On December 29, the "2020 Nanjing Science and Innovation Capital Investment Promotion and Young Investors Summit" was successfully held in Nanjing,China. The summit was hosted by Nanjing Local Financial Supervision Bureau and Nanjing Zijin Investment Group, and organized by Nanjing Innovation Capital Group and Zero2IPO Group. A group of influential investment leaders from China and representatives of young investors, well-known innovation and entrepreneurial enterprises, leading enterprises in the industry chain, research institutes and new R&D institutions attended the summit. Weng Guojiu, a member of the municipal government party group, attended and delivered a speech.

At the conference, Xiong Yanpin, Co-Founding Partner of V Fund, was invited to attend the roundtable discussion "The Road to Manufacturing in the Age of Science and Technology" and acted as the moderator of the forum, discussing the development trend and value discovery of "new manufacturing" in the age of science and technology.

Looking back to 2020, "hard technology" is definitely a buzzword among investors. Especially after the launch of the Science and Technology Innovation Board and the registration system, our country has clearly proposed to support and encourage the listing of hard technology enterprises, and hard technology has quickly become the focus of market attention, and a track that many investment institutions are scrambling to enter.

Founded in late 2015 by Xiong Yanpin and four other former Goldman Sachs colleagues, V Fund has been deeply involved in the advanced manufacturing track since before the industry focused on the hard technology innovation sector. Over the past five years, V Fund has managed a cumulative scale of 6 billion yuan and has invested in more than 30 projects. 6 of its portfolio companies have gone public, and more than 10 have been submitted for IPO now or in the coming year, accounting for more than 50% of its portfolio projects. Representative cases include CATL (300750.SZ), Farasis Energy (688567.SH), Ronbaymat (688005.SH), YUNDA Holding (002120.SZ), CLOOPEN, Horizon Robotics, Cloudwise, Yuanian Technology, BIRENTECH, Geek+ and some other representative companies.

"This is due to our extreme focus on advanced manufacturing sector, and we are also grateful for the opening of the STB, which has provided a smooth exit channel for our portfolio companies and we are also a big beneficiary."

A golden age for industrial track investment

In 2020, the world saw the biggest wave of information technology and intelligent upgrading and change in the past decade, while China enters the era of science and innovation, with huge opportunities for independent control and import substitution. The combination of these two effects may usher in unprecedented "good times" for hard technology investment.

In Xiong Yanpin's view, 2020 is the perfect golden age to invest in industrial tracks. "We have tripled the number of investments this year compared to last year. We only really worked for six months this year due to the epidemic, and in six months we created three times the amount of investment last year, and twice the money amount of investment ."

According to Xiong Yanpin, the entire Chinese supply chain has now gone from relying on globalisation and finding the best quality suppliers with absolute advantages from the global market to a system that needs to rely on self-built supply chain systems and self-sufficiency at key nodes. "It is in this general environment that we have found some more investment opportunities in many key industry chains. So we followed this general logic to find and capture the best teams in the market at the most critical core technology nodes."

Xiong Yanpin went on to analyse that China is also the world's largest consumer market for many segments of hard technology and advanced manufacturing, which, coupled with the opening of the Science and Technology Innovation Board, provides a better exit environment for many hard technology and advanced manufacturing companies.

For V Fund, this year has been a year of acceleration, with all team members running on overload. V Fund is still bullish on opportunities in the hard technology and advanced manufacturing sectors, especially in tracks such as 5G, semiconductors, artificial intelligence, industrial connectivity and new automotive. And after five years’ hard working , V Fund has a proven record of successful investments in these tracks.

How to leverage differentiation?

After the introduction of the Science and Technology Venture Board, the most obvious benefit for institutions like V Fund that focus on hard technology investments is that their own investment projects are potential targets for the Science and Technology Venture Board in the future, and it also accelerates the establishment of the entire technology entrepreneurship and innovation valuation system and the construction of exit channels.

"Five years ago, when we invested in the track of smart manufacturing, it was actually relatively cold. But from last year after the opening of the science and technology board, it is obvious that the track of hard technology or advanced manufacturing has become crowded, with more and more entrants and higher valuations." Xiong Yanpin said.

In this case, it is particularly important to leverage the differentiation. In Xiong Yanpin's analysis, the threshold to invest in the track of advanced manufacturing is also very high.

"On the one hand, there must be a project, and there is a very high threshold for the source of the project; the other is that after finding the project, there is a technical judgment on the project, which also has a very high threshold. There is also an ecosystem that has to be able to give industrial empowerment to the investee company." She admits that any beneficiaries in the capital market now are some companies that worked quietly a few years ago and could endure the loneliness, as well as investment institutions that have focused deeply on this track for a long time.