With an emphasis on Chinese tech firms, Vertex Ventures to launch a $500 million fund

• ByStartupStory     |    October 19, 2022

According to a senior executive, venture capital firm Vertex Ventures, backed by Singapore’s Temasek state investor, plans to raise up to $500 million for a new fund that will invest in initiatives to accelerate China’s domestic IT development.

When compared to an earlier, comparable fund that raised $275 million, the size of the new fund would exceed its initial target of $400 million, according to Tay Choon Chong, the managing partner at Vertex Ventures China.

According to him, 90% of the additional cash will go towards Chinese start-ups. China is shifting its reliance from using foreign technologies to its own technological know-how, according to Tay. The time is ideal for China to play catch-up, which will present us with significant chances, as it lacks the most fundamental technology, such as those for semiconductors and computing.

On Sunday, President Xi Jinping addressed the opening session of China’s 20th Communist Party Congress, highlighting the value of technological independence and the need to strengthen the country’s capacity for independent innovation.

A change in Beijing’s strategy for growing its IT industry, with more state-led spending and intervention to counter U.S. pressures, according to some observers, could be signalled by Xi’s call for China to “win the war” in core technologies.

The launch of the newest Vertex fund coincides with a slowdown in U.S. dollar fundraising by venture capital and private equity firms with a focus on China this year. The time is ideal for China to play catch-up, which will present us with significant chances, as it lacks the most fundamental technology, such as those for semiconductors and computing.

Some investors have been forced to reconsider their approaches to Chinese ventures as a result of regulatory crackdowns, COVID-19 limitations, and heightened China-U.S. tensions.

Vertex would hunt for businesses that have the potential to lessen Beijing’s dependency on foreign suppliers while searching for investment opportunities with businesses producing cutting-edge technologies, Tay said.

Tay added that he saw increasing investment value in companies developing processors for electric vehicles. “We will invest in some underlying technologies that may not seem to be high-end but risk import limitations,” Tay said.

SES, a manufacturer of batteries for electric vehicles, Horizon Robotics, a chip developer based in Beijing, and Mobike, a bike-sharing company that China’s Meituan purchased in 2018, are some of Vertex’s prior China investments.

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