In recent years, the role of Corporate Venture Capital (CVC) in China's equity investment market has increasingly come to the forefrontUnlike traditional investment schemes that merely focus on injecting capital, CVC is now recognized for its significant contributions to industrial upgrades and ecosystem developmentThe relationship between CVC and the companies in which they invest has evolved from a simple investment model into a complex ecosystem of mutual integration, driven by a shared vision of innovation and progress.

This paradigm shift has been encouraged by national policies promoting technological innovation, which have pushed venture capital efforts toward "hard technology" spacesAs a pivotal force in investment, CVC is actively pursuing transformation and breakthroughs of its own.

Many leading companies are now positioning CVC as an essential feature of their corporate strategyAccording to data released by Ruishou Analytics, in the first quarter of this year, the participation of CVC in significant funding rounds reached 34.6%, with 214 domestic CVC institutions active in primary market investmentsOut of the 56 China-based companies that went public, 13 received CVC support, marking a penetration rate of 23.2%; the total amount of disclosed mergers and acquisitions involving domestic CVCs reached approximately 44.26 billion yuanInvestments were concentrated across 26 sectors, including smart manufacturing, healthcare, artificial intelligence, and energy.

He Zhiqiang, Senior Vice President of Lenovo Group and President of Lenovo Capital, highlighted that more excellent companies are establishing CVC divisions, treating this as a standard industry practiceThis trend is largely driven by two key factors: first, the necessity for companies to evaluate the flow of funds, talent, and technological advancements from a venture capital perspective in order to identify future trends and seize disruptive innovation opportunities; second, the nature of innovation demands deep interaction with the ecosystem to achieve long-chain innovation

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Consequently, forming a venture investment department enables companies to propel internal R&D efforts and collaborate with other enterprises within the ecosystem to foster innovation processes.

Lenovo Capital has been proactive in its investment approach since its inception, focusing on early-stage tech innovation without being constrained by its industrial value chainThe division aims to leverage capital and entrepreneurial spirit to drive internal innovation and incubate competitive new enterprisesSo far, Lenovo Capital has successfully incubated several companies, such as Qiezi Kuai Chuan and Dongde Communication.

Moreover, Lenovo Capital identifies itself as a "research-driven" investment entity, where every one to two years brings a large research theme to the forefrontRecently, the focus has shifted towards AI 2.0, robotics 2.0, and super technology engineeringLooking forward, Lenovo Capital anticipates that advancements in large models will elevate AI to unprecedented heights, with silicon-based intelligence coexisting alongside carbon-based alternativesThey assert that the foundation for silicon-based development rests on crucial elements such as energy, data, computing power, and algorithms.

This collaborative investment strategy is not merely about financial returns but rather about achieving a holistic understanding of supply chains and industrial ecosystemsBy deeply linking business and R&D with investee firms, Lenovo aims to fortify nascent companies and help them flourish in the industry.

Unlike internet platform giants, Lenovo believes it has the capacity to recognize potential hard-tech stocks and extend effective supportIn a similar vein, Xu Xin, Co-CEO and Chairman of Fosun Venture Capital, articulated that the firm’s industry investment strategy revolves around three principles: deeply discovering value within industries, elevating value through operational enhancements, and empowering ecosystems.

Recognizing the rapid changes in market demands, Xu emphasized that a singular industrial focus is insufficient for sustainable growth

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To facilitate this, the firm aims to broaden its perspective, adopt a closed-loop business mindset, and engage in cross-sector and interdisciplinary ecosystem buildingThis multifaceted approach enables the discovery and servicing of outstanding enterprises and entrepreneurs, ultimately fostering enhanced growth opportunities.

In the consumer sector, Fosun Venture Capital has partnered with Yuyuan Group to establish a consumer-focused fund, aimed at tapping into market trends while investing in promising brands and projectsOne notable investment was in Lao Pu Gold, which specializes in traditional Chinese handcrafted gold jewelry and opened its first store in Shanghai within the Yuyuan Shopping MallThis brand quickly transformed into a popular destination, further enhancing the fund’s visibility and reachThe success of Lao Pu Gold culminated in its public listing on the Hong Kong Stock Exchange—marking it as the first IPO achievement for this fund in 2023.

In intelligent manufacturing, Fosun has collaborated with listed company Wansheng Co. to launch a new materials fund, focusing on innovations within the intelligent manufacturing domainThey also joined forces with Nanjing Steel Group to create the Binhai Intelligent Manufacturing Fund, which concentrates on advancements in relevant sectors.

With every business sector backed by a solid industrial anchor, Xu stated enthused, “We can say that behind every operating segment, there’s a strong industry leader from Fosun providing support.”

In a pioneering move during the Olympics, Bawang Cha Ji debuted a pop-up store in Paris, exemplifying its acceleration towards global market expansionBehind its success lies Fosun’s strategic investment and ecosystem empowerment philosophy.

When Fosun chose to invest in Bawang Cha Ji, skepticism lingered due to the crowded beverage market, prompting caution from outside observersHowever, from an industrial investment standpoint, Fosun’s team believed that the tea brand had a formidable chance of success within its niche

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Xu stressed their recognition of the vast opportunities available for Chinese consumer brands on a global scale.

About their investment strategy, Xu elaborated that Fosun’s CVC tends to lean toward Ecosystem-based CVC (EVC). Unlike traditional CVCs, Fosun has established an independent, market-driven decision-making mechanism capable of making more agile investment decisions—thus avoiding pitfalls like prioritizing immediate profits over sustainable growth.

Fosun has invested in star projects in fields like artificial intelligence and big data, including companies such as Baiwang and Hehe InformationThis strategy not only aids businesses in their rapid growth but also integrates technology into the broader Fosun industrial framework, illustrating the profound synthesis of technology and industryThrough this series of investments, Fosun has reinforced the belief that the true power of capital transcends immediate financial returns and extends into long-term value creation.

For Fosun, the essence of patient capital does not merely imply waiting for returns; it embodies a commitment to fostering growth potential for invested enterprises and accompanying them on their journey.

In terms of exit strategies, Fosun cultivates capital appreciation and optimization of asset allocationXu noted that Fosun maintains a remarkably low "red light rate," ensuring their projects remain a step ahead of industry standardsThe firm is dedicated to value investing principles, avoiding trends, and ensuring successful project trajectories while managing risks—even navigating legal disputes by seeking constructive solutions.

Lenovo Capital mirrors this philosophy through its "Star Plan" and "Bright Plan," which have yielded significant results in empowering innovation and digital transformation among SMEsThese initiatives not only provide financial backing, R&D support, and ecosystem openness but also catalyze the transformation and application of technological advancements.

For instance, the "Star Plan" for 2024 attracted 150 tech start-ups and successfully established 35 collaborative projects

To date, more than 50 enterprises have become members of this initiative, entering into deeper cooperation.

Through these two programs, many component suppliers that Lenovo previously invested in—such as Siterui, Naidejia, and Taifang—have already been certified as suppliers for Lenovo GroupThis deep cooperation not only strengthens Lenovo's ties with these investee firms but also fosters collaborative ecosystem development, allowing Lenovo to incorporate ecosystem players into their complete service solutions, thus aiding customers in their digital transformation.

He Zhiqiang indicated that Lenovo provides comprehensive support to its investees, leveraging international experience and manufacturing advantages for rapid growthConversely, these investees inject fresh vitality into Lenovo's innovation and long-chain innovation culturesTo substantiate this, Lenovo Capital has invested in over 250 enterprises, with nearly half establishing deep collaboration with LenovoBeyond geographical expansion, Lenovo continues to assist several Chinese robotics firms in their international pursuits while collaborating with investees on cutting-edge technology innovations.

The transformation and breakthroughs in China's CVC landscape reflect a progression from mere financial investments to a multifaceted ecosystem approachLiu Zhiyang, a distinguished professor from Shanghai University of Finance and Economics, noted that the evolution of CVC in China has traversed from early efforts focused on financial returns to the development of a comprehensive ecosystem, marking the changing landscape of market conditions and policy orientations.

Initially, CVC primarily consisted of foreign multinational corporations such as Intel and Siemens, who viewed their investment efforts in China through a lens of financial returns and strategic footholdsWith the rise of domestic tech giants like Tencent and Alibaba, local CVCs have garnered attention, gradually shifting towards corporate strategic alignment.

After 2020, the evolution of CVC in China entered a new phase, now guided by ecosystem building

This modern approach entails an expansion of investment focus into broader industries beyond traditional internet and tech sectors, with established manufacturers like Haier, Huawei, and CATL joining the fray to leverage CVCs for transformative initiatives.

Liu explained that the driving forces behind CVC involve both financial and strategic goalsFrom a financial standpoint, CVCs seek to counterbalance stagnant growth in legacy operations by investing in emerging sectors to achieve superior returnsStrategically, CVCs focus more on cultivating external businesses, fostering independent research and development, and capturing entrepreneurial opportunities while enhancing industry ecosystems.

For startups, engaging with CVCs provides invaluable support, encompassing funding, knowledge transfer, technical resources, and managerial expertise aimed at accelerating their growth journeys.

Looking to the future, industry experts express optimism regarding CVC's trajectoryGe Peijian, Head of Jindiwei New Industry Research Institute and former General Manager of Shanghai Zhangjiang Hi-Tech Park Development Co., encapsulated the future of CVC in four key points: emphasize long-lasting vision, target strategic projects, enhance foresight, and cultivate industry investment talent.

Ge recognized that CVCs offer high adaptability, possess valuable application scenarios, and exhibit a considerable degree of patience, rendering them ideal candidates for funding research projects with lengthy cycles and elevated risksThey will likely play pivotal roles in strategic industry mergers and acquisitions, collaborating effectively with angel, VC, and PE investors throughout various investment stages to deepen innovation development.

According to Cha Jun, Chairman of Lanxin Digital Technology and Executive Director of Changbai Asset Management, CVCs possess a distinctive advantage due to their in-depth understanding of their respective industriesThis deep comprehension facilitates precision and efficiency in investment decision-making and project selection

However, he acknowledged challenges, noting that such depth of understanding might also limit CVCs, as industry transformation often arises externally rather than solely from within.

He cautioned that focusing too intently on industry experience could dull sensitivity and restrict the potential to recognize early-stage hard tech enterprises, underestimating internal dynamism and robust technical foundationsThus, Cha advocates that CVCs maintain industry insight while fostering cross-disciplinary thinking and openness to adapt to swiftly evolving market dynamics.

Obtaining information from Wang Quan, Secretary of the Board at Guoxuan High-tech Co., he's been exploring new models for forming venture capital funds through collaborations with various partnersHe explained that establishing venture funds alongside traditional private equity or other corporate venture partners enhances decision-making efficiency and alleviates financing pressures, achieving a synergistic effect.

Moreover, Wang mentioned the prospect of partnering with local financial holding groups or government investment platforms to invest in beneficial regional industrial chainsCorporate venture capital can leverage corporate resources to fortify local industries and enable these local companies to reciprocate, generating a win-win scenario.

Furthermore, Liu Zhiyang underscored the importance of CVCs identifying their strategic core capabilities, advising against indiscriminate investmentsSelecting appropriate organizational structures and decision-making frameworks is crucial for securing positive investment outcomes in CVCs.

In considering the "Policies for Promoting High-quality Development of Venture Capital," Ge Peijian acknowledged several remaining hurdles across the "raising—investing—managing—exiting" spectrumHe particularly emphasized that refining exit processes remains a primary concern for investment institutionsTo this end, he advocated for bolstering support for exit channels while exploring diversified options to facilitate smooth capital mobility

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