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23 May 2017

Fundraising of the year: Tsinghua Holdings

Tsinghua Holdings, the investment firm backed by Tsinghua University, has been awarded Fundraising of the Year by Global University Venturing.

Author: Thierry Heles, editor

When it comes to jaw-dropping figures, China often leads the way: from the world’s largest population (approximately 1.38 billion citizens) to staggering government funds (one such fund is Tianjin City, which launched a $17.4bn vehicle this year) the country regularly produces the kind of numbers that defy even lists of superlatives.

The same is true, unsurprisingly, of the higher education sector – and of one institution in particular, Tsinghua University.

In June 2016, Tsinghua Holdings, the investment firm backed by Tsinghua University, committed at least RMB500bn ($7.6bn) to research over the next five years. The figure includes a $1.5bn commercialisation fund dubbed Tsinghua Technology Transfer Fund.

The commercialisation fund, headed by managing general partner and director William Wang, alone is a size far beyond that of any of its peers. In fact, Oxford Sciences Innovation (OSI, one of the fellow nominees for this category) comes in a distant second with “only” £580m ($745m) – though OSI has an influential consortium of backers that make it impressive.

If $1.5n is going into a spinout-focused investment fund, what about the remainder of the cash? Tsinghua has a few more breath-taking numbers on offer here: the university expects to establish 1,000 incubators across China by 2021, plus an additional 50 incubators across the world in countries including the US, the UK and Germany.

And Tsinghua has lofty ambitions for these incubators: they are expected to support 500 startups and help them reach valuations of at least RMB100m. If Tsinghua proves successful, that would make for an eye-popping portfolio value of $7.25bn.

Tsinghua will focus on its core markets when considering international opportunities, such as integrated circuits, but also make forays into environmental protection, new energy and materials.

Its expertise in integrated circuits in particular is notable: the firm owns Tsinghua Unigroup, a fabless semiconductor manufacturer, which separately partnered electronics producer TCL for a $1.5bn fund to invest in sectors such as electronics, media and telecoms, and smart manufacturing earlier in 2016.

The firm’s portfolio currently consists primarily of domestic startups, but Tsinghua plans on increasing the share of international companies from 5% to 30% within the next few years.

Xu Jinghong, chairman of Tsinghua Holdings, said: “China is still lagging in terms of indigenous and core technologies, and there needs to be some companies to act as pioneers and push ahead with innovation.”

Does more money always mean more success? Of course it does not, but Tsinghua also brings several truckloads’ worth of expertise with it and betting on China’s drive has, so far, almost always paid off. And if Jinghong is serious about helping the country catch up, he has equipped himself with all the resources he will need.

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