<Science and Technology Innovation Board Daily> (Shanghai, Reporter: Chen Xiayi)

Without an introduction, one would not anticipate that the soft-spoken, gentle and calm lady being interviewed would be a financier, but as the saying goes: “don’t judge a book by its cover”. The interviewee, Ms Xiong Yanpin, a former Goldman Sachs investment banker, is actually the co-founder of V Fund, an investment management firm.  

In late 2015, Ms Xiong, together with four former Goldman Sachs colleagues, founded V Fund together. As a mid to late-stage investment firm, V fund currently manages over 6 billion RMB in funds, and within 5 years, V Fund has invested over 4 billion RMB. They have invested in 24 projects and 7 of them have been publicly listed, with an impressive IPO rate of 30% which is expected to increase to over 50% within the next year. Notable projects include Contemporary Amperex Technology, Farasis, Yunda Express, Zhongke Aerospace, YunTongXun, and GeekPlus, among other leading enterprises in the industry. 

To Ms Xiong, V Fund’s advantage lies in its ability to focus. Since its establishment, V Fund has been focusing on China’s industrial transformation and upgrading, together with investments in innovative technology. Furthermore, the partners have years of experience in capital operation under their belts, especially in the advanced manufacturing field, thus are very familiar with the capital operation of the technological innovation industry. 

Farasis Technology, a company invested in by V Fund, has been successfully listed on the Sci-tech Innovation Board, while another company they have invested in has been accepted by the Board. In the next year, 6-8 companies they have invested in will continue to apply to the Sci-Tech Innovation Board. At the event, Xiong Yanpin, a partner of V Fund, accepted an exclusive interview with a reporter from the Science and Technology Innovation Board Daily and discussed topics such as V Fund’s investment style, strengths and investment logic in-depth. 

Selecting Leading Companies with High Value-Adding Potential

When investing, V Fund opts to be prudent and stable. The field of new energy vehicles best reflects V Fund’s investment strategy and Contemporary Amperex Technology is undoubtedly their most dazzling investment. 

Around 2017, a new energy vehicle fund was established. After analyzing the overall industrial chain of new energy vehicles, V Fund’s investment team came to the opinion that vehicle companies that focus on the c-segment not only require large amounts of capital but also have extremely high risks, with a low probability of success. Thus, they avoided investing in this industry. 

 V Fund believes that investments in core components have greater stability compared to whole vehicles, as market demand, rather than the popularity of individual brands, are the key to the success of the companies.

 From the perspective of parts and components, because batteries account for 60% of the cost of new energy vehicles, and cathode materials account for about 30%-40% of battery costs, it is the segment with the highest added value in the automotive industry chain. Therefore, V Fund invested in Contemporary Amperex Technology which was one of the industry leaders at the time, and Farasis Technology, which has recently been listed on the Science and Technology Innovation Board.

 V Fund is also involved in the field of hard and core technology, including Biren, a GPU start-up founded by a team of elite Chinese scientists, chip design software EDA, automotive smart driving chip companies, 5G mobile phone RF chip prediction and cloud RF chip, among others.

When asked whether V Fund avoids investing in multiple companies in a single subfield, Ms Xiong believes that from the perspective of a financial investor, fund managers aim to maximize the value of their investors’ investments, thus the fact that companies that they have invested in are in a state of competition is not a worry for them.

She believes that the new energy vehicles market is a trillion-dollar market, which is sufficient to support 2-3 competitive companies. This opinion is based on the concentration rates of previous automotive industry chains and auto-component supply chains and is supported by financial analysis. 

"If an industry does not have much room for growth, for example, the market size of the entire industry is only 5 billion RMB, and a leading company already holds 70-80% of the market share, we will not try to get a second company involved, as that limits the space for imagination." Ms Xiong added.