China's new infrastructure rollout is attracting a growing number of private investors from both home and abroad, which industry experts believe will further help local startups to resolve key technical problems.
"With the new infrastructure initiative, the country already saw a large number of venture capital and private equity firms invest in new infrastructure and its downstream areas," said Wu Yaping, a researcher at the Investment Research Institute of the National Development and Reform Commission.
In the first quarter of this year, $560 million of investment flowed into the country's big data industry, an important part of new infrastructure. The overall deals in the sector increased 11 percent year-on-year, according to CVSource, a database from investment consulting firm ChinaVenture.
"Different from traditional infrastructure investment, new infrastructure projects are more attractive for private capital, including venture capital and private equity firms, to engage in. New infrastructure projects focus on emerging and high-tech sectors and evolve quickly in technologies, which is similar to the investment logic of private capital," Wu said.
To gear up new growth engines, China has called for new infrastructure construction including 5G, artificial intelligence and the industrial internet. Such efforts are in line with the nation's drive to ensure stability in domestic and foreign investment.
"New infrastructure comes with huge opportunities," said Kaifu Lee, a prominent AI expert and chairman and CEO of venture capital firm Sinovation Ventures. "During the process, AI, together with other core areas of new infrastructure, such as big data and the industrial internet, will integrate much more closely with each other. This will take the digitalization of the nation's traditional industries to a new level."
Zhang Yuepeng, managing partner in China of leading Japanese investment firm Softbank, said at a recent conference, "The rollout of new infrastructure brings a very good investment environment."
In the first four months of this year, venture capital and private equity firms made 642 investment deals in the information and technology sector, worth a total of 56.2 billion yuan ($7.9 billion). Total investment in new infrastructure in China is expected to reach 3 trillion yuan by the end of the year, Haitong Securities estimated.
Industry insiders pointed out that the active engagement of venture capital and private equity firms in new infrastructure also makes it easier for Chinese startups, especially technology-driven firms, to get funds and develop independent technologies.
Deltaphone Information, a developer and provider of industrial internet solutions, raised $11.3 million in a financing round last month. The startup mainly leverages independent technology to offer advanced industrial internet platforms to traditional industry leaders including State Grid Corp of China and China National Petroleum Corp.
Wang Qingjie, Deltaphone CEO, said that the fresh round of fundraising will be used for the research and development of the core technology of its industrial internet products.
Fang Yimin, a partner at Sinovation Ventures, said that the development of new infrastructure will attract more private capital to tech startups.
"Such capital will play a critical role in helping these companies survive the research and development cycle and move toward the fast track of scale development."