Zhongguancun releases first Angel Investment funds

The Zhongguancun Angel Fund of Funds launched on October 21 during the National Week of Mass Entrepreneurship and Innovation. [Photo provided to China Daily]

China’s first fund for Angel Investment - the Zhongguancun Angel Fund of Funds-- was launched on October 21, during the National Week of Mass Entrepreneurship and Innovation, according to the Zhongguancun Administrative Commission.

The fund will promote Angel Investment and help the Zhongguangcun science park becoming a national innovation center, the commission said.

In addition, the fund will provide sound assistance to the country’s startup businesses.

The total scale of the fund is one billion yuan ($157 million), of which the first phase will reach 300 million yuan ($47.19 million). The fund is managed by the Zhongguancun Development Group, a corporation in the science park run by the Beijing government and major foundations and enterprise institutions.

Zhongguancun Development Group and Tsinghua Holdings, –run by Tsinghua University, founded the fund as sponsors. The fund also received policy support from Beijing’s Haidian District and the Zhongguancun Administrative Committee.

Zhongguancun Development Group, a leading state-owned company, works in three major areas – industrial investment, technological finance, and science park development. The company has invested in 69 Angel Investments and industrial funds, with a total scale of 68 billion yuan ($10.7 billion). It manages around 16 science parks, including Zhongguancun Software Park and Zhongguancun Biological Science Park.

Shengjingjiacheng Fund, a major manager of the new fund, is the largest “fund of funds” in the country. It has been selected by China Venture as the “Top 3 Most Innovative Capital Fund” and is expected to invest five billion yuan ($786.5 million) this year. The “Shengjing Global Innovation Award” is a renowned festival with world-wide attention.

The Qingqingchuang Technology Corporation, another major manger, is a “venture capital plus incubation” platform by Tsinghua Holdings. It also operates Zhongguancun Entrepreneurship Street and is the largest service provider for start-ups in the preliminary stage.

The three sides support the fund in different ways. Zhongguancun Development Group uses its resource channels and capital capability to lay a sound foundation for the fund. The Shengjingjiacheng Fund implements its proficiencies in investment decisions, capital management, and adding-value services. The Qingqingchuang Technology Corporation supports the fund with entrepreneurship services.

Unlike the USA—where Angel Investors invest in around 100,000 projects and spend tens of billions dollars annually, pushing the country’s economy—in China the number of Angel Investors remains low, limiting the country’s business growth.

Angel Investment in China experienced rapid growth in the past decade and Angel Investors are gradually entering into more industries. The industry needs more mid- to long- term capital to promote the growth of projects.

The new “Fund of Funds” will attract leading Angel Investors and re-invest their money in Angel Investment funds such as the Zhen Fund.

The fund will invite senior mangers, venture capitalists, and entrepreneurs as limited partners. Their resources will connect and integrate Angel Investment institutions with projects.

The first investments of two to three billion yuan will go to 10 to 15 leading Angel Investment funds. Centered on the “Internet plus”, the fund will invest in thousands of businesses in industries such as high technology, health, culture, and services.

The founder of the fund expects that more mid- to long- term investors will enter Angel Investments, providing start-ups with more capital support.