PE, VC firms face battle for 'survival of fittest'

With the IPO exit return rate falling below two times, a chill has set in for China's venture capital and private equity sectors, which face a shake-out, analysts said.

Last month, 20 Chinese companies were listed, nine of them backed by a total of 16 VC and PE firms. But more than half of the exit return rates were less than two times, according to Beijing-based consultancy Zero2IPO Group.

The consultancy added that because most investment deals involving the VC and PE firms in the nine companies were at the pre-IPO stage, their investment periods were only about two years and exit return rates were low.