China's capital controls have delayed Chinese funding to UK startups

pulse

July 9, 2017 8:16 AM

Where's the nearly £1 billion from China?

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Two Chinese companies announced funds for UK startups totalling almost £1 billion.
More than one year later, one fund has yet to invest in UK startups.
Sources told Business Insider that Chinese capital controls mean funds have difficultly bringing money in from China.

In early 2016, it was looking like there would be a big new pot of investment money for British startups, backed by China.

Last January, Chinese company Cocoon Networks announced a venture fund worth £500 million, along with a massive co-working space in east London and, apparently, a partnership with UCL. (UCL told Business Insider there was no partnership, and that Cocoon had used its logo on its website without permission.)

And in March this year, the press reported that another Chinese firm, Silk Ventures, had raised a $500 million fund (

"[Many] wealthy Chinese are seeking for ways to take their money out of China. Buying properties and businesses is the standard practice," he told Business Insider. "The logic is simple, money inside China is not secure."

But, he added, the government is becoming stricter. "[Even] if an investment contract has been signed, a Chinese investor may not get his or her money out of China. From the authorities' point of view, every rich Chinese is guilty unless proven innocent."

As for Cocoon, Business Insider spoke to James Griffiths, chief investment officer of a green technologies fund supported by the Chinese firm called Adapt Cocoon.

Adapt Cocoon is based out of the University of East Anglia, and is in the process of raising around £20 million in funding to invest in startups tackling environmental problems. As yet, Cocoon isn't actually an investor in the Adapt Cocoon fund, but is providing introductions to other Chinese investors.

Griffiths said: "The thing about money movement is very true.

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