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The new fund’s size will exceed an initial target of $400 million, compare with an earlier, similar fund that raised $275 million, said Tay Choon Chong, managing partner at Vertex Ventures China.
Around 90% of the new capital will be invested in Chinese start-ups, he said.
“China is pivoting from relying on imported technologies to its own tech know-how,” Tay said.
“It lacks the most underlying technologies, such as those for chips and computing, and it’s the right moment for China to play catch-up, which will bring us big opportunities.”
President Xi Jinping kicked off China’s 20th Communist Party Congress on Sunday emphasizing the importance of self-reliance in technology and the need to improve the nation’s capacity for independent innovation.
Some analysts said Xi’s call for China to “win the battle” in core technologies could signal an overhaul in Beijing’s approach to advancing its tech industry, with more state-led spending and intervention to counter U.S. pressures.
The latest Vertex fund comes amid a slowdown this year in U.S. dollar-denominated fundraising by China-focused venture capital and private equity firms. Regulatory crackdowns, COVID-19 controls and heightened China-U.S. tensions have forced some investors to rethink their strategies towards Chinese projects.
While looking for investment opportunities involving companies developing advanced technologies, Vertex will also look for firms that have potential in reducing Beijing’s reliance on foreign suppliers, Tay said.
“We will invest in some underlying technologies that may not seem to be high-end but risk import restrictions,” Tay said, adding that he saw emerging investment value in firms working on chips for electric vehicles.
Vertex’s previous China investments include electric vehicle battery maker SES, Beijing-based chip developer Horizon Robotics, and Mobike, a bike-sharing firm acquired by China’s Meituan in 2018.
