Qiming Venture cuts China fund target to $600m

Qiming Venture Partners has cut the target size of its new fund for Chinese AI and healthcare startups by 25% to US$600 million, reflecting continued caution among global investors toward China’s tech sector.

Qiming, an early investor in Meituan and Xiaomi, reduced its fundraising goal from US$800 million after potential backers showed interest in smaller funds, according to people familiar with the matter.

The Shanghai-based firm, led by Duane Kuang, originally set a hard cap of US$1 billion for the fund.

Qiming raised US$2.5 billion for its previous US-dollar fund in 2022, but deal activity has slowed since then.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ New US investment restrictions directly impact fundraising timing

Qiming’s fund reduction coincides with sweeping new US regulations that took effect January 2, 2025, restricting American investment in Chinese companies involved in AI, semiconductors, and quantum technologies1.

These outbound investment rules specifically target the sectors where Qiming has significant portfolio companies, including AI firms like Stepfun ($2 billion valuation) and Zhipu AI ($3 billion valuation).

The regulations require US investors to notify the Treasury Department of certain transactions or face outright prohibitions, creating new compliance burdens that make smaller fund sizes more attractive to cautious limited partners2.

This regulatory shift reflects concerns about US-China trade policy impacts that Chinese startups have anticipated for years, with 66% expressing worry about such impacts as early as 20193.

2️⃣ Chinese VC market contracts dramatically from historical peaks

The current fundraising struggles mark a stark reversal from China’s VC boom, when 3,418 Chinese VC funds launched in 2017 alone, raising $243 billion that year4.

At that peak, 40% of global VC investment came from Asian investors, primarily Chinese, nearly matching the US at 44%4.

Today’s landscape shows funds like Lightspeed China seeking just $150-400 million, representing a fraction of the capital that flowed during the sector’s height.

The shift reflects not just regulatory pressure but also economic reality, as endowments and pension funds that previously bankrolled China’s internet companies have grown cautious about the country’s economic outlook and geopolitical tensions.