position: relative; overflow: hidden; width: px; display: none; .wsj-ai2html-1522725992007aiAbs position: absolute; .wsj-ai2html-1522725992007aiImg display: block; width: 100% !important; #wsj-ai2html-1522725992007 p font-family: Arial,Helvetica,sans-serif; font-size: 13px; line-height: 18px; margin: 0; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-4-0 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 20px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-4-1 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #323232; margin-top: 1px; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-4-2 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #ffffff; margin-top: 1px; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-4-3 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-4-4 font-family: “Retina Narrow”,Helvetica,Arial,sans-serif; font-size: 13px; line-height: 16px; font-weight: 300; color: #333333; margin-top: 1px;

Venture capital by place of origin, share of total

In 2017

U.S.: 44%

97%

China: 24%

Japan: 12%

Mixed: 7.8%

Europe: 7.1%

Other Asia: 3.3%

Others: 1.8%

’96

’98

2000

’02

’16

’14

’12

’10

’08

’06

’04

’94

1992

#wsj-ai2html-1522725992007 position: relative; overflow: hidden; width: px; display: none; .wsj-ai2html-1522725992007aiAbs position: absolute; .wsj-ai2html-1522725992007aiImg display: block; width: 100% !important; #wsj-ai2html-1522725992007 p font-family: Arial,Helvetica,sans-serif; font-size: 13px; line-height: 18px; margin: 0; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-3-0 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 20px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-3-1 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #323232; margin-top: 1px; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-3-2 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #ffffff; margin-top: 1px; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-3-3 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-3-4 font-family: “Retina Narrow”,Helvetica,Arial,sans-serif; font-size: 13px; line-height: 16px; font-weight: 300; color: #333333; margin-top: 1px;

Venture capital by place of origin, share of total

In 2017

U.S.: 44%

97%

China: 24%

Japan: 12%

Mixed: 7.8%

Europe: 7.1%

Other Asia: 3.3%

Others: 1.8%

’98

’96

’94

2000

1992

’16

’14

’12

’10

’08

’06

’04

’02

#wsj-ai2html-1522725992007 position: relative; overflow: hidden; width: px; display: none; .wsj-ai2html-1522725992007aiAbs position: absolute; .wsj-ai2html-1522725992007aiImg display: block; width: 100% !important; #wsj-ai2html-1522725992007 p font-family: Arial,Helvetica,sans-serif; font-size: 13px; line-height: 18px; margin: 0; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-2-0 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 20px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-2-1 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #323232; margin-top: 1px; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-2-2 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #ffffff; margin-top: 1px; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-2-3 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-2-4 font-family: “Retina Narrow”,Helvetica,Arial,sans-serif; font-size: 13px; line-height: 16px; font-weight: 300; color: #333333; margin-top: 1px;

Venture capital by place of origin, share of total

In 2017

U.S.: 44%

97%

China: 24%

Japan: 12%

Mixed: 7.8%

Europe: 7.1%

Other Asia: 3.3%

Others: 1.8%

1992

’94

’96

’98

’04

’16

’14

’12

’10

’08

’02

’06

2000

#wsj-ai2html-1522725992007 position: relative; overflow: hidden; width: px; display: none; .wsj-ai2html-1522725992007aiAbs position: absolute; .wsj-ai2html-1522725992007aiImg display: block; width: 100% !important; #wsj-ai2html-1522725992007 p font-family: Arial,Helvetica,sans-serif; font-size: 13px; line-height: 18px; margin: 0; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-1-0 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 20px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-1-1 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #323232; margin-top: 1px; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-1-2 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 500; color: #323232; margin-top: 1px; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-1-3 font-family: Retina,Helvetica,Arial,sans-serif; font-size: 15px; line-height: 18px; font-weight: 300; color: #ffffff; margin-top: 1px; #wsj-ai2html-1522725992007 .wsj-ai2html-1522725992007-aiPstyle-1-4 font-family: “Retina Narrow”,Helvetica,Arial,sans-serif; font-size: 13px; line-height: 16px; font-weight: 300; color: #333333; margin-top: 1px;

Venture capital by place of origin, share of total

U.S.

In 2017

China

44%

Japan

Mixed

Europe

In 1992

Other Asia

97%

Others

24%

12%

7.8%

7.1%

3.3%

1.8%

’05

’10

’15

2000

1995

Note: Bands represent the amount of investment led by investors of each country as a share of total, ranked in order from the top for each year.

Source: WSJ analysis of VentureSource data

That tidal wave of cash into promising young firms could herald a shift in who controls the world’s technological innovation and its economic fruits, from artificial intelligence to self-driving cars.

Silicon Valley previously was far and away the leader for tech entrepreneurs in both money and know-how, says

Kai-Fu Lee,

a veteran tech executive who headed China units of

Microsoft

and Google before founding his own Beijing-based venture-capital firm, Sinovation Ventures, in 2009. The rise of China’s venture market “signifies a shift from a single-epicenter view of the world to a duopoly,” he says.

U.S. investors remain the biggest single source of global venture capital, and they do more deals than anyone else—nearly half of all venture rounds in 2017, according to VentureSource data. The U.S. is still an important driver of innovation, with many of China’s bigger investments merely copying American technologies. For startups, the big increase in Asian funds also makes more cash available to finance new technology.

The surge also positions Asia’s investors to win stakes in markets that Western companies covet, or that have national security implications. The U.S. government has grown increasingly uneasy about Chinese advances in key technologies such as artificial intelligence.

The expanding pool of venture capital from the East “is powerful rocket fuel for innovative activity,” says

Josh Lerner,

a Harvard Business School professor and expert on venture financing. “If you think that being the locus of invention gives you a boost to your GDP and so forth, that’s a deterioration of the U.S. competitive advantage.”

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display: block !important; body.at4units .wsj-ai2html-1522314720852show-4u, body.at4units .wrap .wsj-ai2html-1522314720852show-4u-wrap, body.at4units .margin .wsj-ai2html-1522314720852show-4u-margin, body.at4units .bleed .wsj-ai2html-1522314720852show-4u-bleed, body.at4units .header .wsj-ai2html-1522314720852show-4u-header, body.at4units .inline .wsj-ai2html-1522314720852show-4u-inline max-width: 300px; .wrap .wsj-ai2html-1522314720852show-8u-wrap, .wrap .wsj-ai2html-1522314720852show-12u-wrap, .wrap .wsj-ai2html-1522314720852show-16u-wrap, .margin .wsj-ai2html-1522314720852show-8u-margin, .margin .wsj-ai2html-1522314720852show-12u-margin, .margin .wsj-ai2html-1522314720852show-16u-margin max-width: 300px; body.at4units .wsj-ai2html-1522314720852show-4u, body.at8units .wsj-ai2html-1522314720852show-8u, body.at12units .wsj-ai2html-1522314720852show-12u, body.at16units .wsj-ai2html-1522314720852show-16u, body.at4units .bleed .wsj-ai2html-1522314720852show-4u-bleed, body.at8units .bleed .wsj-ai2html-1522314720852show-8u-bleed, body.at12units .bleed .wsj-ai2html-1522314720852show-12u-bleed, body.at16units .bleed .wsj-ai2html-1522314720852show-16u-bleed, body.at4units .header .wsj-ai2html-1522314720852show-4u-header, body.at8units .header .wsj-ai2html-1522314720852show-8u-header, body.at12units .header .wsj-ai2html-1522314720852show-12u-header, body.at16units .header .wsj-ai2html-1522314720852show-16u-header, body.at4units .inline .wsj-ai2html-1522314720852show-4u-inline, body.at8units .inline .wsj-ai2html-1522314720852show-8u-inline, body.at12units .inline .wsj-ai2html-1522314720852show-12u-inline, body.at16units .inline .wsj-ai2html-1522314720852show-16u-inline, body.at4units .offset .wsj-ai2html-1522314720852show-4u-offset, body.at8units .offset .wsj-ai2html-1522314720852show-8u-offset, body.at12units .offset .wsj-ai2html-1522314720852show-12u-offset, body.at16units .offset .wsj-ai2html-1522314720852show-16u-offset, body.at4units .wrap .wsj-ai2html-1522314720852show-4u, body.at4units .wrap .wsj-ai2html-1522314720852show-4u-wrap, body.at8units .wrap .wsj-ai2html-1522314720852show-8u-wrap, body.at12units .wrap .wsj-ai2html-1522314720852show-12u-wrap, body.at16units .wrap .wsj-ai2html-1522314720852show-16u-wrap, body.at4units .margin .wsj-ai2html-1522314720852show-4u, body.at4units .margin .wsj-ai2html-1522314720852show-4u-margin, body.at8units .margin .wsj-ai2html-1522314720852show-8u-margin, body.at12units .margin .wsj-ai2html-1522314720852show-12u-margin, body.at16units .margin .wsj-ai2html-1522314720852show-16u-margin display: block !important; 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Where the Money Goes

The U.S. and China invest largely within their own borders, while Japan bets heavily outside.

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Venture-capital flow in 2017

Origin

Target

U.S.

52

U.S.

$67 billion

5.5

China

Europe

4.0

3.7

Other Asia

Others

2.3

Japan

0.2

China

30

China

38

4.0

Other Asia

U.S.

3.1

Europe

0.6

Others

0.1

China

6.6

U.S.

5.0

Other Asia

4.9

Japan

18

Japan

1.1

0.6

Europe

Others

0.1

Source: WSJ analysis of VentureSource data

Although one of the biggest Asian investors is Japan’s

SoftBank Group Corp.

, which has tapped Middle Eastern money to create the world’s largest tech-investment fund, it is Chinese activity that is having the greatest impact.

The prospect of a trade war between the U.S. and China could crimp venture finance along with overall investments if the countries go through with threats to levy billions of dollars in tariffs on each others’ products. But since the tariffs are so far largely focused on industrial or agricultural exports like cars, chemicals and corn, they are unlikely to have much direct impact on most startups.

China is creating unicorns—startups valued at a billion dollars or more—at much the same pace as the U.S., drawing on funding from internet giants like

Alibaba Group Holding Ltd.

and

Tencent Holdings Ltd.

as well as more than a thousand domestic venture-capital firms that have raised billions of dollars a year for the past few years, according to VentureSource.

Chinese-led venture funding is about 15 times its size in 2013, outpacing growth in U.S.-led financing, which roughly doubled in that time period, the Journal’s analysis shows.

Most Chinese-led investment so far has gone to the country’s own firms, the Journal analysis found. Many of them, like the

Yelp

equivalent Meituan-Dianping, are household names with millions of customers in China, yet virtually unknown elsewhere.

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The Race to Fund Indian Ventures

Chinese and Japanese investors are pouring money into India, channeling more venture money into the world’s second-most populous country than U.S. financiers.

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Venture capital targeting India

Others

Japan

From U.S.

China

$8

billion

2.8

6

4

2.8

2

1.8

0

’12

’11

’15

’14

’17

’10

’09

’08

2007

’16

’13

Source: WSJ analysis of VentureSource data

Slowing growth and fierce competition in China is prompting the country’s tech champions to look for markets overseas. Last year, the amount of China-led venture investment outside the country more than doubled, the Journal’s analysis found.

Of the five biggest venture investments led by Chinese investors in 2017, three were rounds led by Tencent or Alibaba in e-commerce and ride-hailing startups in India and Indonesia.

Many Chinese tech companies are “at this critical size that the China market alone is not enough to support their business and valuation,” says

Brian Gu,

who recently left a position as

J.P. Morgan’s

Asia Pacific investment banking chairman to become vice chairman and president of Alibaba’s electric-car startup, Xiaopeng Motors. “The money will first go to adjacent markets where Chinese technology, Chinese business models, Chinese capital will have more impact.”

Madhur Deora, chief financial officer for Paytm, one of India’s biggest e-payments firms, says the company approached Alibaba affiliate Ant Financial instead of U.S. backers for funding in 2015 because Chinese mobile-internet innovations are “way far ahead of anything that’s happened in the U.S.” Ant is preparing to raise $9 billion in a private funding round, according to people familiar with the matter, valuing it at close to $150 billion.

Staff at the Jakarta offices of Tokopedia, an internet shopping site that has drawn big investments from China.
Staff at the Jakarta offices of Tokopedia, an internet shopping site that has drawn big investments from China.
Photo:

Dimas Ardian/Bloomberg News

Ant and Alibaba eventually invested a total of around $800 million in Paytm parent One97 Communications, while SoftBank later poured in around $1.4 billion. That made the trio the biggest investors in the company, says a person familiar with the transactions, and gave them board seats. The company hasn’t had “meaningful” U.S. investors, Mr. Deora says. SoftBank led another investment of $445 million in Paytm’s online mall in recent weeks.

One reason China’s push into new technologies worries many in the U.S. is that, unlike the hunt for good returns that underpins most Western venture finance, a lot of Chinese investment is driven by strategic interests, some carrying the specter of state influence.

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Picking Up the Pace

U.S. investors still lead a far greater number of venture deals than those of any other country.

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Number of deals by place of origin*

2007

2017

6,057

U.S.

3,230

2,186

China

126

480

Japan

397

*Includes deals with undisclosed value

Source: WSJ analysis of VentureSource data

China is pushing hard into semiconductors, for which the government has provided billions of dollars in public funding, and artificial intelligence, where Beijing in July set a goal of global leadership by 2030. China’s state and local governments have also put money into private venture funds, and Beijing’s interest has spurred a rush of startup VC activity, experts say.

Chinese venture investments include stakes in companies like Megvii Technology Inc., a Chinese facial-recognition firm that has worked with financial firms on systems that match facial scans with databases for loan approvals. It has also helped Chinese police with surveillance systems.

U.S. investors are still pumping more money into AI startups than Chinese, leading $4 billion in funding rounds last year, double the previous year’s amount, according to the Journal’s analysis of VentureSource data. Chinese investors led around $2.5 billion in AI venture financing last year—up from less than $100 million a few years before.

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AI Financing Boom

Both the U.S. and China are scrambling to fund startups in the key tech area of artificial-intelligence.

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Venture capital targeting artificial-intelligence companies*

U.S.

China

$4

billion

3

2

1

0

’08

’09

’10

’11

’12

’13

’14

’15

’16

’17

2007

*Includes companies working in machine learning, neural networks and predictive analysis.

Source: WSJ analysis of VentureSource data

China’s tech giants have their own agendas for investment, separate from government policy. Yet they have faced intense pressure to serve state interests, creating worries that even funds from private sources could come with government strings attached.

Tencent says it is focused on investments in companies with leading technologies or research as well as top players in high-growth markets “where we can share our experience and contribute to building the internet ecosystems.”

Alibaba has taken stakes in companies abroad to expand its services and hopes to create “chemistry” with others in the Alibaba group to “build long-term value,” Alibaba Executive Vice Chairman

Joseph Tsai

told investors last June.

Mr. Lee, the venture investor, predicts that in the next five to 10 years Chinese tech companies will become pacesetters for tech-related development, vying with the likes of

Alphabet Inc.’s

Google and

Facebook

for dominance in markets outside the English-speaking world and Western Europe.

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Rise of the Mega-Deal

Funding rounds of $100 million or more are now half of all venture finance.

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Value of venture capital by deal size

$160

billion

140

120

$100 million

or more

100

80

60

40

Less than

$100 million

20

0

2000

1992

2010

Source: WSJ analysis of VentureSource data

“All the rest of the world will basically be a land grab between the U.S. and China,” he says.

“The U.S. approach is: We’ll build a better product and just win over all the countries,” says Mr. Lee. The Chinese approach is “we’ll fund the local partner to beat off the American companies.”

Last year, deals led by U.S. venture-capital and tech-investment firms, such as Sequoia Capital or Andreessen Horowitz, accounted for about $67 billion in venture financing, slightly more than the $61 billion led by Asian investors, including Tencent and SoftBank, according to the Journal’s analysis of VentureSource data.

A decade earlier, U.S. investors led 73% of the $41 billion in venture finance logged; in 1992, the figure was 97% of $2 billion, when VentureSource’s records begin.

The Journal’s analysis looked at the source of venture finance based on the headquarters of the company or companies leading or making up the majority of each round’s investors.

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China Bound

The amount of venture money flowing to Chinese companies is now approaching the amount going to U.S. companies.

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Venture capital targeting U.S. and Chinese companies, share of total

100

%

75

In 2017

50

U.S.

44.6%

China

31.6%

25

0

2000

1992

2010

Source: WSJ analysis of VentureSource data

Asia’s rise as a startup financier is even starker in the biggest venture investments—those of $100 million or more. These megadeals have become an increasingly important part of venture finance as valuations have ballooned, with their proportion of deal volume growing from around 8% in 2007 to around half of the total last year.

In 2017, deals led by Chinese investors made up a bigger portion of that megafinance than those led by U.S. investors. Japanese-led funding—largely by SoftBank—came in third.

In Southeast Asia, a flood of Chinese money into local startups—such as the $1.1 billion Alibaba-led investment into Indonesian online marketplace PT Tokopedia last year—is drawing the region closer to China, says Santitarn Sathirathai,

Credit Suisse’s

lead economist for emerging Asian markets.

Chinese money is also playing a big role in India, which, with a population of 1.2 billion, has been described as the next big internet market. Chinese and Japanese investors each led nearly $3 billion in venture finance in India last year, ahead of the nearly $2 billion in deals led by U.S. investors, which have been the top source of India’s VC money in recent years.

Last year, Tencent led a $1.1 billion round in Indian ride-hailing company Ola, which is piling up cash to battle U.S. rival Uber Technologies Ltd. Tencent and SoftBank, another big investor, got seats on the board of Ola’s parent.

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Investing Across Borders

Venture investors are plowing increasing amounts of money into companies in other countries, with Asian investors leading the pack.

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Outbound venture capital

Share of total

%

50

40

30

20

10

0

1992

2000

2010

Value by place of origin

billion

$30

Asia*

25

20

15

U.S.

10

5

0

1992

2010

2000

*Includes China, Japan and other Asia

Source: WSJ analysis of VentureSource data

The money has helped Ola continue a tight race with Uber for market share in India, as well as challenge Uber in Australia, where Ola recently launched operations with introductory free rides.

Tencent and SoftBank also each led billion-plus rounds into Flipkart, India’s biggest local e-commerce company, earning them board seats as well. Flipkart has also recently discussed selling a stake in itself to

Walmart Inc.,

people familiar with the discussions say, and is facing a challenge from

Amazon.com Inc.,

which has announced plans to pour $5 billion into its India operations and is gaining market share. Walmart and Flipkart declined to comment.

Vijay Shekhar Sharma,

the founder of Paytm, the Indian e-payment firm, visited Alibaba’s home base of Hangzhou several years ago, and was amazed at the online retail and payments market it pioneered with its affiliate Ant, says Mr. Deora, the CFO.

An electric vehicle used by Ola, a ride-hailing company in India that is piling up cash to compete with Uber.
An electric vehicle used by Ola, a ride-hailing company in India that is piling up cash to compete with Uber.
Photo:

Aditi Shah/Reuters

Paytm executives adapted practices they saw in China, including distributing stickers with QR codes to Indian merchants that let them accept payments via mobile phones, and rolling out shops that pop up for a limited time in Indian malls, where buyers can check out goods before they buy them online. Paytm is going up against Google and Facebook, which have also launched or tested services in India that let users pay through their phones.

“Think of strategic investments and M&A as playing a game of go,” said Mr. Tsai, the Alibaba executive vice chairman, at the investor conference last year. “In a game of go the strategic objective is to put your pieces on the chess board and surround your opponent.”

Methodology

The Journal analyzed all 117,338 equity-finance rounds into venture companies in Dow Jones VentureSource’s database, between 1992 and 2017, for which values were given. Venture companies are defined as those that have had at least one investment round that VentureSource classifies as venture finance.

To determine where the investment came from, the Journal looked at the headquarters of the company or companies that led each round. When no lead investor was flagged, the Journal assigned the lead to the country whose investors made up the majority of those participating in the round. If there was no clear majority of investors from one country, the round was categorized as “mixed.”

Write to Phred Dvorak at [email protected]

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