Shanghai's Star Market Anniversary: Startups Raised Over USD94.6 Billion in Three Years

(Yicai Global) July 22 — Shanghai’s Star Market, the science and technology innovation board launched exactly three years ago, has become a major driver of startup financing in China.

Almost 440 companies have been listed on the Star Market, raising over CNY64 billion (USD94.6 billion) via their initial public offerings as of yesterday, according to Yicai Global statistics compiled for the third anniversary of the board today.

The board has become a major part of the mainland’s capital market. Valuations of the almost 440 firms exceeded CNY5.5 trillion (USD812.9 billion) yesterday, making up about 6.6 percent of the mainland’s total sum.

The board has eased the threshold for startups to get listed. Some 38 unprofitable companies and seven companies with special equity structures were listed on the Star Market as of June 30. Before 2018, neither China’s mainland nor the Hong Kong market accepted IPO applications from unprofitable biotech companies so US exchanges were basically the only option for these firms.

The Star Market has given startups across the healthcare industry more opportunities to get support from the capital market, Xue Mingyu, vice president of investment at venture capital firm Matrix Partners China, told Yicai Global.

The board adds an important exit channel, allowing valuable but unprofitable companies to be seen by investors while helping venture capitalists to achieve reasonable returns, Xue added.

With the launch of the Star Market, investment banks are getting involved in startups significantly earlier, accompanying companies on their growth journey, Long Liang, executive head of investment banking at state-backed China International Capital, said to Yicai Global.

The Star Market is driving more social resources into technology innovation, and the key elements include capital and talent, Long said. The wealth effect generated through listings can attract more high-tech talent to use technologies that support innovation, the investing expert added.

Companies listed on the board are investing heavily in research and development. Last year, these firms spent CNY85.2 billion (USD12.6 billion) on R&D, rising by 29 percent from a year ago and accounting for 13 percent of their revenues, according to data disclosed by the Shanghai Stock Exchange.

The number of R&D staff of Star Market-listed companies exceeded 140,000 as of Dec. 31, 2021, the SSE disclosed. The figure was an average of 330 people per company, making up nearly 30 percent of their respective numbers.

Editors: Dou Shicong, Emmi Laine, Xiao Yi