HONG KONG -- Chinese e-commerce giant Alibaba announced on Tuesday that it will throw its weight behind a HK$2 billion ($257 million) venture fund to invest in startups in the Greater Bay Area, the urban swath of Southern China that Beijing wants to turn into the country's growth driver.
Alibaba Hong Kong Entrepreneurs Fund will be the anchor investor in the new fund, which is expected to close in the first half of 2022 with participation from financial institutions, family offices and conglomerates as limited partners. The company did not reveal its initial investment in the Greater Bay Area fund, which claims to be the first private sector-led fund focused on the area.
The Greater Bay Area is a national initiative led by the central government to create a mega-economic hub comparable to other metropolitan clusters like Silicon Valley and Tokyo. It consists of 11 cities along the South China coast, including Shenzhen and Guangzhou, as well as special administrative regions Hong Kong and Macau.
The area had over 80 million people and a total GDP of US$1.67 trillion in 2020. It is also home to the country's most prominent tech companies, including social media and gaming mammoth Tencent, drone maker DJI and telecommunications company Huawei.
Cindy Chow, executive director of the Alibaba Hong Kong Entrepreneurs Fund, said the new fund will seek to participate in Series B or later rounds. They can either be Hong Kong startups planning to expand into the Greater Bay Area or native to the region.
"There is no limit in terms of ticket size," Chow said at a news conference. "We are looking at businesses that are innovative and disruptive ... particularly in the sectors of sustainability, deep tech, health tech, artificial intelligence and industry 4.0-related projects."
Upon investment, their portfolio companies can gain access to the extensive Alibaba ecosystem, which will help startups attract talent and build connections in new markets, she added.
The plan comes as Hong Kong's status as a global financial center gains increasing scrutiny. International businesses are rethinking their future in the city now that Beijing is tightening its grip on the former British colony, and the sweeping national security law is persuading talent to flee.
Founded in 2015, Alibaba Hong Kong Entrepreneurs Fund has invested HK$600 million in over 50 local startups and attracted more than HK$13 billion of co-investments.
"We started AEF five years ago with the vision to invigorate the innovation and entrepreneurial spirit of Hong Kong," said Joe Tsai, Executive Vice Chairman of Alibaba Group and Chairman of Alibaba Entrepreneurs Fund. "We are now ready to extend our startup ecosystem to the Greater Bay Area in order to give innovators and entrepreneurs a bigger platform for growth."