On June 29, the General Office of the Zhengzhou Municipal People’s Government issued the “Implementation Opinions on Promoting the Development of Venture Capital in Zhengzhou” (referred to as the “Opinions”).
The "Opinions" clarify future development goals: through a series of measures such as cultivating market entities, policy guidance, and optimizing the business environment, we will further expand the scale of venture capital, promote venture capital to become bigger, stronger, and better, and strive to cultivate a group of influential companies. The venture capital brand enterprise strives to have the total scale of private equity and venture capital funds exceed 200 billion yuan by the end of the "14th Five-Year Plan" and build Zhengzhou into a venture capital center with large scale, strong vitality and excellent environment in the central region of . , to promote the development of strategic emerging industries in Zhengzhou City.
The "Opinions" also introduced many measures to promote the sustainable and healthy development of venture capital in Zhengzhou in terms of encouraging the establishment of venture capital enterprises, guiding the clustered development of venture capital, and giving full play to the cultivation function of the venture capital industry.
In addition to regular measures to support the establishment of venture capital enterprises and provide facilitated registration services, the "Opinions" also put forward many powerful highlight measures. The focus of the Fund Research Center is as follows:
- In the face of domestic and foreign ventures, Investment institutions carry out investment promotion work, adopt market-oriented investment promotion methods, increase settlement support, and reward venture capital companies that settle in Zhengzhou based on their local financial contribution to city and county levels. Since that year, has been rewarding for five consecutive years. The reward funds are mainly used to introduce and cultivate a number of well-known domestic and foreign venture capital institutions with large investment scale and strong influence.
- Promote government investment funds to establish or participate in angel funds, guide all types of social capital to jointly establish angel investment enterprises, promote individuals including angel investors to engage in venture capital activities, and explore the establishment of risk sharing and profit sharing mechanisms.
- For investment institutions registered in Zhengzhou that directly invest in unlisted technology enterprises in our city, investment risk subsidies will be provided based on 5% to 10% of their actual annual investment funds (which refers to monetary funds and is included in the registered capital of the enterprise). , the maximum annual subsidy amount for this project for a single investment institution is 5 million yuan.
- Support the establishment of venture capital guidance funds at the municipal level and qualified districts and counties (cities), and attract social capital to jointly initiate the establishment of venture capital enterprises and venture capital sub-funds. Support state-owned enterprises with needs and conditions to establish or participate in venture capital enterprises and venture capital funds of funds in accordance with laws and regulations and in a market-oriented manner. Relying on government parent funds such as the Zhengzhou National Central City Industrial Development Fund, we will establish an investment ecosystem in which government investment funds, social capital, and management teams interact with each other and complement each other's advantages.
- The proportion of funds invested in enterprises in our city by funds invested by our city government investment funds can be appropriately reduced; the identification standards for funds invested by government investment funds in enterprises in our city can be relaxed .
- Establish a profit-sharing mechanism for government investment funds to encourage government investment funds to give profits to venture capital management enterprises based on the profits enjoyed by the government-invested part from the funds in which they participate.
- Government investment funds are encouraged to establish a market-oriented compensation system based on market-oriented performance assessment requirements and return levels. Support government investment funds in exploring the establishment of a mandatory co-investment mechanism for senior executives, allowing government investment fund personnel to voluntarily choose to invest in entrepreneurial enterprise projects with their own funds.
- In order to encourage innovation and tolerate failure, in the venture capital work such as initiatives and businesses that are conducive to innovative development, state-owned asset investment business, etc., although the expected investment results are not achieved or losses are incurred, it is strictly following the investment decision-making process, due to force majeure or market If it is caused by a malfunction and the individual does not seek personal gain or commits any serious negligence, it will be handled in accordance with the principle of due diligence and immunity. Strictly implement the requirements of " and ", and comply with regulations, disciplines and laws to avoid being held accountable or to be given lighter or lighter punishments.
- Encourage listed companies and other social capital to participate in or initiate the establishment of venture capital funds , and promote venture capital companies to broaden fundraising channels through the issuance of corporate bonds, mergers, acquisitions and reorganizations. Encourage financial institutions and venture capital companies to carry out investment-loan linkage, investment-bond linkage, and promote various innovative models such as investment, loan, and guarantee linkage.
- Government investment funds and outstanding domestic investment institutions are encouraged to establish equity transfer funds (S funds) in Zhengzhou. Encourage all types of social capital to establish merger and acquisition funds in a market-oriented manner and provide key support.
Fund of Funds Research Center believes that as the capital city of Henan Province, the "Opinions" issued by Zhengzhou City cover all aspects of "raising, investing, managing and exiting", supporting the development of venture capital with all-round and multiple measures, and emphasizing the use of government guidance The role of fund has also been to propose a series of measures to guide the marketization of funds, such as relaxing return investment standards, establishing a profit-sharing mechanism, establishing a market-oriented compensation system, etc., which undoubtedly greatly increased the attraction to GPs.
We have noticed that Henan Province has frequently made efforts in parent funds and venture capital since last year :
- In the "Henan Province's Fourteenth Five-Year Plan for National Economic and Social Development and the Outline of Long-term Goals for 2035" , also proposed to reform the government-invested industry investment fund management mechanism, establish a fault-tolerant and government profit-sharing mechanism for corporate investment in the seed and start-up stages, and create a full-process service chain covering "raising, investment, management and exit". Actively introduce and cultivate venture capital and angel investment institutions, and support technology companies to list on the GEM, STAR Market, and New Third Board for listing and financing.
- On the morning of October 20, 2021, at the 9th China Venture Capital Industry Summit, the Henan Province Venture Capital Guidance Fund, the Henan Province Emerging Industry Investment Guidance Fund, and the Henan Province High-quality Enterprise Investment Preparation Project Database were officially established. Relying on the supporting investment from three provincial-level investment companies, including Henan Investment Group, Zhongyuan Yuzi Holding Group and Henan Agricultural Development Company, Henan has respectively established a provincial venture capital guidance fund with a total scale of 15 billion yuan and a provincial venture capital guidance fund with a total scale of 150 billion yuan. Two large parent funds of emerging industry investment guidance funds.
It is understood that the two large-scale parent funds are used to widely attract domestic and foreign advanced venture capital and industrial investment fund management institutions, focusing on new displays and intelligent terminals, biomedicine , energy conservation and environmental protection, new energy and network connections in Henan Province. Emerging industries such as automobiles, new generation artificial intelligence , network security, nylon new materials, smart equipment, smart sensors, 5G and new coal chemical materials, as well as innovative enterprises in the growth and mature stages of the industry chain with advantageous characteristics.
- On December 26, 2021, the "Henan Province Promotes Angel Venture Capital Fund High-quality Development " press conference was held. It is reported that the recent Henan Provincial Party Committee Standing Committee meeting and the provincial government executive meeting reviewed and approved the "Henan Province Promotes Angel Venture Capital Fund High-quality Development " Important policy documents include the Implementation Plan for the High-Quality Development of Venture Capital Funds, the Henan Province Digital Economy Government Guidance Fund Establishment Plan, and the Henan Province Biomedical New Materials Government Guidance Fund Establishment Plan. Among them, the Implementation Plan focuses on four major areas. Proposed 16 measures to promote the total scale of private equity and venture capital funds in Henan Province to exceed 300 billion yuan by the end of the "14th Five-Year Plan".
- On December 31, 2021, Henan Province issued the "Measures for Promoting the Development of Venture Capital Investment" (hereinafter referred to as the "Measures"). The "Measures" will come into effect on March 1, 2022. This is the first country in my country to specifically regulate the promotion of venture capital investment. , guiding provincial government regulations to solve the problems of small number of provincial venture capital entities, small capital scale, few professional talents, insufficient contribution of venture capital funds to scientific and technological innovation and lagging development of government guidance funds from the legal level.
The "Measures" mainly improve and improve the institutional system that supports the development of venture capital from the four aspects of "subject, operation, environment, and guidance".Three types of entities, including individuals, enterprises and funds, have been established, and the operating paths of various types of venture capital have been clarified based on the "raising, investment, management and withdrawal" aspects of venture capital. On the one hand, it has created a good development environment for venture capital investment and carried out targeted prevention of possible risks in guiding the standardized development of venture capital investment.
In addition, He Xiong, deputy secretary of the Municipal Party Committee and Mayor of Zhengzhou, Henan Province, previously promoted parent funds and venture capital when he was Henan Provincial Development and Reform Commission Party Group Secretary and Director. In a speech in 2021, he proposed : In the future, efforts should be made to build a three-level government guidance fund system at the provincial, municipal and county levels. If the fund of funds is strong, venture capital will gather; if venture capital is active, the industry will flourish. Only by vigorously developing parent funds can we gather "patient capital" and " long-term capital " to empower funds and enterprises. In particular, government-funded venture capital guidance funds have the advantage of effectively integrating policy with the market.
Against the background of the promulgation of the "Opinions", we are also looking forward to a new round of development climax for the venture capital industry in Zhengzhou.
