In 2025, fundraising and investment activity in China's primary market has shown signs of warming up. According to recent data released by ChinaVenture, the number of investments and the scale of funds have both increased by approximately 30% year-on-year.
Notably, against the backdrop of slowing IPO activity, the venture capital sector has once again turned its attention to merger and acquisition (M&A) transactions. A significant trend observed this year is the re-emergence of large-scale deals, where buyers are focusing on mature, late-stage projects with strong backing from investors, leading to a significant expansion in the average deal size.
However, judging from the number of pre-disclosed M&A transactions this year, there has also been a noticeable year-on-year decline. Particularly, the cross-border M&A market continues to languish in a deep freeze, with both transaction activity and capital scale contracting simultaneously. The role of large-value deals in driving the overall market size has become increasingly prominent.
Since 2024, mainland China's PE and VC markets experienced a cliff-like drop in fundraising. At that time, the fund scale of nearly 2.5 trillion yuan shrank significantly compared to the over 4 trillion yuan recorded the previous year. Besides a lack of investment confidence, there was also a shortage of Limited Partner (LP) groups capable of sustaining investments. The situation has shown some improvement in 2025.
According to statistics from ChinaVenture, a total of 6,127 new funds were established in China's VC and PE markets in 2025, an increase of 1,293 funds, or 27%, compared to the same period last year. The total fundraising scale reached 3.09 trillion yuan, a 26% year-on-year increase.
Furthermore, corporate investors have become the most active LP group, accounting for 37.3% of investment instances, nearly six percentage points higher than the 31.1% contribution from state-owned capital platforms. This is uncommon in an ecosystem traditionally dominated by government-guided funds fueling the front-end fundraising of the venture capital market. Moreover, the market is evolving towards a model characterized by "industrial capital taking the lead, financial capital providing thrust, and state-owned capital implementing precise regulation."
Of course, in terms of the actual amount of capital contributed, state-owned platforms still account for the largest share. However, the heightened activity of corporate investor LPs reflects the accumulation of energy from new forces within the market's investment landscape. Analysts point out that this marks the beginning of a shift for corporate capital from mere financial allocation towards ecosystem binding, with leading companies particularly leveraging Corporate Venture Capital (CVC) to strengthen industrial synergies.
Indeed, observing the equity investment trends of listed companies in 2025, many have been establishing private equity investment funds. This trend is not limited to hot technology sectors such as AIGC and innovative pharmaceuticals; even traditional industries like chemicals, non-ferrous metals, and consumer goods have seen numerous companies set up new private funds, either to participate in M&A investments or to indirectly acquire stakes in other peripheral assets.
Statistics show that the number of domestic investment cases reached 11,000 in 2025, a 30.6% year-on-year increase. The total investment scale was 1.34 trillion yuan, up 23.43% year-on-year, while the average investment size was 122 million yuan, showing a slight decrease from the previous year. This marks another year with over 10,000 investment cases since 2021.
Fundraising activity is not confined to the domestic market. It is reported that in 2025, PAG successfully completed fundraising for the tenth fund in its opportunistic real estate fund series, raising a total of $4 billion, exceeding its $3.5 billion target. Investors primarily consisted of pension funds and sovereign wealth funds from North America, Europe, Asia-Pacific, and the Middle East.
Against the backdrop of improved fundraising, changes are also evident on the investment side, manifested in a greater willingness to allocate substantial capital to early-stage projects. Statistical data indicates that the project "Zhongke Diwuji," at the angel+ stage, received four rounds of investment within 2025, with the annual investment scale reaching hundreds of millions of yuan, placing it among the top ten in terms of valuation for the year.
Among the projects receiving high valuations from the market, six out of the top ten companies had their latest funding round at Series B or earlier. Compared to the old model where high valuations were typically associated with mature projects, the new paradigm shows capital increasingly inclined towards early and small investments, willing to assign high valuations to companies within core, high-quality sectors.
Looking at the hot industries in 2025, the electronic information sector continued to lead with 3,485 investment deals and a financing scale of 353.282 billion yuan. Advanced manufacturing and healthcare formed the second tier, ranking second and third with 1,983 and 1,594 deals respectively.
Drilling down into sub-sectors, semiconductors and artificial intelligence led significantly, with 1,434 and 891 funded deals respectively. Examining their market share trends over the past decade, sectors like new materials, robotics, aerospace, and new energy have become more prominent.
However, from a secondary market perspective, investment in the semiconductor industry is no longer about the broad chip sector generically. Instead, it has fragmented into more specialized and logically differentiated paths. This is evidenced not only by shifts in industry valuations but also by the strong performance of sub-sectors like memory chips and semiconductor equipment. Even institutional industrial perspectives are now prioritizing the development sequence and distinguishing based on the depth of technological储备 (reserves).
Current hot topics focus on semiconductor industry investments driven by AI computing power, with investors concentrating capital on initiating a new cycle of expansion. Demand for high-performance logic chips, High Bandwidth Memory (HBM), and advanced packaging is experiencing exponential growth, directly driving up capital expenditure in the global semiconductor industry and becoming the most watched direction for both entrepreneurs and investors.
On the exit front, the book exit return scale for venture capital institutions in 2025 was approximately 431.8 billion yuan. According to ChinaVenture statistics, this represents a 1.16-fold increase compared to the 199.9 billion yuan book return in 2024. The average book return multiple was 2.89x, down from 3.53x in 2024.
Amid the slowdown in IPOs, the venture capital sector has refocused on M&A market transactions within the year. It has been noted that large-scale M&A deals have reappeared, with buyers prioritizing mature, late-stage projects that attract concentrated investor interest, leading to a significant expansion in single-deal transaction sizes.
According to ChinaVenture statistics, there were 5,086 proposed M&A transactions disclosed in 2025, a decrease of 20.27% year-on-year. Among these, 3,499 deals disclosed transaction values, with a total amount of 2.37 trillion yuan, representing a 29.08% year-on-year increase. The number of M&A market transactions fell to the lowest level in nearly seven years, reflecting a significant cooling in overall market activity. Although the number of deals decreased, the average deal size expanded markedly, highlighting the role of large-value transactions in pulling up the overall market scale.
Looking at completed M&A transactions, 3,342 deals were finalized in 2025, a slight increase of 0.45% year-on-year. Among these, 2,026 deals disclosed transaction values, with a total amount of 1.49 trillion yuan, a substantial increase of 54.41% year-on-year. It can be said that the M&A transaction market in 2025 exhibited a trend of structural optimization characterized by stabilizing transaction numbers and significantly growing transaction scale. The total annual transaction value reversed the sustained downward trend since 2019, achieving a leapfrog recovery.
However, cross-border M&A data for 2025 was not ideal. A total of 144 cross-border transactions were completed throughout the year, comprising 79 outbound deals and 65 inbound deals. Compared to the previous year, the number of transactions decreased by 13.77%. Among these, 105 deals disclosed values, with a total transaction amount of 118.146 billion yuan, down 5.73% year-on-year. The cross-border M&A market overall continued its "freezing point" status in 2025, with both transaction activity and capital scale contracting in tandem.
Overall, against the macro backdrop of accelerating global industrial chain restructuring and the deepening推进 (advancement) of China's "dual circulation" strategy, the M&A markets in some provinces are leading the nation, ranking first in the number of cases. However, regional disparities are significant. Electronic information, traditional manufacturing, healthcare, and energy/mining have become M&A hotspots, aligning closely with the popular sectors on the investment side mentioned earlier.
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