SOE venture capital helps fund innovative development

The State-owned Assets Supervision and Administration Commission of the State Council and the National Development and Reform Commission recently issued joint policy measures to promote the high-quality development of venture capital funds and support State-owned enterprises in establishing such funds.

The development of venture capital marks an important move to promote the virtuous development of science and technology, industries and finance. Without the support of venture capital, it would be difficult for influential innovative enterprises to have grown and developed rapidly. In China's venture capital market, State-owned capital holds the lion's share and plays a positive role in promoting its scientific and technological breakthroughs.

The healthy development of the venture capital industry requires a long-term and stable source of funds, that is, patient capital. An enterprise has to go through hardships for which impatient capital cannot be a patient companion. To cultivate and develop patient capital, the "visible hand" should play an important role in promoting State-funded investment.

The latest move points out the direction for the further development of central enterprise venture capital funds. On the one hand, it makes clear that funds should be directed toward early-stage, small-scale, long-term investments and hard technology, and toward those in need rather than those already well-resourced. It also aims to resolve the problem of "where does money come from", that is, central State-owned enterprises will set up venture capital funds.

The latest policy measures are not aimed at pursuing short-term financial returns. Instead, they set a higher fault tolerance rate for the funds that focus on the seed stage and the initial stage projects.

After the establishment of central enterprise venture capital funds, how it handles the relationship with the market still needs to be taken into account. For example, how to cooperate with mature market-oriented investment institutions to jointly incubate and cultivate the growth of scientific and creative enterprises is a topic worth thinking about. It is hoped that all localities will actively explore an investment mechanism with multiple sources of funds, attract qualified social capital into the field of venture capital in an orderly manner, and promote the transformation and application of more scientific and technological achievements of great value.

ECONOMIC DAILY