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Chinese Investment Firm Launches £500m UK-Based Fund

Chinese investors looking to invest in technology start-ups in Europe have launched a UK£500 million (C$1,035 million) fund in London, England in the hopes of attracting businesses wanting to enter China’s market and wanting to use the new, 70,000-square feet incubator facilities funded by the group. Cocoon Networks, the new fund, is backed by China Equity Group and Hanxin Capital and will focus on start-ups in the financial technology, biotechnology, and creative industry sectors.

The start-up fund is just the latest in a trend of Chinese players establishing or investing in London, which has seen firms such as Kunlun Tech Co invest UK£23 million into London’s Lendinvest. Over the past nine months, at least 28 Chinese companies have committed to operations in London, and by March 2016 that number is expected to be around 40. The city saw 30 Chinese firms enter back in fiscal year 2011-2012, a record-year that is now likely to be beaten. Chinese firms have been actively investing in Europe’s technology sectors, including the US$58 million (C$74 million) acquiring of France’s mobile ad company ModPartner by China’s Cheetah Mobile in March 2015.

Funds from London’s venture capitalists have recently been dominated by ecommerce, with four ecommerce firms receiving 50% of all funds in Q3 2015. The UK’s overall tech sector has also been dominated by London’s: in 2015, 62% of the UK£2.5 billion in technology venture capital flowed to London. Some €3.6 billion (C$5.1 billion) in European venture capital investments occurred in 2014, up 6% from the previous year, while UK£288 million of venture capital investments occurred in the UK, up from £259m in 2013.

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