China-based investment firm Cocoon Networks is launching a $720-million London-based fund which will invest in European tech startups.
Cocoon is backed by private equity investor China Equity Group, which was an early investor in the country’s biggest search engine Baidu, and Hanxin Capital. The fund will invest in companies which have products and services that can be successful in the Chinese market.
Such startups can be in sectors like fintech, biotech, medical devices and the UK’s creative tech industries, including fashion-tech. Apart from providing funding, Cocoon will help startups to set up operations in China by providing legal and practical advice.
Cocoon has also partnered with the University College London to set up a 70,000 sq ft incubator space for tech startups. “The fund and incubator programme will bring awareness for more Chinese investors to get into London’s booming technology sector. It will also help many companies grow and expand into China,” said John Zai, Founder and CEO, Cocoon Networks, in a statement.
The incubator will work with startups to help take their concept-stage products, and test them in its own digital labs, before launching in the market.
Chinese companies are set to invest in record amounts in London in the current financial year, according to London & Partners, the official promotional company for London funded by the Mayor of London and a network of commercial partners. Huawei Technologies, e-commerce giant Alibaba, and gaming company Rekoo are among Chinese firms that have offices there.
In the last nine months, 28 Chinese companies have set up operations in the city. One of the biggest Chinese investments in London last year was £23 million ($34million) by Beijing Kunlun Tech Co. into Lendinvest, the world’s largest peer to peer marketplace for mortgages.
Figures released last week show that in 2015 venture capital investment in to Britain’s technology sector reached a record high with London-based companies securing around 62 per cent of the £2.5 billion ($3.6 billion) raised by UK firms in 2015.