After China Tech Bloodbath, Top VC Tests U.S. Appetite For $1.2 Billion Fund

Are American investors going to keep putting money into China?

Western investors and Chinese entrepreneurs are anxious about the world’s second-largest tech startup market after a bruising six months in which Beijing’s crackdown on domestic tech companies escalated and political tensions between the U.S. and China grew. Americans are still investing in Chinese startups. But now that U.S. stock exchanges are effectively off limits to many venture-backed Chinese tech companies, it’s not so clear that U.S. investors will be able to get a good return.

A key test of how investors feel is underway. One of China’s top VC firms, Qiming Venture Partners, an early backer of Chinese smartphone maker Xiaomi, is in talks with U.S. institutional investors as it tries to raise more than $1.2 billion for a new fund, according to three people familiar with the matter. If successful, the fund would be among the biggest of its kind and could reverse a dramatic slowdown in dollar-based fundraising by Chinese venture capitalists.