Venture capital (VC) is widely recognised as a powerful engine that can drive a nation’s innovation, job creation, knowledge economy and economic growth. Governments around the world, such as Germany, Australia, Japan, Israel, Chile, Taiwan, and Singapore, have tried to develop their VC markets. Empirical studies show that many government-led programmes have not been particularly successful. It is in this context that China’s efforts stand out: over three decades, China has created the world’s second largest VC market in terms of annual VC investment, after the United States (US). Against the more moderate results achieved elsewhere, China’s success is especially prominent considering that it has surpassed the US in terms of the amount of VC investments raised by start-ups and number of unicorns, despite the relative youth of its market.

This book has sought to provide an understanding of the unique features of the Chinese venture capital (VC) market, especially from the perspective of legal and corporate practices. Drawing on the materials covered earlier in this book with regard to the life cycle of VC in China – fundraising, investment, and exit – this chapter seeks to answer the questions raised in the first chapter on a more principled basis. 1. How did China create the world’s second-largest VC market within such a short period of time? 2. Are there any lessons of general applicability, which may be extracted from China’s VC story? 3. What are the ways forward for China’s VC market? These questions will each be discussed in turn.