(Yicai Global) Dec. 23 -- Chinese venture capital funds, which serve as private equity investment vehicles, raised more money in the first three quarters than the same period last year, yet they made much fewer investments, according to a recent report.

Funds’ financing amount jumped 11 percent year on year to CNY1.6 trillion (USD239 billion), according to a report released during the 22th China Venture Capital & Private Equity Annual Forum in Shenzhen, which ends today.

Yet their investment in the Chinese equity market plunged 33.9 percent year on year to CNY725.7 billion (USD103.9 billion) and the frequency of their investment sank 9.4 percent to 8,631 times, according to the 2022 Chinese Equity investment Development Report published on Dec. 21.

"State capital has become the most important source of funds for equity investment," said Ni Zhengdong, founder, chairman and chief executive at Zero2IPO Ventures, one of the forum's organizers. "Funds are continually flowing into innovative and tech firms through venture capital and private equity firms," he added.

"The current stark valuation inversion between the primary market, where venture capitalists make their initial investments, and the secondary market, where investment is opened to the public after the company’s initial public offering on a stock exchange, is the main reason making venture capital firms hesitate to make new investments," said Kuang Duane, founding managing partner of Qiming Venture Partners.

Despite the overall doom and gloom, there was still a lot of enthusiasm for information technology, semiconductors, biomedicine and other 'hard' tech sectors this year and especially in the areas of new energy and new materials, the report said.

The sector with the most investment was semiconductors and electronic equipment, which raked in CNY184 billion (USD26.3 billion) in the first nine months, while the field with the fastest-growing investment inflow was new energy.

Some sectors saw a huge drop in investment though. Investment in the internet sector plummeted 81.6 percent in the nine months ended Sept. 30 from a year earlier, that in consumption and retail plunged 72 percent, while that in medical healthcare, once an investor's darling, slumped 45.2 percent.

Hillhouse Capital has invested in about 150 projects at different venture capital stages so far this year, basically the same as in previous years, founding partner Li Liang said at the forum. Manufacturing projects were the biggest draw, accounting for over 40 percent of total investment. The Beijing-based firm also bought into emerging areas such as electric cars, industrial robots and new materials.

Editors: Tang Shihua, Kim Taylor