Tech company startups in China may find this year as a tough one. Analyst predict the growth of venture capital investment in China will slow down after a good 2015. Government will work hard to boost the development in startup and venture capital this year.

The 2016 is the year of the monkey, according to Chinese lunar calendar. As unpredictable as the animal representing the year, Chinese venture capital may face slowdown after huge gain last year. Bloomberg reported that in the entire 2015, value of venture capital investment in China increased more than double compared to 2014. In total, $37 billion investment was poured into 1,555 deals in the country's startup companies.

However, starting fourth quarter a decline was reported. According to Preqin, a London-based consulting firm, value of investment in the fourth quarter dropped at 40%. Investors only put in $7.8 billion, compared to the previous quarter, when the venture capitalists eagerly closed $13 billion in investment.

Investors that invested heavily in previous quarter started to take more calculative approach. Managing director of Highland Capital Partners, Hong Chuan Thor said, "Venture and private equity investors, who aggressively invested over the last two years, are getting very cautious. First half of this year doesn't look good for entrepreneurs who are raising capital."

Analysts predicted the growth of venture capital investment in China will cool down in 2016. Managing partner at iResearch Capital, Albert Yang told China Radio International that the momentum in 2015 is hard to sustain this year.

Furthermore he said, "In the first half of last year, a lot of the funding came from companies that went public, which blew up the valuations of start-ups. In the second half of the year, when the secondary market didn't do well, money from these companies was not there anymore, which caused this bubble to burst. The companies that survived are more competitive, but I think this year the total amount of investment will drop."

In order to maintain growth and momentum, Shanghai government made a bold policy to cover venture capital losses with public fund. Caixin News reported that government offered payout to venture capital firms invested in Shanghai startups since 2015 if their investment loses. This policy draws criticism from private equity and venture capital firms alike.

Managing parter of private equity investment firm SAIF Partners, Andrew Y. Yan criticized the policy of involving public fund in venture capital will extend risk to public. He said, "VC investments are extremely risky and limited to only a very few people and institutions. The negative consequences of using public money to compensate investment losses will be unimaginable."

Starting this year, tech startups in China will have to work harder to improve their values. As analyst have predicted a slowdown this year, government tries hard to maintain the growth momentum with a payout.