Shanghai Plan to Cover Venture Capital Firms' Losses Is Criticized

(Beijing) – A plan by Shanghai's government to encourage innovation by compensating venture capital firms for their loss has been criticized by professional investors as violating market principles and filled with loopholes.

Starting next month, venture capital firms that invested in high-tech startups in Shanghai since the beginning of last year can apply for government compensation if their investment loses money. The policy is laid out in a regulation dated December 29 that the city's Science and Technology Commission put on its website on January 21.