Guangdong to Encourage Investment by State-Owned Venture Capital Firms With New Rules

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Guangdong province has issued regulations to encourage state-owned venture capital (VC) firms to invest, part of China’s broader efforts to boost the industry.

The regulations, which are set to take effect on Oct. 1, call for provincial and city governments to improve mechanisms to evaluate these firms’ performance and allow for certain risks, mistakes or failures in investment decisions without leading to significant negative consequences.

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New Guangdong regulations, effective Oct. 1, aim to encourage state-owned VC firm investments by easing evaluation criteria and acknowledging investment risks.
State-owned capital dominates China's VC/PE sector amid market downturn and tightened IPO rules, accounting for 57% of total investments in H1 2023.
There are calls for more detailed guidelines on accountability and risk tolerance to reduce pressure on state fund managers, despite some skepticism about the new regulations' effectiveness.

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Who’s Who

Hunan Sany Venture Capital Management Ltd.: Hunan Sany Venture Capital Management Ltd. is led by chairman Gao Daming, who views Guangdong province's new regulations as "progress" and believes they may alleviate some pressure on the venture capital industry.

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What Happened When

Last year (2023)：: The sector saw a dual decline in the number and total value of equity investments from VC/PE firms.

First half of this year (2024)：: Both shortfalls in the number and total value of equity investments widened.

By the first six months of this year (2024)：: Government-backed investment institutions accounted for 57% of total investment by value.

June 2024：: The State Council published guidelines calling for improvements to the policy environment and management system for the entire VC chain.

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