Temasek-backed Vertex set to raise nearly $500 mln for new China-focused fund

SES AI

18/10/2022 11:39

BEIJING/HONG KONG, Oct 18 (Reuters) - Venture capital
firm Vertex Ventures, backed by Singapore state investor
Temasek, is set to raise nearly $500 million for a new fund that
will invest in efforts to step up China's domestic tech
development, a senior executive said. 
    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  SES.N , Beijing-based chip developer Horizon
Robotics, and Mobike, a bike-sharing firm acquired by China's
Meituan  3690.HK  in 2018. 
 (Reporting by Roxanne Liu and Kane Wu; Editing by Sumeet
Chatterjee and Tom Hogue)
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