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| The Daily Pitch |
| VC, PE and M&A |
| Your edge on global private capital markets |
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| VC pulls back from China's AI market |
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By Leah Hodgson, Senior VC Reporter
AI core conglomerates in China posted the strongest year-to-date returns globally, according to a recent PitchBook report. But the enthusiasm for Chinese AI has not translated to private market investment.
When DeepSeek launched its ChatGPT rival in January, it was expected to spur renewed VC investment in China. But PitchBook data shows only $6 billion has been invested across 574 deals in the sector in 2025, representing a significant drop from last year's totals.
AI funding in the US has already exceeded 2024 levels by 61.5% to $174.6 billion, while in Europe, it has increased by 19% to nearly $22 billion.
China also has fewer outsized deals closing this year. Notable pacts include LLM developer MiniMax's $300 million round and Leju Robotics' $200 million investment. |
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Wider economic concerns and a sluggish recovery from the pandemic have created a more constrained funding environment in China. The capital raised for Chinese VC funds is less than a quarter of what it was last year, which was itself at its lowest level in nearly a decade.
Due to a lack of domestic capital, Chinese startups have increasingly relied on foreign investment, but geopolitical tensions have significantly reduced overseas inflows.
According to our 2025 Greater China Private Capital Breakdown, VC dealmaking involving foreign investors has dropped to only 112 pacts totaling $2.1 billion in H1.
VCs are particularly sensitive about investments in sectors of strategic importance to the Chinese government, especially AI. In May, the US Treasury Department reportedly began reviewing Benchmark's investment in Chinese AI agentic startup Manus.
Chinese AI startups are also being blocked from accessing US technology. President Donald Trump this week said Nvidia's most advanced chips would be banned from China.
China's government seeks to close the funding gap. In March, it launched a 1 trillion yuan (about $140 billion) government-backed fund to support emerging technologies.
Although VC funding may have stalled, China's AI market remains active. According to Stanford University's 2025 AI Index Report, the country leads in the number of AI publications and patents, and is narrowing the performance gap with the US for its models. |
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| Building for speed: How Picus Capital's tech stack became their edge |
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AI, automation, and data enrichment are reshaping how the best firms operate. With 70% of firms juggling both internal and external solutions, tech stacks have become increasingly complex, and many teams struggle to optimize what they have.
Join us for a Tech Stack Spotlight with Abhijay Thacker, Sr., Vice President at Picus Capital, to see how their team built an integrated system with Affinity at the core.
You’ll learn:
- How Picus structures their stack and why Affinity is the foundation
- Workflows and automations that eliminate manual work and accelerate decisions
- Best practices for driving firm-wide adoption of new technologies and the Affinity CRM
- Real examples of AI and automation streamlining private-capital workflows
Register today |
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• Dealmaking in the consumer retail and services market has slumped to a 10-year low, despite a rebound in the wider PE industry. See our latest analysis of the sector
• Charles Schwab is nearing a deal to acquire private share marketplace Forge Global, the Financial Times reported. This highlights asset managers' appetite to expand their private capital offerings. Full story
• Private credit investments in sectors with "stretched" valuations—like car washes, veterinary practices and HVAC specialists—face a reckoning, according to a report by Fitch Ratings. Find out more
• Mumbai-based ChrysCapital closed its 10th flagship fund on $2.2 billion, marking the largest vehicle raised by an India-based GP to date. Read more |
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| How Goldman Sachs' ETF targets PE returns with public stocks |
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| (OlegAlbinsky/Getty Images) |
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By Rod James, Private Equity Senior Editor
Late October saw the debut of the Goldman Sachs MSCI World Private Equity Return Tracker, an exchange-traded fund designed to give investors PE-like returns by investing in publicly traded stocks.
The ETF is invested in around 2,000 public equities picked to mirror the region, sector and style exposure of the MSCI World Private Equity Return Tracker Index, a dataset of 9,700 PE funds and 174,000 private businesses.
The array of private market investment products targeting wealthy and affluent individuals has expanded significantly in recent years. Unlike this ETF, most are structured to allow investors to invest directly in private assets, whether acquiring equity through interval funds or issuing debt through business development companies.
Brendan McCarthy, Goldman Sachs' global head of ETF distribution, and Oliver Bunn, its head of quantitative investment strategies alternatives, spoke to PitchBook about why it took a liquid approach to providing illiquid-style exposure.
"We want to make sure investors are buying something where they know what's inside of it, which is transparent and liquid in nature. But we also wanted to address the gap in the marketplace: the investor who can't access true private equity," McCarthy said.
“We want to give them a vehicle that at least gets them diversification and a return stream that is private equity-like,” he said. |
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Smart reads that caught our eye.
• See the economic details of how Zohran Mamdani plans to make New York City more affordable, with a breakdown of the NYC mayor-elect's plans for his largest promises: taxation, childcare, rent control and public transportation. [The Wall Street Journal]
• China's state-funded data centers can now only use domestically-made AI chips. Regulatory authorities are instructing new data centers to uninstall foreign chips in a move toward AI self-sufficiency. [Reuters]
• Perplexity's AI search engine is coming to Snapchat. Perplexity inked a $400 million deal with Snap as the company opens up to more AI partnerships. [Bloomberg] |
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