The challenge today lies in the increasing concentration of capital among top-tier funds, while funding for mid-to-lower-tier funds becomes increasingly fragmented—and thus more difficult to secure. The reason top-tier funds have managed to achieve 1-2x growth is due to shifts in their LP (limited partner) structures. As for the funding sources of these leading funds, we believe they primarily come from the following areas:

First, investments are being made by local governments through policies aimed at attracting investment, facilitating industrial establishment, and encouraging industry development. Take Suzhou as an example: in 2021, the Suzhou government successively introduced a series of incentive policies for equity investments, such as the establishment of a 6-billion-yuan angel mother fund, followed by the launch of district-level development funds in areas like the High-Tech Zone and Xiangcheng District. Overall, Suzhou's fund ecosystem has significantly improved over the past two years—particularly in terms of funding entities, District-level funds, and even district-owned state enterprises, city-managed funds and city-level state enterprises—along with Suzhou's asset management companies and the municipal investment group—are all exploring equity-based investments.

Second, from a publicly listed company. For instance, TigerMed, a leader in the biopharmaceutical industry, has already invested in more than 30 funds. We’re seeing an increasing number of newly listed companies either establishing their own corporate venture capital (CVC) arms or launching their own investment funds—often targeting earlier-stage investors who backed them during their growth phase. This trend is also evident across both B2B and B2C sectors, where companies, after going public, are stepping in as limited partners (LPs) to reinvest in fund institutions, thereby creating a self-sustaining cycle of capital deployment.

Third, it comes from the personal wealth side. This year presents a favorable window for individual LP fundraising. On one hand, both U.S. and A-share markets have experienced significant volatility this year, while the real estate sector has also come under considerable pressure. In recent years, the prevailing view has been that holding cash isn’t advisable—instead, investors should convert their capital into tangible assets. As a result, we can expect individuals to increase their investments in the primary market going forward. On the other hand, founders of several companies listed on the STAR Market and ChiNext boards are now willing to serve as LPs, contributing capital to institutional investors that have accompanied these firms from their early stages all the way through their IPOs. By channeling funds into these investment vehicles, they aim to further fuel the growth of both their companies and entire industries.

Fourth, from family offices. This year, many people are setting up family trusts to achieve asset segregation, and we expect this area to see relatively rapid growth in terms of fund volume in the future.

National VC/PE Industry Trends

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