China, the world’s third largest VC market (behind the US and the US-secondaries), is home of 175 unicorns, 14.7% of the world’s total (as of Sept 30, 2022). However, in 2022 (as of Sept 30), China gave birth to only 8 unicorns, or merely 3.4% of the 2022 unicorn maternity. In contrast, during the same period, the US gave birth to 141 unicorns, or 60.0% of the total (source: CBInsights).
As expected, the Chinese tech sector has been stumbling under Xi Jinping’s interventionism and regulatory sprees. Indeed, Crunchbase has recently published an analysis on 17 Chinese VC-backed companies that IPOed on Nasdaq and the NYSE in the past two years. These companies showed an average decline of 91%! from the IPO price to now (as of Oct 24, 2022). Even the famous Didi (ride-hailing) has lost more than 90% of market capitalization since its IPO in June 2021.
In the last two years, three Brazilian “techish” companies have also IPOed in the US. So let’s check how they are performing since then (as of Oct 24, 2022, Yahoo Finance):
* VTEX — SaaS digital commerce platform for enterprise brands and retailers – IPO in Jul 2021 — % decline = 81.1%
* Zenvia — Cloud-based platform to integrate communication capabilities in enterprises — IPO in Jul 2021 — % decline = 88.0%
* Semantix – Big data solutions — IPO in Aug 2022 — % decline = 80.2%
China is Brazil’s largest trade partner.
Besides their longing for commodities — iron ore, soy, pulp and beef — , Brazil and China share a central planning ideology.
Thus, unsurprisingly, their Ctrl C Ctrl V “techish” companies lag, since technology demands innovation which can only flourish under market freedom.