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Startups

Funding squeeze to deflate China's startup 'bubble,' says US incubator

Slower pace of venture capital will let smaller players emerge from shadow of giants like Ant Financial and Didi

A driver in Beijing taps the Didi app. The ride-hailing company ranks as China's most valuable unicorn.   © Reuters

BEIJING -- China's startup bubble, which has spawned a flurry of multibillion-dollar companies such as ride-hailing group Didi Chuxing, is at risk of bursting, a leading U.S. incubator has warned.

Too many venture capital firms are betting their money on just a handful of startups in the belief that "only the top player can survive," said Peter Xu, chief executive of Plug and Play China in an interview with Nikkei Asian Review. This has inflated valuations to the point where "50% is a bubble," he said. Founded in 2012, Didi's valuation today sits at more than $50 billion.

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