Silk Ventures, a venture capital firm headquartered in London with additional hubs in Menlo Park, Beijing, and Shenzen, has closed its inaugural investment fund at $500 million, targeting later-stage technology companies looking to expand into China.
With a specific focus on “scale-up” firms from the U.S. and Europe, Silk Ventures announced the fund at China’s two-day One Belt, One Road (OBOR) event in Beijing, an occasion that brings together dozens of state leaders from around the world.
Founded in 2015 with backing from the Chinese government, Silk Ventures has so far operated as an accelerator of sorts, working on a number of initiatives to help Chinese companies internationalize and help startups from elsewhere enter China. The first fund will focus specifically on Series A-level startups looking to target the Chinese market and will cover artificial intelligence (AI), Internet of Things (IoT), fintech, robotics, medical tech, and more.
The investment pot is half funded by China’s state-owned Assets Supervision and Administration Commission (SASAC) Shenzhen, while the remainder comes from “a group of confidential strategic corporations,” according to a statement issued by Silk Ventures. Names are expected to be revealed in July. The VC firm has yet to conclude any investments from its first fund, a spokesperson told VentureBeat, but it does expect to announce its first deals in July.
Angelica Anton, founding partner of SILK Ventures, said:
We are proud to announce our first fund, which will enable us to invest into some of the world’s most promising scaling businesses and technologies. We are the only venture fund in the world doing what we are doing. We are globally aligned with expert partners in the U.S., 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.
Silk Ventures emerged as the European HQ for Shenzhen’s Department of Trade and Investment, which partnered with Silk Ventures to open an office in Canary Wharf in London. And this tight tie-up gives a clue as to how closely China’s government will be working with Silk Ventures — it will be providing the “support and funding needed by promising technology companies to expand into the Chinese market,” according to a statement.
A number of other funds have come to the fore in recent times that are also designed to create close links between China and Western markets. Last year, Chinese investment firm Cocoon Networks launched a $715 million fund aimed at helping European startups grow in China, while IDG Capital Partners, the China-focused incarnation of San Francisco VC company IDG Ventures, launched a gargantuan $1 billion fund in conjunction with Silicon Valley VC firm Breyer Capital.
Ultimately, any company looking to enter China faces significant regulatory hurdles, so it helps to have local networks and partners on board from the start. Silk Ventures’ main selling point to European and U.S. scale-ups is that it will be working directly with official Chinese local government departments, which should go some way toward smoothing the path to what should prove a lucrative market.