- Hangzhou is using public funds to insure early-stage tech bets, shifting government support from rewarding success to cushioning failure
- The “Hao Miao Bao” model offers a new template for how local governments can reduce innovation risks for AI and deep-tech startups
Hangzhou is betting that more failures could lead to more breakthroughs. The eastern Chinese tech hub is deploying public funds to shield early-stage technology companies from research setbacks and monetization hurdles, removing one of the biggest barriers for startups working on high-risk innovations.
The initiative, known as “Hao Miao Bao” (好苗保), literally good seedling insurance, was launched on July 22 as China’s first city-level government-funded group technology insurance program for small tech firms.
The Hangzhou Science and Technology Bureau serves as the policyholder, purchasing coverage for 1,051 selected promising startups, with premiums fully covered by the government.
Companies are automatically enrolled without paying fees, filling out insurance applications or negotiating with insurers.
Long-standing bottlenecks
The program targets a long-standing market failure in technology financing: many early-stage startups are unable to obtain insurance because they lack operating history and face unpredictable R&D risks, while insurers are reluctant to underwrite projects without reliable historical data.
Traditional insurance products are built on large pools of historical risk data. But for emerging tech startups developing new materials, AI systems, biotech products or advanced equipment, failure itself is often part of the innovation process.
This mismatch has left many companies exposed during their most vulnerable early years.
“Hao Miao Bao” attempts to bridge that gap through a combination of basic coverage and industry-specific add-on policies.
1.6-million-yuan maximum coverage
Its five core insurance categories provide up to 1.4 million yuan ($206,756) in coverage, including protection against R&D failure, commercialization failure, pilot-scale production setbacks, product liability risks and damage to key equipment.
An additional 200,000 yuan industry-specific policy brings the maximum coverage to 1.6 million yuan.
The program also adopts a sector-specific approach tailored to Hangzhou’s “296X” advanced manufacturing clusters.
“296X” refers to Hangzhou’s advanced manufacturing cluster strategy, which focuses on two world-class industrial clusters, nine emerging strategic industries, six future industries, and a number of other key industrial chains.
For 17 targeted industries, insurance products are customized around different risks: semiconductor companies may need protection against chip tape-out failures, biotech firms against clinical trial setbacks, and low-altitude economy companies against aircraft accidents.
Mitigating risks upfront
Unlike conventional property insurance, which is typically renewed annually, “Hao Miao Bao” provides two years of coverage in a single policy period, matching the longer development cycles of technology projects.
It also introduces a “R&D rescue” mechanism, under which insurers can organize industry experts to assess failed projects and help companies identify ways to revive them.
This model reflects a broader shift in China’s approach to tech-focused finance — from rewarding success after the fact to mitigating the risks of experimentation upfront.
Dong Ximiao (董希淼), a researcher at Fudan University’s Institute of Finance, said the government’s use of fiscal resources to encourage insurers to underwrite technology risks represents a move from “adding icing on the cake” to “providing timely support.”
From financing support to risk-sharing
“Haomiao Bao” is a flagship measure under Hangzhou’s “Runmiao Project” (润苗计划) — or Nurturing the Seedlings — an initiative introduced in 2025 to cultivate 3,000 high-growth tech startups by 2027 through an integrated support system covering insurance, guarantees and lending.
Previously, the city set up a dedicated Runmiao Fund (润苗基金) with an initial size of 2 billion yuan ($290 million) and a 20-year lifespan. The fund provides first-round financing for early-stage tech firms less than five years old and valued below 100 million yuan.
Before the insurance program, Hangzhou had already launched “Hao Miao Guarantee” (好苗担) and “Hao Miao Loan” (好苗贷).
The former provides guarantees of up to 20 million yuan with annual fees capped at 0.5%, while the latter offers credit lines of up to 20 million yuan with interest subsidies of 1%.
In June, Hangzhou identified the first batch of 1,056 promising companies spanning AI, biotechnology, semiconductors and other emerging industries. “Hao Miao Bao” currently covers 1,051 of them, with broader coverage expected as the selection expands.
The initiative comes as local governments across China compete to create more supportive environments for early-stage innovation.
Rather than relying solely on subsidies or investment funds, Hangzhou is building a wider ecosystem designed to reduce the uncertainty surrounding tech commercialization.
Why it matters globally
“Hao Miao Bao” offers a glimpse into how Chinese cities are experimenting with new financial tools to support frontier technologies in the AI era.
By having the government absorb part of the early-stage failure risk, Hangzhou is effectively trying to solve a problem common to innovation economies worldwide: how to encourage entrepreneurs to pursue breakthroughs when the probability of failure remains high.
The approach differs from the more market-driven model common in many Western economies, where tech insurance is usually purchased directly by companies and priced according to commercial risk.
Hangzhou’s model places the government in the role of risk-sharing partner, allowing startups to focus more resources on development.
As AI and deep-tech entrepreneurship shift from software-driven experimentation toward deeper engineering challenges, institutional support mechanisms that reduce downside risks may become as important as capital itself.
For global observers tracking China’s innovation policy, “Hao Miao Bao” signals a broader evolution in technology finance — from lowering the cost of raising money to reducing the cost of taking risks.
