(Source: "Economic Daily" 2025-06-09)

Recently, seven departments including the Ministry of Science and Technology and the People's Bank of China jointly issued "Several Policy Measures to Accelerate the Construction of a Science and Technology Financial System to Strongly Support High-level Science and Technology Self-reliance and Self-reliance", which clearly proposed to give full play to the role of venture capital in supporting scientific and technological innovation, broaden the sources of venture capital funds, and optimize the assessment and evaluation mechanism of state-owned venture capital.

Developing venture capital is an important measure to promote a virtuous cycle of technology, industry, and finance. With the characteristics of long-term investment cycles, venture capital (VC) and private equity funds (PE) have become the key forces of patient capital. At the same time, the high-risk preferences of VC and PE are also highly consistent with the high-risk attributes of technological innovation companies. Therefore, actively cultivating patient capital with VC and PE as the main body is of great significance to do a good job in science and technology finance, support high-level scientific and technological self-reliance, and shape new development momentum and new advantages.

However, in practice, the current primary market faces challenges such as shrinking fundraising scale, high dependence on state-owned assets, short assessment cycle, and single exit channel. In recent years, the scale of VC and PE fundraising has been declining year by year; limited partners (LPs) with state-owned backgrounds account for more than 80%, and market capital participation is not high; the risk appetite of national venture capital guidance funds is low, which conflicts with the high-risk nature of venture capital; government guidance funds are difficult to play the role of patient capital under the pressure of short-cycle assessments; exits rely heavily on listings, and alternative channels such as M&A funds are lagging behind in development and market liquidity is poor.

To solve these restrictive problems, we must focus on the systemic reform of the entire chain of "raising, investment, management, and exit" to promote the healthy growth of patient capital and stimulate market vitality.

On the fundraising side, market-oriented limited partners should be expanded and sources of funds should be broadened. At present, state-owned assets have become the main force of limited partners. It is recommended to further introduce long-term capital in the future and promote corporate annuities and pension funds to invest in the primary market through fund of funds. At the same time, access should be appropriately relaxed, the proportion of equity investment in insurance funds should be increased, and cross-border investment and financing by family offices should be piloted.

In terms of investment assessment and management, it is necessary to optimize the investment evaluation system to make all types of capital more patient. For example, the assessment cycle of government guidance funds and other long-term capital can be appropriately extended to adapt to the long-term characteristics of technological innovation and venture capital; use an overall investment portfolio approach to evaluate investment results, change the existing project-by-project assessment model, and tolerate necessary failures; establish a fault-tolerance mechanism and set up a reasonable fault-tolerance exemption mechanism to reduce the phenomenon of investors avoiding early-stage and technological innovation projects due to concerns about policy and liability risks; gradually optimize tax policies to encourage long-term holdings; and so on.

On the exit side, it is necessary to unblock diversified exit channels and improve market liquidity. The experience of developed countries shows that the mature operation of private equity secondary market funds (S funds) and M&A investment funds has greatly promoted capital circulation and improved the exit mechanism. At present, some domestic pilot policies have been implemented first, such as the Beijing Equity Exchange Center’s S Fund trading platform. Relevant government departments can gradually establish more S funds to broaden channels for the exit of patient capital from the primary market; explore the establishment of "technology M&A pilot zones" to activate the M&A market with innovative models. As a highland for technological innovation, Beijing can try to establish a "technological merger and acquisition pilot zone" relying on Zhongguancun, such as promoting the securitization of patents and technology assets, with the Beijing Stock Exchange providing liquidity support to solve the problem of valuation and realization of intangible assets.

(Author: Jiang Ping, researcher at Beijing Institute of Opening up, w88 casino)

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