Member Article

Meet the high-flyers behind China’s $500m 21st Century Silk Road of tech investment

With over a quarter of the world’s population living in China and with its burgeoning middle class avidly adopting the latest tech innovations ever more voraciously, the potential of the Chinese market for businesses looking to scale is vast.

Now a new fund launched with the support of the Chinese Government is to help US and European startups do just that in conjunction with official investment departments and Chinese local governments.

The $500m SILK Ventures fund revealed this morning will look to invest in Series A rounds of companies across a range of tech areas, including deep tech, Internet of Things (IoT), robotics and FinTech.

Based out of Level39 in Canary Wharf, the fund is the first from the venture capital firm which began life as an accelerator back in 2015 and is a significant stamp of approval for the capital’s continued position as a key fulcrum in global tech.

From its London base, alongside its Menlo Park, Beijing and Shenzhen offices, the fund will look to invest in US and European companies with ambitions to scale into China, opening doors and giving companies access to incentive packages to encourage inroads into the market.

The state-owned Assets Supervision and Administration Commission (SASAC) Shenzhen, which helms 100 large state-owned corporations, will provide 50% of the funding, with the rest funded by as yet unnamed strategic corporations, highlighting both the commercial and political heft of those behind the fund.

Heading up the fund will be Founding and Managing Partner, Angelica Anton, who has previously acted as investment director to the Chinese government and was Senior Associate for QVentures, the VC arm of Quintessentially.

Anton hailed the new fund as the only one in the world to bring just high-profile global partners together with the highest levels of governmental officials and support networks.

She commented: “We are globally aligned with expert partners in the US, Europe and Asia to work with China at the highest levels to ensure that our portfolio companies are not only well-funded, but have the best chance of success in the Asian market.

“SILK Ventures was built to change the way Chinese capital marries Western technologies, and we pride ourselves on the cultural and operational know-how within our expanding team.”

Following the fund’s first raise, Anton will now be joined by a line-up of experienced investors and entrepreneurs from around the globe who will form Silk’s partner team, including:

• Former Head of Asia at Prudential and advisor on Alibaba’s IPO, Brewer Stone, who becomes Venture Partner.
• Silicon Valley VC investor, Ian Foley, who also becomes a Venture Partner.
• Experienced private equity operator, Matthew Brandt, who becomes Operating Partner.
• Edward Zeng, founder of China Bridge Capital, who becomes a partner for the SILK-SASAC fund.
• Co-General Partner, Wang Yongjian, who is also the General Manager of SASAC’s Shenzhen Investment Holdings.
• Former Goldman Sachs and Bank of China analyst, Di Ai, who becomes a Senior Associate.

Why it’s interesting

It is no coincidence that the announcement of Silk’s new $500m tech fund has coincided with China’s One Belt, One Road (OBOR) event.

If OBOR can be viewed as a revival and renewal of the old Silk Road trading belt through Asia and to Europe and beyond, then Silk Ventures’ first fund is the 21st Century equivalent for the knowledge and services economy.

With Chinese homegrown tech giants such as Tencent and Baidu holding their own against their more well-known global rivals and plotting international moves of their own, the country has become an increasingly confident operator on the global tech scene in the last decade.

Now the Sino government has its sights trained on becoming a major tech investor over the next decade, and has earmarked significant state funds to be funneled into startups and innovative companies at home and abroad.

According to the New York Times, Chinese investors provided almost $30bn in early stage tech funding between 2015 to 2016, with 10% of that funded by China, and this is only set to rise in the coming years.

And while such figures have predictably encouraged claims of espionage and soft power fears, there’s little doubt that UK companies willing to work within the boundaries of state control have much to gain from the enormous Chinese market.

Looking to promote your product/service to SME businesses in your region? Find out how Bdaily can help →