Following the news of China's startup-focused $6.5bn fund launch, Global Government Venturing editor James Mawson looks back at the country's efforts to bolster venture capital.
It is nearly 30 years since China’s central government effectively set up the country’s first venture capital company.
The past week’s decision by China’s State Council to set up a RMB40bn ($6.5bn) government venturing fund to back startups is a good opportunity to look both at the evolution in the country and in approaches to state-support venture capital.
Back in 1986, China started its New Technology Venture Investment Corporation (CNTVIC), majority-owned by China’s State Science and Technology Commission and Ministry of Finance, in a model followed by local governments. CNTVIC was effectively an agency to support policy rather than a profit-oriented private enterprise, according to John Orcutt in his book, Shaping China’s Innovation Future.
This meant its preferential access to startups based in economic development zones were “far outweighed” by compromised investment decisions as CNTVIC and others focused on leaders’ interests, he added.
Lin Zhang’s excellent book, China’s Venture Capital Market,…
