Shanghai Opens Doors to Foreign Funds Amid Dwindling Start-Up Investments: An In-depth Look at the QFLP Quota Expansion and Its Impact on Unlisted Chinese Firms

Shanghai is increasing foreign fund accessibility for purchasing start-ups, indicating an expansion of the QFLP quota. Wang Feng from Ye Lang Capital, a financial services company, mentioned that in recent years, the financing for non-public Chinese businesses has been declining.

Mayor Gong Zheng has announced that international asset managers will receive increased flexibility in conducting private equity and venture capital investments. This move is part of the city's efforts to boost growth in the finance and tech industries. This decision comes in the wake of geopolitical conflicts and regulatory restrictions that have hindered investment inflows.

"Global investment managers will be urged to increase their investments in Shanghai's tech companies and take part in the city's creative initiatives," he stated following the conclusion of the yearly International Business Leaders' Advisory Council gathering in Shanghai. "We will foster increased collaboration between capital, data, technology, and skills."

Investment funds gathered for unlisted Chinese start-ups reached a high of US$132.7 billion in 2021, as per the data gathered by Mergermarket. However, there was a significant drop to US$67 billion in 2022 and further to US$45.4 billion in 2023. In the first six months of the current year, the figure is at US$25.7 billion.

Wang Feng, the head of Ye Lang Capital, a financial services company based in Shanghai, stated that Shanghai and China have grounds to bolster assurance for investing in private companies. He noted that over recent years, funding for new businesses in China has significantly dwindled.