Shanghai issues new measures to further boost venture capital

In a move to strengthen financing support for startups, Shanghai has released new measures, including more support from the government guidance fund and a continuous focus on cultivating leading industries, including the three core sectors of integrated circuits, biomedicine, and artificial intelligence.

The city has continuously promoted the development of venture capital, having unveiled supportive policies in 2014 and 2019 to cultivate VC firms and angel investors while guide social capital to strengthen early-stage investment.

Under new requirements amid a fast-changing market, the city has revised policies and drafted new guidelines to further promote the development of VC in Shanghai, which would take effect from August 1 and be valid for a year.

The revised guidelines are divided into five aspects with 19 detailed measures. Adjustments include supporting an investment company of financial assets to expand direct equity investment, selecting a professional investment team focused on supporting the early period of science and technology-based enterprises and establishing funds for future industries.

The guidelines also include preferences through government guidance funds, such as stepped-up profit sharing for such funds, and support for early-stage investments in core science and technology.

In addition, the new measures will broaden the fund-raising and exit channels for VC enterprises, encourage mergers and acquisitions (M&As) as well as integration in key industrial sectors, providing facilitation measures for overseas M&A in key sectors.

They will also continue to specifically support the city's three core industries of integrated circuits, biomedicine, and artificial intelligence, along with key sectors such as electronic information, life and health, automobiles, high-end equipment, and advanced materials.

Three major pilot industry parent funds totalling 100 billion yuan (US$13.7 billion) were launched in Shanghai on July 26, covering IC, biomedicine, and AI as well as the future industry.

By the end of 2023, Shanghai boasted nearly 600 types of various science and innovation carriers, including 65 state-level science and technology business incubators, 60 new Internet public service platform spaces, and 14 national university science and technology parks; the total area of space venues was 4,128,600 square meters with more than 33,000 incubates.

The science and innovation carriers incubated by science and innovation board-listed enterprises had reached 30, according to official data.