China creates $6.5b VC fund to support start-ups

"The establishment of state venture capital funds, with a focus on supporting fledging start-ups, is a significant step to integrate technology and the market, innovation and manufacturing," according to a State Council statement. "This move could help breed and cultivate new businesses in the future, and promote the economy towards a mid-and high-end level."

The decision came after the State Council's regular meeting on Tuesday, which was chaired by Premier Li Keqiang. Part of the government's existing capital, which is designated for expansion of emerging industries, will be invested in the fund. Enterprises, financial institutions and private capital are also being encouraged to participate.

The fund - to be managed by several professional managers based on open tendering process - will target equity investments in early-stage innovative firms. It will also partner with local or leading industry players' corporate arms on certain deals. Private investors will be prioritized when distributing any returns, the statement noted.

The Chinese government is increasingly supporting the expansion of venture capital. Last month, regulators allowed insurance companies to unleash their capital to invest in VC funds.

China set up its first government-guided fund - Beijing Zhongguancun Venture Capital Fund - in 2012, with total assets of RMB500 million ($80 million). As of year-end 2013, there were a total of 189 government-backed funds, with about RMB10 billion ready to invest, according to a separate statement posted on the government website.

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• Topics
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