China prepares next phase of national SME fund to boost tech start-ups and IPOs

China's National SME Development Fund, now entering its second phase, is a direct policy lever to channel private capital into hard tech startups. The focus on IPO incubation is key, suggesting a push for these companies to mature quickly and access public markets, rather than relying solely on state or venture funding for extended periods. This approach aims to create a more robust and self-sustaining ecosystem for tech innovation within China. The fund's first phase saw significant activity, with 92 IPOs and a 15 percent overall return on over 120 billion yuan invested across more than 2,000 enterprises. The challenge for the second phase will be to maintain this momentum and return profile while targeting even earlier-stage companies, which inherently carry higher risk. The MIIT's confidence in attracting more venture and private capital will be tested by market conditions and investor appetite for longer-term, hard tech plays.