Chinese ‘future industries’ push triggers flood of venture capital, bubble concerns
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- June 26, 2026
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Just two days after SpaceX made its historic market debut, a Chinese space startup held an investor roadshow for its maiden fundraising round by touting a mission to help China catch up with the US in the race to the heavens. The mission for Tectronic Maritime Space Systems, a Shanghai-based company that focuses on launching rockets from the sea, is to “build the Maersk of global commercial space flight,” finance manager Gu Mei told roughly 50 venture capital investors. To achieve that goal, Tectronic, established just three months ago, needs to raise 150mn yuan ($22mn) at a valuation of 1.5bn yuan, according to its investor presentation. It plans three additional funding rounds totaling 3bn yuan over five years before targeting a 2032 listing at a valuation of about 50bn yuan - more than 30 times its current level, the presentation showed. “Demand is inelastic, supply is limited and the clock is ticking,” Gu said at the event on June 14. “Investors participating in this round of financing are expected to get returns of 26.7 times.” The aggressive fundraising pitch highlights a scramble among what Beijing refers to as China’s “strategic emerging and future industries,” which include startups focusing on space, quantum technology, nuclear fusion and brain-machine interfacing. While the rush to raise funds by companies like Tectronic is creating potentially lucrative opportunities for local venture firms — struggling to recover from a years-long downturn — the fever is also inflating startup valuations and stirring fears of a forming bubble. In China, venture capital and private equity investments in the first five months of this year totaled 620bn yuan ($91.6bn), jumping nearly 60% from a year earlier, according to ChinaVenture Investment Consulting. Newly registered venture capital funds in the world’s second-largest economy totaled 154bn yuan during the first five months of 2026, already in excess of last year’s total, according to China’s fund industry association. “The level of frenzy (in China) is something I have never seen in my entire career,” said Yan Kai, a veteran venture capitalist and partner at Ivy Capital in Shanghai. A startup with no revenue can raise billions in a first funding round and before that deal is completed, investors line up for the second while talks have already started for the third, said Yan, whose firm makes tech-focused investments. ‘PULLING THE TRIGGERS’A pickup in venture capital investments comes as Beijing has highlighted the need to bolster its “future industries,” a grouping that also includes biomanufacturing and hydrogen energy, in its next five-year plan, published in March. The development blueprint also identified sectors like robotics and aerospace as strategic emerging industries earmarked for priority development. China also published rules this month to support domestic stock market listings of “future industry” startups, typically firms working on frontier technologies that have no profit or revenue. “Our strategy is to move with the trend — follow guidance of national strategy, while selecting investment targets using a market approach,” said Huang Yan, co-founder of Shanghai-based Lantern Capital. Huang, who expects a return of nearly 100 times from his decade-old investment in LandSpace — China’s closest answer to SpaceX — said “the key is to marry what that state wants with what the market needs.” Raymond Feng, a partner at Atom Ventures, said competition among venture funds to invest is fierce in the areas of nuclear fusion, quantum tech and embodied AI, as “everyone is throwing money at future industries.” Ni Zhengdong, chairman of Beijing-based venture capital consultancy Zero2IPO Holdings, said there is a strong sense of FOMO — a fear of missing out — among early-stage investors in China, with some funds “pulling the triggers more often.” NARROWING TECH GAP WITH USWhile most venture capital deals involve local, yuan-denominated funds amid the intensifying Sino-American tech rivalry, five China-focused dollar-denominated funds raised a combined $4bn as of June 12, Preqin data showed. That already exceeds the annual total for each of the past two years. Venture funds including ZhenFund, Qiming Ventures and Capital Today are back in the market raising new funds, people familiar with their plans said, riding the surge of recovering global investor interest in China tech. The sources were not authorized to speak to the media. The three firms did not reply to Reuters requests for comment. Some industry participants, however, say the industry’s present trajectory is too fast and furious. “A photonic chip project was worth 1bn yuan last year, and is now worth 10bn,” said Yu Tiecheng, head of Guanghui M&A, a think tank. “A rocket satellite project was valued at 5bn at the start of the year and is now worth 20bn.” If a hoped-for listing at an even higher valuation fails to materialise, “such investments would look extremely dicey,” he said. But for now, the representatives of the so-called “emerging and future industries,” like Tectronic, are capitalising on the Chinese government’s push to narrow the country’s gap with the US in areas including AI and space. There is heated competition for orbital space globally, “so there’s strong government support for private capital to participate” in companies like Tectronic, said Chief Financial Officer Wu Qunhui.
