A venture capital foundation aiming to raise money for China's small businesses was launched Saturday to help relieve their financing hardships.

The China Association of Small and Medium Enterprises and the Shenzhen Junsheng Capital, a leading private equity and asset management company, will jointly operate the foundation.

In the initial phase, the fund aims to raise 1 billion yuan (147 million U.S. dollars), with 2 billion more to be collected after the road show completed, said Li Zibin, chairman of the association.

The money will be raised through private offering. Subscription should be no less than 50 million yuan, Li said.

The foundation will help push private capital to finance the growth of small businesses, said Wang Liming, head of the small business department of the Ministry of Industry and Information Technology.

Li Zibin said the initial fund is expected to come from some government agencies such as the Ministry of Finance and Ministry of Science and Technology. Banks, insurance and securities companies are also invited to join the mission.

Small businesses in China have suffered limited financing sources as the nation's commercial lenders preferred state-owned enterprises and large key projects.