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Germany’s prominent venture capital fund is planning to invest $700 million in Chinese startups, defying the negative sentiment among Western investors towards the country’s tech industry.
Carsten Coesfeld, the CEO of Bertelsmann Investments, expressed admiration for China’s impressive entrepreneurial talent after a visit to the country.
Over the next three to five years, the company, along with other co-investors such as financial institutions and sovereign wealth funds, will support Chinese tech groups and startups established by Chinese entrepreneurs abroad.
Contrary to Western media portrayals of China’s struggle for post-pandemic growth, Coesfeld remarked on the economic growth that cannot be ignored, even if it is at a lower scale than before.
Bertelsmann Investments is a part of Bertelsmann, a large family-run media empire that also owns Penguin Random House and BMG music label.
Since 2006, Bertelsmann Investments has invested €1.7 billion in over 400 companies and funds globally, amassing a portfolio valued at approximately €3.7 billion.
Bertelsmann Asia Investments, its China-focused subdivision launched in 2008, has backed more than 180 startups, including Nio, Bigo, and Mobike.
Amid escalating tensions between the US and China, as well as Beijing’s crackdown on consumer internet groups and the resulting exodus of foreign capital, Coesfeld’s decision to increase investments in China stands out.
The complexities faced by Western investors in navigating the Chinese market, coupled with Washington’s plans to implement an investment-screening mechanism and the impact on Chinese tech stocks due to the volatile recovery, have not deterred Coesfeld.
Germany has also cautioned its companies about relying too heavily on China, as highlighted in a strategy document issued in July.
Coesfeld, a seventh-generation member of the Bertelsmann family, remains unfazed by geopolitical tensions.
The 36-year-old CEO of Bertelsmann Investments, who assumed the role last year, acknowledges that many investors are reassessing their strategies. He mentions that some funds have withdrawn from the market due to changing conditions in China.
However, Coesfeld also highlights the Chinese government’s efforts to revive economic activity and foreign direct investment (FDI) two years after imposing strict regulations that halted initial public offerings in off-shore jurisdictions like Hong Kong and New York.
In addition to investing $700 million in Chinese startups, Coesfeld plans to invest $1 billion in the US healthcare sector in the coming years. He acknowledges the existence of decoupling between China and the West in technologies such as artificial intelligence and semiconductors, but believes that a complete decoupling of the two economic systems would be extremely challenging.
Additional reporting by Ryan McMorrow in Beijing
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