
China to create $6.5B venture capital fund to support start-ups - billconan
http://www.reuters.com/article/2015/01/15/us-china-venturecapital-idUSKBN0KO05Q20150115
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Pro_bity
What really happens with most government run investment where funds are
allocated to outside investment people or groups (ex. EU funds), is that the
investors have limited incentives to actually/help create successful
companies.

In fact, what often happens is that the investors manage to funnel a large
portion of the funding back to their own pockets by requiring the startups to
pay for bootcamps and trips that are run by the investor and mentors (i.e.
investor's buddies) and pay for services and facilities that the state
provides the investors for free.

On top of this, the investors get very generous salaries and reimbursed for
many if not all expenses (i.e. a great opportunity to double dip, see above).

Finally, if the investor has any money at risk in the fund it is normally all
but fully insured by the government and they get the lion's share of any
returns, if there are any. All in all, it is a great deal for the investors
with almost no accountability and little net benefit for the startups.

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nubela
By your definition, most state venture-funds are born to die. What you are
describing is a structural issue, which while plausible, is not definitive the
structure that a state VC will wield. Some very good examples of state VCs
that did not fall into this trip are Temasek/GIC from my country (Singapore),
as well as that of Norway. And yes, Termasek have a VC that does tech fundings
too. They recently funded Snapchat.

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Pro_bity
I would exclude from this explanation, state funded VCs or sovereign wealth
funds that invest in later stages. They are most commonly investing for
strategic reasons or just piling onto an already established leader.

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bobjordan
I just wish they would stop attacking google products. I have a China legal
enterprise, we pay China taxes, employ 15 people, expect to double size again
this year. But since January 1st I had to scramble and buy VPN service for all
our employees just to continue using our email. I've dealt with a lot of
frustration to get started over here in Chinese system but right now is
probably the most pissed off I've been, this is ridiculous.

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edwinyzh
I have the same frustration as you as someone who is also using Gmail (Apps
version) in China. Even you can get through using VPN, but Gmail web is slow.

Sometimes I am even impulsed to make an email client that has all the Gmail
features I love so that I can migrate to another IMAP-enabled email service
like FastMail, but I know it's not easy even if I have already built
[http://ownmycopy.com](http://ownmycopy.com) which already does cloud-to-
desktop backup for Gmail and has a viewer for Gmail labels and emails......

And sometimes I think, if I ever fight against the evil GOV, such a
frustration is what make it happen. Well, this is just a thought, I'm putting
me in danger if I wrote this in Chinese and on a Chinese website......

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tn13
Government funding of start-ups is a bad idea for everyone. It is like using
the taxed money of successful entrepreneurs to fund doomed to fail
entrepreneurs. It might make more sense for the government to give similar tax
incentives to say employees, VCs and founders on the potential windfall they
might make from their success.

When government puts up such program, the people whose expertise in convincing
government agents would end up getting such money. Convincing a VC and
convincing a government agent are pretty much orthogonal because VCs are
generally directly responsible for that money.

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bhouston
I think this is scary for Europeans and North Americans. We've had a free ride
in the startup space, a real dearth of competition from China, even though
China has exceptionally skilled people (most heavily talented in technology,
although the marketing talent is obviously getting better with the home grown
successes like Xiaomi.)

The one saving grace is that this is government run, which means it will
likely be less efficient than privately run VCs. I've seen government run
startup "accelerators" in action and it is usually pretty messy.

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pasbesoin
What scares me, in terms of technical competition, are things like Bunnie
Huang's description of the differing and sometimes more flexible approaches to
intellectual property, construction, and fulfillment.

Will the West end up fighting its own lawyers, while the East avoids such at
times either through differing social structure or a top-down mandate to "get
out of the way so it can get done"?

The flipside, perhaps: Your startup is yours, until the State decides it is
important to the State. Thereafter, maybe not so much.

I'm no expert -- hardly. But these differences come to mind when I stew on the
topic.

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rayiner
China has historically paid less attention to IP, largely because they didn't
create much of it themselves. That's changing. China is on track to handle
more patent cases than any other country:
[http://www.finnegan.com/resources/articles/articlesdetail.as...](http://www.finnegan.com/resources/articles/articlesdetail.aspx?news=5baf9931-12cd-4d65-8f27-4644b9010b98).
As Chinese brands become valuable in and of themselves, as opposed to being
behind some Western brand, trademark filings are skyrocketing:
[http://www.uspto.gov/news/speeches/2013/rea_fordham_china.js...](http://www.uspto.gov/news/speeches/2013/rea_fordham_china.jsp).

Part of this is in response to TRIPS obligations. But Western countries have
been trying to get China on board for decades. What's changing now? What's
changing is that Chinese companies have IP to protect now.

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sorpaas
This national capital has already been set up since 2009, so there's not so
much new things about it.

If you can read Chinese, here's some "inner people" commenting about it:
[http://www.zhihu.com/question/24838323](http://www.zhihu.com/question/24838323)

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maceo
Yasheng Huang writes that China's economic system is not "Socialism with
Chinese Characteristics", as the CPC proclaims. It is in fact capitalism with
Chinese characteristics, and this move offers further evidence.

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rebootthesystem
I am going to China in a few weeks to meet about a fairly large tech project.
China has grown an amazingly vibrant and potent culture of entrepreneurship
that puts most nations in the world to shame.

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free2rhyme214
Oh cool. Now we can finally copy the Chinese.

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238357
Anybody knows how to apply to one of those funds?

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sidcool
Communism with a side of capitalism.

