Venture Capital Firms Struggle to Raise Funds in China

When CMC Capital, a Shanghai-based venture capital and private equity firm, started raising a new fund from global investors in 2021, its target size of more than $1 billion didn’t seem ambitious. The amount was only a tad more than the firm’s previous fund of $950 million. And CMC’s founder, Li Ruigang, is a well-known media mogul, sometimes referred to as China’s Rupert Murdoch, who has a stake in the English Premier League soccer team Manchester City.

But two years later, CMC still hasn’t completed the fundraising process for the fund, even though the firm has extended its fundraising period in hopes of getting closer to its target, according to two people with direct knowledge of the matter. The firm has reached out to investors in the Middle East in an attempt to find new backers for the U.S.-dollar fund, according to one of the people.

The previously unreported fundraising struggles of CMC and other prominent Chinese firms, including Genesis Capital and Sinovation Ventures, reflect a stark reversal for the industry. The country’s technology sector has lost some of its appeal among global investors, and the environment for Chinese funds raising U.S. dollars from overseas backers has become increasingly harsh, in part due to rising geopolitical tensions between Washington and Beijing.