(Yicai Global) July 28 -- Continuing a downward trend from last year, the fundraising size and investment amount in China's onshore equity investment market tumbled in the first six months of this year, while limited partnerships backed by state capital remained major financers of the Chinese yuan fund, according to a report published earlier this week.

Fundraisers in the onshore equity investment market dropped 24 percent to CNY734.1 billion (USD102.5 billion) in the six months ended June 30 from a year earlier, a report by Beijing-based Zero2IPO Group's research center showed recently. Investment amount sank 42 percent to CNY293 billion, with the number of investments plunging 38 percent to 3,638.

"We remain bullish in the onshore market in the long run as China's economy is set to have a stable comeback and growth, though the market still fell in the first half," according to Ni Zhengdong, founder and chairman of Zero2IPO and chief executive of Zero2IPO Ventures.

Notably, local and state-backed venture capitals have taken a sizeable market share, with 71 percent of fundraising in the first half coming from limited partnerships controlled by state capital and LPs where the state capital is not a major shareholder, the report showed.

Scientific and technological innovations remained the investment theme of VCs in the onshore market during the period. According to data from the report, semiconductor and electronic devices, biotech and healthcare, and information technology were most sought after by VCs, with over 700 investments made in each of the three sectors.

I am quite optimistic about robots, artificial intelligence algorithms, the aerospace industry, GPT, and AI's application in urban and social governance, no matter how the economic cycles swing, Chen Xiangming, president and founder of Yinxinggu Capital, told Yicai Global.

Many new opportunities have appeared with battery and solar materials, new energy storage techs, hydrogen energy, and energy storage carriers, said Ma Dongjun, managing partner at Oceanpine Capital. Application of some innovative technologies may boom soon, Ma pointed out.

Cai Wei, a partner at Lightspeed China Partners, said that hard techs, green techs, and healthcare, three industries where rivalry is hot, are key areas he is paying attention to.

Departures from startups via initial public offerings are becoming common among VCs as regulators apply registration-based IPOs across sections of the Chinese mainland's stock market. Some 1,326 exits occurred in the onshore equity investment market in the first half of this year, with 78 percent from startups' IPOs, and less than 10 percent done through mergers, acquisitions, and backdoor listings.

The VCs departing via IPOs posted an average nominal return on investment of 558 percent for IPO cases in the onshore stock market, with an ROI of 520 percent for IPOs in offshore markets, according to Zero2IPO's report, continuing a trend that began in 2021's second half when yuan funds scored higher nominal ROI than US dollar ones after IPO exits.

Editors: Tang Shihua, Martin Kadiev