- City raises “3 plus N” fund cluster from 200 billion yuan to 311 billion yuan
- New policy loosens investment restrictions and extends fund lifecycles to back long-term tech bets
Hangzhou has expanded its government-backed industrial investment fund network to 311 billion yuan ($45 billion), underscoring the Chinese tech hub’s push to build longer-term financing channels for startups and strategic industries.
The new scale was disclosed in an implementation plan released on May 15 following the city’s “Fortunate Meeting Hangzhou” innovation and entrepreneurship conference.
The plan outlines measures to strengthen Hangzhou’s so-called “3 plus N” industrial fund cluster, which combines three flagship government funds with a broader network of state-backed investment vehicles.
The three core funds include the Hangzhou Technology Innovation Fund, the Hangzhou Innovation Fund and the Hangzhou M&A Fund, alongside additional investment funds managed by city-owned enterprises.
Among them, the technology innovation fund has reached 83.3 billion yuan and focuses on early-stage and hard-tech investments.
The larger innovation fund, with 158.6 billion yuan under management, targets larger-scale and future-oriented industries, while the 69.3 billion yuan M&A fund focuses on listed companies, acquisitions and industrial consolidation.
By the end of 2025, the three funds had approved investments into 392 sub-funds and 4,614 projects, with total committed capital reaching 143.3 billion yuan.
Under the new policy framework, Hangzhou plans to allocate 5 billion yuan annually in fiscal support during China’s 15th Five-Year Plan period (2026-2030), with the goal of expanding the overall fund cluster beyond 500 billion yuan.
The new measures also loosen several long-standing restrictions on government-guided funds. The maximum contribution ratio for municipal state capital in sub-funds will rise from 25% to 30%.
Meanwhile, the maximum lifespan for some technology-focused funds will be extended to 20 years, a stark contrast to conventional yuan-denominated venture funds, which normally operate on a five- to seven-year lifecycle.
Required local reinvestment multiples were also lowered from two times to 1.5 times, giving fund managers greater flexibility.
The changes reflect Hangzhou’s broader effort to evolve from a traditional government-guided fund model into what officials describe as a long-term “patient capital” system aimed at supporting technologies with long commercialization cycles.
Hangzhou began experimenting with government-guided funds as early as 2008 and formally introduced the “3 plus N” structure in 2023 as part of a plan to build a fund cluster exceeding 300 billion yuan.
A defining feature of the model has been the use of ultra-long fund durations designed to match the timelines required for deep-tech development.
In late 2025, the city also launched a separate 2 billion yuan “Runmiao Fund“—literally meaning “nurturing the seedlings”—focused on startups less than five years old and valued below 100 million yuan, targeting gaps in early-stage technology financing.
