Silk Ventures Spins $500 Million Fund to Aid China-Bound Western Startups

(Beijing) — Government-backed financier Silk Ventures has raised a $500 million fund to invest in Western technology startups looking to expand into China.

Silk Ventures announced the fund at  the Belt and Road Forum, held over the weekend in Beijing, and said the first investment will be in July.

Based in London but with offices in Shenzhen and Beijing as well, Silk Ventures has carved out a niche as a business intermediary, helping foreign technology companies invest and move into China.

Half of the new fund will come from the Chinese State-Owned Assets Supervision and Administration Commission (SASAC), which oversees state-owned enterprises. The remainder is coming from a group of “strategic corporations” that Silk Ventures declined to name.

“We are the only venture fund in the world doing what we are doing,” Silk Ventures founding partner Angelica Anton said at the forum. “Silk Ventures was built to change the way Chinese capital marries Western technologies.”

For foreign companies, the road to China can be difficult due in part to the country’s big bureaucracy. Government-backed companies like Silk Ventures are aiming to help ease the path by acting as intermediaries to cut through the red tape.

Silk Ventures has focused on industries like financial technology, robotics, medical technology and artificial intelligence since its establishment in 2015, with support from the Chinese government and personal approval from President Xi Jinping. Its focus areas all have big growth potential, and have been earmarked for strong government support by Beijing.

In June, Silk Ventures launched its first accelerator program to match British startups with Chinese companies. With support from five major Chinese city governments, it helped startups export their technologies to Chinese companies like Ant Financial Services Group, which operates Alipay, the nation’s largest privately owned electronic payments platform.

The new fund’s formation follows a number of similar ones designed to link Western startups to China. Last year, China’s Cocoon Networks launched a $715 million fund to help European startups break into the Chinese market. In 2015, China Science and Merchants Capital launched a $400 million fund to invest in U.S. technology startups.

Contact reporter Song Shiqing (shiqingsong@caixin.com)