Chinese VC Firms Rush to Raise Funds After Three-Year Drought

Chinese venture capital firms are rushing to raise new funds after a three-year fundraising drought, the Financial Times reported on August 2. Limited partners are increasingly looking to China as a hedge against US market concentration, and managers are pitching hard.

What's Changed

For most of 2023-2025, Chinese VC fundraising was largely frozen. US-China tensions, regulatory crackdowns on Chinese tech platforms, and a moribund domestic IPO market all combined to make LPs wary. In the last six months, sentiment has shifted: AI-driven enthusiasm for Chinese model labs, a recovering Hong Kong IPO market, and clearer signals from Beijing that platform regulation has stabilized have all brought LPs back to the table.

"Managers capitalise on investors' desire to 'hedge' against US market bets," the FT wrote.

Who's Raising

Several marquee names are in market. HongShan (formerly Sequoia China) is targeting a multi-billion-dollar fund, and DCM, GGV Capital, and Source Code Capital are all raising vehicles larger than their last. Newer firms focused on AI and semiconductors are also raising first-time funds at meaningful sizes. The fund sizes are larger than 2024-2025 vintages but still smaller than the 2021 peak.

The Hedge Argument

LPs are increasingly framing China exposure as a hedge rather than a bet on Chinese growth. The argument is that even if Chinese tech underperforms the US, it offers diversification away from US tech concentration, AI capex overruns, and dollar exposure. Several large US endowments and sovereign wealth funds have made new China commitments in 2026, the FT said. The hedge framing is also why Hong Kong listings have come back: LPs want an exit path.