China's venture capital funds for 'hard technology' explained

Consistent with its ambitions to outdo the competition in the technological realm, China has launched three new venture capital funds directed to "hard technology" sectors, as reported by state broadcaster CCTV.

Each of these funds will have a capital contribution of over 50 billion yuan (approximately $7.14 billion), primarily focused on early-stage startups valued at less than 500 million yuan, with individual investments capped at 50 million yuan.

This move is part of a broader strategy to strengthen China's innovation ecosystem. The national venture capital guidance fund, which has a total target scale of up to 1 trillion yuan (around $142.7 billion), is jointly established by the National Development and Reform Commission and the Ministry of Finance.

Its initial phase is funded with 100 billion yuan (about $14.3 billion) from government capital, designed to attract additional social capital through regional and sub-funds.

The funds operate on a three-tier structure, including a guiding fund company, regional funds, and sub-funds. Regional funds would be established in key areas such as the Beijing-Tianjin-Hebei region, the Yangtze River Delta, and the Guangdong-Hong Kong-Macao Greater Bay Area.

These regional funds have already signed investment agreements and initiated a batch of sub-funds and investment projects.

Investment focus areas include integrated circuits, quantum technology, biomedicine, brain-computer interfaces, and aerospace. The fund will support companies in the seed, startup, and early-to-mid stages, fostering original technological breakthroughs.

With a 20-year duration, including a 10-year investment and exit period, the fund aims to cultivate "little giants" and unicorns while addressing market funding shortages.