China’s venture capital market is the second-largest globally, boasting cutting-edge innovation and growth across technology, healthcare, renewable energy and more.
With more than $1 billion allocated to venture funds in China by experienced investors such as RisCura, the country has consistently demonstrated a strong track record of delivering competitive returns. China’s shift from ‘made in China’ to ‘invented in China’ epitomises its transition to a high-tech innovation hub.
Venture-backed companies such as ByteDance, Li Auto and Xiaohongshu illustrate the sector’s vibrancy, with firms scaling rapidly to dominate global markets. Despite geopolitical challenges, China continues to lead in AI, healthcare innovation and green energy. These growth areas align with the Chinese government’s commitment to fostering self-reliance in critical industries, further de-risking the ecosystem for venture investments.
Investing in Chinese venture capital (VC) remains a privilege few can access. The limited number of fund-of-funds targeting China, coupled with stringent regulations, creates a significant barrier for retail investors.
However, Altvest is preparing to offer SA investors a rare gateway into China’s dynamic VC market. Through instruments that provide exposure to the Altvest Orient Opportunities Fund (AOOF), this initiative opens doors to a high-growth asset class previously inaccessible to most retail investors. While the AOOF itself will not be listed, Altvest will – pending approval – issue and list instruments on the JSE, giving investors economic exposure to the AOOF, a fund-of-funds managed by RisCura Invest.
Through this offering, Altvest bridges the gap by issuing listed instruments that provide economic exposure to the AOOF, a fund-of-funds designed to aggregate investments into top-performing Chinese VC funds. The AOOF, managed by RisCura Invest, leverages decades of expertise and deep relationships to secure allocations in premier venture funds.
These partnerships will include leading managers whose capacity for new investors is typically highly constrained. The fund-of-funds approach ensures diversified exposure across high-growth sectors, mitigating the risk associated with single investments.
It’s important to note that returns will not necessarily be linked to share price appreciation but will be realised through distributions to investors as individual investments are exited. This approach ensures that value is delivered directly to investors, reinforcing the fund’s focus on long-term growth.
The AOOF is structured to provide exposure to a portfolio of Chinese venture capital funds operating across diverse sectors such as technology, healthcare and renewable energy. RisCura’s expertise and on-the-ground presence in China offer a distinct advantage in navigating the complexities of the Chinese market. By spreading investments across various stages of growth and sectors, the AOOF achieves diversification and targets high growth potential.
The fund’s investments align with government-supported sectors, enhancing their resilience in a challenging regulatory and geopolitical landscape. This strategic focus reduces some of the inherent risks associated with venture capital while tapping into China’s innovation-driven growth.
No investment opportunity is without risks, however, and Chinese venture capital is no exception. Investors must take cognisance of and navigate the following:
- Regulatory Risks: China’s regulatory landscape can be unpredictable. However, recent reforms have created a more favourable environment for strategic sectors such as artificial intelligence and green energy.
- Geopolitical Tensions: US-China relations in particular remain complex. The incoming Trump administration has so far offered few concrete indications on how it will manage the trade relationship between the two countries.
- Liquidity Constraints: Venture capital is inherently illiquid, but the listing of Altvest’s instruments on the JSE provides a secondary market mechanism, allowing investors to manage their liquidity more effectively. The economic exposure offered ensures that investors can access distributions without being directly involved in the complexities of venture capital management.
Timing is critical in venture capital, and current conditions in China may present an entry point:
- Lower Valuations: The sector has seen a correction in valuations, providing opportunities to invest in quality companies at discounted rates.
- Reduced Competition: With capital supply constrained, VCs can negotiate better deals, ensuring access to the best deals.
- Government Support: Strategic sectors like robotics, green energy, and healthcare are heavily backed by government incentives, mitigating some of the inherent risks.
The instruments providing exposure to the AOOF are pending regulatory approval for listing on the JSE. This process will undergo rigorous compliance and governance frameworks supporting the offering. Altvest aims to issue 20 million instruments, each priced at R10, providing SA investors with a structured way to participate in a historically inaccessible asset class.
Altvest’s offering linked to the AOOF represents a chance to participate in China’s innovation story. With a diversified fund-of-funds approach and the backing of RisCura’s proven expertise, Altvest is bridging the gap between retail investors and opportunities in China, and opening doors to a market with the potential for long-term value.
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