(Yicai) Dec. 26 -- China today began operations of a national venture capital guidance fund of up to CNY1 trillion (USD142.7 billion) to steer financial capital toward early-stage, small, long-term, and hard-technology businesses, as part of broader efforts to strengthen the country’s innovation ecosystem.

The fund, jointly established by the National Development and Reform Commission and China’s Ministry of Finance, is funded with CNY100 billion (USD14.3 billion) of government capital and is designed to attract social capital through regional funds and sub-funds, ultimately reaching a total scale of CNY1 trillion.

Adopting a three-tier structure comprising a guiding fund company, regional funds, and sub-funds, the initiative is accelerating the establishment of three regional funds covering the Beijing-Tianjin-Hebei region, the Yangtze River Delta, and the Guangdong-Hong Kong-Macao Greater Bay Area. All three have signed investment agreements, completed industrial and commercial registration, and formed an initial batch of 49 sub-funds and 27 investment projects.

The fund’s investment focus spans integrated circuits, quantum technology, biomedicine, brain-computer interfaces, and aerospace, reflecting a strong commitment to supporting hard technology, said Bai Jingyu, director of the Department of Innovation and High-Tech Development at the National Development and Reform Commission.

According to Bai, the fund will prioritize companies at the seed, startup, and early-to-mid stages, supporting original and disruptive technological breakthroughs in cutting-edge fields and fostering a “two-way commitment” between capital and innovation. Given that the growth of high-tech enterprises resembles a marathon, the fund has been set with a 20-year duration, including a 10-year investment period and a 10-year exit period, to cultivate “little giants” and unicorns across industries.

The fund will act as an angel investor to address market funding shortages and share innovation and entrepreneurship risks across society through market-oriented approaches, said Guo Fangming, director of the Department of Economic Construction at the Ministry of Finance. The ministry will fulfill its role as a state investor by emphasizing performance evaluation based on policy outcomes and operational compliance, rather than short-term profit and loss from individual projects or single years.

Guo added that the fund has three defining features: targeting the front end of the innovation chain to close financing gaps at the original innovation stage; building a relay mechanism based on patient capital to reserve high-quality projects for later stages; and cultivating an innovation ecosystem through differentiated risk control to guide social capital toward long-term engagement in technological innovation.

Editor: Emmi Laine