China’s new government fund for venture capital has real potential to significantly promote China’s domestic entrepreneurship and innovation. But if access to the new funding is too easy, the projects main objective will be jeopardised.
On 14 January 2015, the State Council — China’s chief policy body — announced it will allocate 40 billion yuan (US$6.5 billion) to a new venture capital fund to support new startups and foster emerging industries. The announcement read that the fund ‘comes at the right time’, but that ‘follow-up efforts are still required to ensure the fund works’. The government said the fund will come from the government’s existing budget designated for the expansion of emerging industries. Details on how it will be managed have yet to be announced. The government has referenced the possibility of including ‘social capital’ and will invite tenders from fund managers.
