China’s venture funds see opportunity in local tech firms

HONG KONG: China-focused venture capital funds are increasing their bets on local technology companies and a further opening of Chinese domestic capital markets, raising money in the yuan at the fastest pace in five years.

Fund managers have raised 95.8 billion yuan (RM61 billion) this year through late September in funds denominated in the Chinese currency, compared with 56.7 billion yuan in all of 2016. That puts this year on pace to be the biggest year since 2012, when 145.8 billion yuan was raised, according to data provider Preqin.

There are currently 78 funds looking to raise as much as another 1.15 trillion yuan over the next couple of years, most of it coming from state-owned entities and government guidance funds, which seek to foster domestic innovation in industries from engineering and robotics to biotechnology and clean energy.

Those include the 350 billion yuan sought by the China Structural Reform Fund, 200 billion yuan targeted by the China State-Owned Capital Venture Investment Fund and 150 billion yuan for the state-owned Enterprise National Innovation Fund.

The surge contrasts with the slowdown in seed financing for startups in the United States, which is down for the past two years. It also compares with flat growth expected for US fundraising in 2017. Reuters