The state backed venture funds of China have raised around ¥1.5 trillion ($231 billion) during 2015. Zero2IPO Group, a consultancy firm has revealed that the fund under management has grown triple to ¥2.2 trillion ($338 billion) in a single year.

The Chinese venture funds have appeared as the biggest pot of money across the whole world. They are five times in volume compared to the sum raised by other global venture firms during last year, reportsChina Economic Review citing data revealed by Preqin Ltd., a London based consultancy firm as the source.

The funds are known as government guidance funds wherein local and central agencies play some roles. There are 780 such funds while leaving no set model for management or funding in China despite going through a lot of experiments. Major portion of their capital comes from tax revenue or state-backed loans, according to a report published in Bloomberg.

The venture funds appear as a part of Premier Li Keqiang's effort to bolster the sluggish Chinese economy through innovation and reducing dependence on heavy industry. China has opened 1,600 high tech incubators for startups since initiating a campaign to support entrepreneurship in 2014. The huge influx of cash enhances the probability of a boom-and-bust cycle like the state-led investment in China's solar and wind power sectors, reports The Sydney Morning Herald quoting Gary Rieschel, founder of Qiming Venture partners.

Chinese government is probably in a fantasy that if they give everyone money they'll create entrepreneurs. But inexperienced or corrupt managers are likely to invest in dozens of regional copycats who won't grow bigger to become profitable. Eventually, the businesses will bring catastrophic losses for the government, forecasts Gary.

Neither the Chinese authorities nor the venture funds have revealed how quickly the funds will be deployed. Meanwhile, regulations and market practices will be finalized, predicts a Zero2IPO report.

A Shanghai government guidance fund has contributed 25% to one of their own local funds which has been analyzed as a good leverage for the government. The ultimate aim is to attract limited partners to set up funds in that area with a central China investment focus, comments Ken Xu, a partner at Shanghai based Gobi Partners.

However, the local fund managers are acting against goal to attract another ¥2 trillion which has been analyzed just as excess. Shortage of sufficiently skilled fund managers or quality startups to invest in has been cited as the reason.

The Chinese venture funds have appeared as the biggest pot of money across the whole world. But the country has reportedly been witnessing acute shortage of skilled manpower. Chinese state backed venture funds have raised ¥1.5 trillion in 2015 while setting goal for raising another ¥2 trillion. However, handling the additional fund may be hazardous due to mismanagement, fears analysts.