While relatively new in China, the overall rise of global entrepreneurship combined with China’s rapidly growing economy has produced a wave of angel investors. Still in early development stages, angel investment groups are a far rarer sight than they are in the western world. However, built on their own entrepreneurial wealth, many “private” business angels operate independently – looking to make investments in the business sector that they are experienced in, and in some cases looking for ways to easily expand their own offering with sound investments that bring a strong return.
With local companies like Baidu, Ctrip and Sohu built from Venture Capital and Angel Investments, the buzz out there has allowed many small businesses and entrepreneurs to start pursuing the angel investor route. As a result, the Angel Investment Network has opened a branch in China, with the hope of providing a communication channel between local investors and businesses.
Exact statistics on angel investment in China are hard to find due to how some records are kept (or not kept for that matter), but some estimates claim that over 10 million people in China are seeking investment channels with private funds and assets. Unlike traditional investors, angel investors are more personal with their investments, combining financial forecasts with their own interests of what the entrepreneurial idea has to offer.
However, just like most other markets, angel investment is a high risk / high return strategy. A lot of angel investments do not succeed, and so many people prefer to invest through investment groups which share the profits and soften the impact of losses. This could be what is needed for the Chinese angel investor community to grow. Rules and regulations in the market are still being written as it seems, but even though the risks are high, the potential for strong return is quite appealing.