(Dec 26): China has officially launched a national venture capital fund and three large regional funds, together worth billions of dollars, as part of a push to foster home-grown tech champions and improve investment efficiency.
The National Startup Investment Guidance Fund, as well as the three vehicles covering the Beijing-Tianjin-Hebei region, the Yangtze River Delta and the Greater Bay Area, began operating on Friday, according to Xinhua news agency.
Thepetronasgas national fund is backed by 100 billion yuan from the Ministry of Finance, financed through the issuance of ultra-long special sovereign bonds, Guo Fangming, a Finance Ministry official, said at a briefing on Friday.
The three regional funds are set up through the national fund’s equity stakes in limited partnerships and are each expected to eventually grow to more than 50 billion yuan, Huo Fupeng, chairman of the state fund, said at the same event.
China is ramping up its push for technological breakthroughs as competition with the US heats up in areas such as semiconductors. Tighter fiscal conditions — including rising debt risks and weaker revenue — have forced the government to be more disciplined about how it invests. At the same time, the rise of artificial intelligence (AI) 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,” Bai Jingyu, an official at the National Development and Reform Commission (NDRC), said at the briefing.
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“Addressing these gaps through the development of patient capital is the very 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.
‘Little giants’
The NDRC first announced plans for the state fund in March, estimating it could drive one trillion yuan of investment from local funds and private capital.
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The national fund will run for 20 years — with 10 years devoted to investment and another 10 to exits. This will help support long-term growth of companies and cultivate “little giants,” a term used for smaller firms aligned with the government’s tech priorities, as well as unicorns across industries, Bai said.
Seed and startup firms will account for at least 70% of the national fund’s investments, he said. The fund will target smaller companies with valuations of no more than 500 million yuan, and each deal will be capped at 50 million yuan.
Strategic emerging and future industries will be prioritised. Bai added that the three regional funds plan to invest in sectors such as integrated circuits, quantum technology, biomedicine, brain-computer interfaces and aerospace.
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