At the Bloomberg Ideas conference in San Francisco this week, I had the honor of sitting on a vibrant panel to discuss if capital markets in the U.S. support innovation.

The day after, I can’t help lamenting about China.

Sure, Asia’s largest economy is peppered with unicorns. Three of the world’s five most-valued startups reside there. Since 2017, another 27 companies have reached a $1 billion valuation at their latest funding round, bringing the country’s total unicorn count to 64, CB Insights data show.

Unicorn Nursery

China has seen a rapid growth in venture capital investing over the past two years

  • U.S.
  • China

Source: CB Insights

But this isn’t something to be proud of. If anything, it’s a sign entrepreneurs and venture capitalists have few exit options.

Finding those opportunities is critical. China is planning to bring home some U.S.-listed tech giants using CDRs, or Chinese depository receipts. Alibaba Group Holding Ltd. and JD.com Inc. will be among the first to issue CDRs, Caixin reported earlier this week, citing unidentified people familiar with the matter.

But how will CDRs help unicorns?

Securities regulations in China require that any firm planning to list on the main board must have generated at least 30 million yuan ($4.7 million) in net profit for three consecutive years. That’s a tall order: The world’s most valuable unicorn, Uber Technologies Inc., remains in the red.

Even if startups are already making money, the rules are such they’ll probably think twice before applying.

The China Securities Regulatory Commission said