China Starts State-Backed Venture Funds to Support Tech Startups
China has officially launched a national venture capital fund and three major regional funds together worth billions of dollars as part of an effort to encourage homegrown tech champions and improve investment efficiency.
According to Xinhua News Agency, three instruments covering the Beijing-Tianjin-Hebei region, the Yangtze River Delta and the Greater Bay Area, as well as the National Startup Investment Guidance Fund, were put into operation on Friday.
The national fund is backed by 100 billion yuan from the Ministry of Finance and financed by the issuance of ultra-long special government bonds, Ministry of Finance official Guo Fangming said at Friday’s briefing.
The three regional funds were established through the national fund’s equity stakes in limited partnerships, and each is expected to eventually reach more than 50 billion yuan, state fund chairman Huo Fupeng said at the same event.
As competition with the United States intensifies in areas such as semiconductors, China is increasing its efforts towards technological breakthroughs. Tighter financial conditions, including rising debt risks and weak revenues, have forced the government to be more disciplined in investing. At the same time, the rise of artificial intelligence startup DeepSeek this year demonstrated the effectiveness of private capital.
“Emerging and future industries are still struggling with limited investment and insufficient inputs of other innovation factors,” National Development and Reform Commission official Bai Jingyu said at the briefing.
“Addressing these gaps through the development of patient capital is the core purpose and mission of the guidance fund,” he said, adding that the state fund will follow market-based principles, with professional managers making investment decisions.
The NDRC first announced plans for the state fund in March, estimating that it could attract investments of 1 trillion yuan from local funds and private capital.
The national fund will operate for 20 years, 10 years of which will be devoted to investment and 10 years to exits. This will help support companies’ long-term growth and cultivate “little giants” – a term for smaller firms aligned with the government’s technology priorities – as well as unicorns across industries, Bai said.
He said seed and startup companies will account for at least 70% of the national fund’s investments. The fund will target small companies whose value does not exceed 500 million yuan, and each deal will have an upper limit of 50 million yuan.
Strategically developing and future sectors will be given priority. Bai added that the three regional funds plan to invest in sectors such as integrated circuits, quantum technology, biomedicine, brain-computer interfaces and aerospace.
This article was generated from an automated news agency feed without modifications to the text.
