Venture Capital

Weaker yuan? A yawn for start-ups: VC

Yuan stalling VC spending?
Yuan stalling VC spending?

China may have devalued its currency twice this week, sparking the largest drop in the yuan in over two decades, but that might not mean much for the country's start-up scene.

"We don't see the short-term currency fluctuations having a big impact," Jeff Richards, GGV Capital managing partner, told CNBC's "Squawk Alley," differentiating from the pain for companies importing into China like Apple.

Most VCs are less concerned with short-term moves since investments are made over a longer time frame of three to 10 years, according to Richards. But even then, a weaker yuan's impact could be negligible for the average insular start-up.

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An employee at a currency exchange counts Chinese one-hundred yuan banknotes next to a pile of U.S. one-hundred dollar bills in Hong Kong.
Xaume Olleros | Bloomberg | Getty Images

"Most of the companies we're investing in aren't really that interested in the U.S.," he said. "Most of them are focused on domestic China as their largest market."

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Aside from larger Chinese companies like Xiaomi and Alibaba which are starting to look abroad at markets like India, smaller start-ups have enough reason to focus inside China, Richards said.

"There's really no other market in the world like China," he said. "You've got over 500 million Internet users, the largest mobile population in the world, and an amazing demographic shift towards younger mobile buyers."