London & Partners: Chinese investment firm to launch £500 million London-based fund to invest in European tech startups

Chinese technology and investment group Cocoon Networks is launching a £500 million ($720 million) London-based venture capital fund aimed at investing in UK and European tech startups.

Cocoon Networks, which has the backing of China Equity Group, one of the first investors in to Baidu, China's answer to Google, and Hanxin Capital, which specialises in cloud computing and bio tech investments, will look to invest in tech companies whose products and services show promise and potential for growth in the Chinese market.

The fund will look to invest in tech companies across a wide range of sectors including fintech, biotech, medical devices and the UK's creative tech industries, like fashion-tech. Companies looking to expand into China will also be offered assistance in navigating Chinese legislation and practical help about doing business there.

As part of a wider investment, Cocoon Networks, in partnership with University College London, is also setting up the capital's biggest incubator space, in order to provide the best environment for growing tech startups.

John Zai, Founder and CEO, Cocoon Networks said: "The fund will provide capital to help the development of some excellent technology and innovative projects in London and the UK.

"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."

Gordon Innes, CEO London & Partners, The Mayor of London's promotional and economic development company, said: "This is a significant vote of confidence in the global nature of London’s tech sector and will deliver significant investment into some of the capital's brightest and best startups.

"London is experiencing unprecedented growth in its technology sector, and there is a wealth of opportunity for entrepreneurs and investors to get a foothold in the UK and the rest of Europe."

The incubator, a 70,000 sq ft building is situated in the heart of London's Tech City close to Moorgate, Liverpool St, and Old Street stations. Cocoon says it will not only be an incubating space for technology companies but it will also work with some of London's world class universities to attract talent, offer accelerator programmes and co-working spaces.

The incubator will work with startups to take products from the concept phase and test them in a real environment – Cocoon’s own digital testing labs – before going live on the public market. Cocoon says this testing and support infrastructure enables startups to compete on a level playing field with larger companies.

The announcement by Cocoon Networks came as London & Partners said that it was on course to secure record investment from Chinese companies in London this financial year.

Over the last nine months 28 Chinese companies, worth £23 million ($33m) to the city's economy, have already pledged to set up in London, with that figure expected to rise to nearer 40 by the end of March 2016. The previous best year for Chinese investment in London was in 2011/12 when 30 Chinese companies came to the city.

Boosted by the visit of President Xi Jinping to the UK last year and the Chinese government's drive to encourage innovation and entrepreneurship, London is already the most popular city in Europe for Chinese foreign direct investment. Chinese companies and venture capital funds are now being encouraged to look at London as the next big tech investment, as the city has grown to become Europe's biggest tech hub.

London has welcomed many Chinese technology companies including Huawei Technologies, Alibaba, gaming giant Rekoo, Cheetah Mobile and Deyatech, a company offering enterprise content management for businesses.

One of the biggest Chinese investments in to a London technology company last year was £23 million ($34 million) by Beijing Kunlun Tech Co in to Lendinvest, the world’s largest peer to peer marketplace for mortgages, having financed over £300m of mortgages in its first two years.

Li Cha, Founder and Managing Partner, iStart Ventures LLC, added: "The Chinese economy is vastly in need of innovation which comes from either competition in the domestic market or from international inspiration. In this respect, London is a good source of international trends and aspiration in technology and cultural creativity. Chinese investors have started exploring opportunities outside of China, in order to grab hold of global cutting edge technology as well as to diversify their portfolios. In light of this, London serves as the best hub in Europe."

The UK tech sector has experienced rapid growth since British Prime Minister David Cameron and Mayor of London Boris Johnson launched the Tech City initiative in 2010. 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% of the £2.5 billion ($3.6bn) raised by UK firms in 2015.

Gavin Poole, CEO, Here East added: “At Here East we see first-hand that London is brimming with a huge range of exciting tech start-ups –from the birth and rapid growth of makers redefining product development in sectors including fintech and biotech, to data-led consumer software businesses. Investment from China and other countries is crucial to improving the access to funding and infrastructure that will help these start-ups to scale quickly, benefitting all partners. In an increasingly globalised world, sharing innovation and collaborating across continents is vital to maximising the economic and creative output of start-up communities worldwide.”

ENDS

Notes for Editors

London & Partners

London & Partners is the official promotional company for London funded by the Mayor of London and a network of commercial partners.

We provide bespoke advice based around business drivers to help companies make better informed decisions more quickly.

Working with a network of over 1,000 partners, we provide investors with the information they need to take advantage of London’s opportunities from day one. We have offices and representatives based around the world.

Cocoon Networks

Cocoon Networks is Europe's first international start-up ecosystem to be backed by Chinese capital. Its aims to create the best possible environment for nurturing great innovation, investment, passion, expertise, talent, teamwork, and genius. Backed by two of the most influential private equity firms in China, Hanxin Capital and China Equity Group, Cocoon Networks is dedicated to delivering excellence in innovation by bringing together the Chinese and European start-up communities. The group consists of various business including incubator, accelerator, venture capital &fund management and Intellectual property management.

iStart Ventures LLC

iStart VC focuses on discovering and investing in startup companies at seed stages, which is also how the name iStart originated. iStart provides capital and mentoring support to passionate startup founders, alone with their journey from 0 to 1,until becoming market leaders.

From iStart campus, emerges numerous shining stars such as ZFATech,31huiyi,Yummy Express, eleme, HunterOn, Bobo, Trend Data, Surong360, wolongge, LeisureLife, Genowise, etc. Together with young startup founders, iStart rocks the world.

Here East

Here East is London’s home for making, located in the heart of Queen Elizabeth Olympic Park in London. It is a dedicated place for individuals and companies who embrace and pioneer technology, share expertise and are creating the products of tomorrow.

It is a unique campus where creative businesses growing in scale join businesses of scale growing in creativity. It is designed as a place for start-up, entrepreneurial businesses to co-exist and collaborate with global, established businesses and support genuine product innovation.

Here East provides over one million square feet of dedicated and versatile spaces for creative and digital companies. It combines unparalleled infrastructure with a unique environment to facilitate collaboration and the exchange of ideas. Here East includes shared workspaces and public areas to foster a tight community, alongside a shared yard with space for discussion and events, a landscaped canal side and artisan cafes, shops and restaurants.

Here East is being developed by iCITY, a company owned by clients of Delancey, a specialist real estate investment and advisory company.

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Contact information

London & Partners
Ben Pattie
press@londonandpartners.com
+44 (0)20 7234 5710