Small Start-Ups Short of International Venture Capital Shanghai (SHANGHAI-DAILY BUSINESS NEWS, 09/15/00) China's high-tech start-ups, especially smaller ones, are finding it hard to get enough business-expansion investment because of their limited access to international venture capital. A lack of venture capital rules, plus a talent shortage and poor management of venture-funded operations will now cause setbacks, analysts say. So China is considering a capital market to help smaller start-ups. "Global venture capitals should be allowed to operate in high-tech parks and development zones in major cities of China," said Zhang Jing'an, director-general of the Torch High Technology Industry Development Centre under the Ministry of Science and Technology. Zhang, also the director of a government-backed venture capital fund in China said at a recent two-day venture capital forum in Shanghai that would-be venture capitals will evaluate China's technological and talent strengths. "Just like in the United States, where venture capitals are concentrating on the Silicon Valley and other high-tech parks, China's high-tech parks will have a big role to play," he said, adding that Without a sustainable source for funding, the high-tech sector, with high stakes involved, cannot take off. Commercial banks, which account for more than 90 per cent of the funding for mainland businesses, shun smaller companies because of the relatively high risks. There are an estimated 100 venture capital firms in the Chinese mainland, but their operations suffer from a lack of funding and talent. One solution: China's forthcoming debut of a tech-heavy board, similar to the NASDAQ in New York. "An exit mechanism, which allows venture capitalists to back out of unsuccessful start-ups, will help secure confidence in the market", Zhang described a feature of the new board. --- Subscribe to our newsletter to receive the latest news --- |
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