Chinese technology and investment group Cocoon Networks is launching a £500m ($720m) London-based venture capital fund aimed at investing in UK and European tech startups.
Cocoon Networks, which has the backing of China Equity Group, one of the first investors in to Baidu, China's answer to Google, and Hanxin Capital, which specialises in cloud computing and bio tech investments, will look to invest in tech companies whose products and services show promise and potential for growth in the Chinese market.
The fund will look to invest in tech companies across a wide range of sectors including fintech, biotech, medical devices and the UK's creative tech industries, like fashion-tech. Companies looking to expand into China will also be offered assistance in navigating Chinese legislation and practical help about doing business there.
As part of a wider investment, Cocoon Networks, in partnership with University College London, is also setting up an incubator space, in order to provide the best environment for growing tech startups. John Zai, Founder and CEO, Cocoon Networks said: "The fund will provide capital to help the development of some excellent technology and innovative projects in London and the UK. The fund and incubator programme will bring awareness for more Chinese investors to get into London’s booming technology sector. It will also help many companies grow and expand into China."
The incubator, a 70,000 sq ft building is situated in the heart of London's Tech City close to Moorgate, Liverpool St, and Old Street stations. Cocoon says it will not only be an incubating space for technology companies but it will also work with some of London's universities to attract talent, offer accelerator programmes and co-working spaces. The incubator will work with startups to take products from the concept phase and test them in a real environment – Cocoon’s own digital testing labs – before going live on the public market. Cocoon says this testing and support infrastructure enables startups to compete on a level playing field with larger companies.
Over the last nine months 28 Chinese companies, worth £23million ($33m) to the city's economy, have already pledged to set up in London, with that figure expected to rise to nearer 40 by the end of March 2016. The previous best year for Chinese investment in London was in 2011/12 when 30 Chinese companies came to the city.
Li Cha, Founder and Managing Partner, iStart Ventures LLC, added: "The Chinese economy is vastly in need of innovation which comes from either competition in the domestic market or from international inspiration. In this respect, London is a good source of international trends and aspiration in technology and cultural creativity. Chinese investors have started exploring opportunities outside of China, in order to grab hold of global cutting edge technology as well as to diversify their portfolios. In light of this, London serves as the best hub in Europe."