State investors in China are gathering more capital to support the growth of homegrown deep-tech companies, with new funds being launched this week in Chinese metropolises including Shanghai and Shenzhen.
Shanghai state investor sets up third industry fund for IC investments
State-owned Shanghai Integrated Circuit Industry Investment Fund Management, which manages Shanghai’s biggest pool of government capital for semiconductor investments, has registered its third fund as the authority continues to funnel capital into the local chip industry.
A business registration update shows that Shanghai Integrated Circuit Industry Investment Fund Management, as the fund manager, set up the third integrated circuit (IC) industry investment vehicle on March 14 with an initial 530 million yuan ($73.3 million) to carry out equity investments, asset management, and other related businesses.
The new fund comes as the metropolis on China’s central coast is becoming the epicentre of domestic chip development. Official data from the municipal government shows that semiconductors, biomedicine, and artificial intelligence (AI) collectively contributed to over a third of the city’s 5.4 trillion yuan ($746.8 billion) gross domestic product (GDP) in 2024.
As the third of Shanghai’s government-led IC fund series, the new vehicle is likely to share a similar mandate to the two predecessor funds, which invest in IC materials, chip design, manufacturing, and related hardware applications.
The debut fund, launched in 2016, raised 28.5 billion yuan ($3.9 billion) in its first close from state-owned limited partners (LPs) including Shanghai International Group, Shanghai STVC Group, and the National Integrated Circuit Industry Investment Fund, also known as the ‘Big Fund’.
The second fund was set up in 2020 with an initial 5.4 billion yuan ($746.8 million) before a few rounds of capital injections from new LPs that eventually brought its capital pool to 14.53 billion yuan ($2 billion) as of August 2024.
Shenzhen Capital co-builds $41.5m seed fund to invest in Shenzhen’s deep tech
State-owned venture capital (VC) firm Shenzhen Capital Group has teamed up with Shenzhen Angel FOF and another local government guidance fund to build a 300-million-yuan ($41.5 million) VC fund for seed-stage investments in cutting-edge technologies in the city.
The new fund, dubbed ‘Red Earth Seed Fund’, plans to invest in seed-stage tech projects deemed strategically important to the authority in the southern Chinese city, such as AI, smart hardware, and intelligent robots, said Shenzhen Capital Group in a Wednesday announcement.
With a fund life of 15 years, Red Earth Seed Fund is tasked to bankroll the incubation of “earlier, smaller, and more advanced” startups with proprietary intellectual properties (IPs), high-tech elements, and strong innovation capabilities, according to the announcement.
Shenzhen Capital Group, founded in 1999, has invested in over 1,600 companies, of which 272 have gone public across 17 stock exchanges globally, by the end of February 2025. As one of China’s biggest VC firms, it manages about 489 billion yuan ($67.6 billion) with a portfolio spanning industries like IT, hardware manufacturing, healthcare, new materials, and new energy.
