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Southern Finance Omnimedia reporter Li Jinping reports from Shenzhen

To accelerate the construction of the "20+8" new industrial clusters, Futian District, one of the three major financial center areas in the country, has taken new actions.

Recently, the industrial investment entity Xuzhi Funeng New Energy Investment Platform landed in Futian District. It is reported that the project was jointly established by Xuzhi Capital under IDG Capital and Foxconn Group, with a total investment of 1 billion yuan, and will focus on investing in new energy power generation and clean energy application fields.

Different from independent venture capital (VC) in the general sense, CVC (corporate venture capital or corporate venture capital, abbreviated as CVC) is the behavior of real enterprises to carry out investment incubation or mergers and acquisitions around the upstream and downstream of the industrial chain through the establishment of strategic investment departments, investment subsidiaries, investment funds, etc.

In recent years, due to its outstanding role in industrial chain resilience and opening up new industrial tracks, attracting the concentration of CVC institutions is becoming an important direction for empowering industrial development in many cities.

A relevant person in charge of the Financial Services and Risk Control Center of Futian District, Shenzhen said that Futian District is strengthening the competitive advantages of emerging industries in Futian District by launching exclusive cluster development space, issuing full-cycle CVC support policies, building a full-scenario CVC service system, and establishing a listed company industrial investment alliance. This will help Futian District achieve the transformation from CVC clustering to key industrial chain clustering, thereby better assisting the construction of Shenzhen's "20+8" industrial clusters.

CVC becomes the main force leading industrial development

According to statistics from the American Venture Capital Association, CVCs accounted for 50% of the investment scale in the venture capital industry for the first time in 2015. After surpassing VC, CVC's market share has continued to increase. In 2023, although the number of transactions of CVC investment in the United States only accounted for 23.3% of the venture capital industry in the United States, the scale of each transaction was significantly higher, and the overall transaction scale accounted for 60.3% of the entire industry.

Behind the continuous increase in market share, the CVC model, which mainly invests in the field of "hard technology", is becoming the main force in cultivating "unicorns". In 2023, the seven major US technology giants (Google, Microsoft, Amazon, Apple, Meta, Tesla, and Nvidia) participated in 208 venture capital transactions with a total transaction volume of US$25 billion, accounting for about 9% of the total global venture capital transactions.

OpenAI, the world's largest artificial intelligence unicorn, is a typical example of successful CVC cultivation. Before OpenAI launched ChatGPT at the end of 2022, which triggered a global AI boom, Microsoft invested in OpenAI twice in 2019 and 2021. After it triggered a global AI boom, in January 2023, Microsoft promised to continue to invest an additional $10 billion in it in the form of cloud computing services over the next 10 years.

Not only in the United States, the CVC model has also become an important force in cultivating and developing unicorn companies and promoting the development of "hard technology" in my country.

Public data shows that in 2023, domestic CVC investment events are mainly distributed in 28 industries such as smart manufacturing, healthcare, enterprise services and materials. Among them, smart manufacturing, healthcare and enterprise services have received the most attention from CVCs, ranking the top three in industry investment with 347, 145 and 139 investment events respectively. The smart manufacturing field has great development potential and is more favored by CVCs.

Yu Lingqu, deputy director of the Institute of Financial Development and State-owned Assets and Enterprises at the China Urban Planning and Development Institute (Shenzhen, China), told the 21st Century Business Herald that compared with VC, CVC has outstanding advantages in cultivating unicorns. This is because CVC parent companies have business scenarios and industrial channels that are highly compatible with the invested companies, usually have greater patience and more flexible investment periods, and are more capable of investing in innovative projects with long R&D cycles and high uncertainty. This is consistent with the development laws of unicorn companies. The success rate of incubating and cultivating unicorn companies is often higher than that of traditional VCs.

In addition to cultivating unicorn companies, industry insiders told reporters that CVC will also become an important carrier to lead the development of the industrial ecosystem. Take BYD as an example. BYD is transforming from the era of electrification (era 1.0) to the era of intelligence (era 2.0). The strategy of the 1.0 era is vertical integration, that is, except for tires and glass, everything else is done by itself. The strategy of the 2.0 era is platform development. Using the tentacles of CVC, more companies can rely on the BYD platform to innovate products and grow stronger, forming a shared and mutually beneficial development model.

Yu Lingqu said that it is recommended to use CVC as an important breakthrough in cultivating unicorn companies and industrial ecology. Local governments should take the lead in establishing professional CVC mother funds, and jointly invest with listed companies and leading enterprises in the jurisdiction to establish "chain leader" funds, absorb capable real enterprises in the jurisdiction to participate in the management of government-guided funds, and stimulate more unicorn companies to grow in the "hard technology" track.

"Element guarantee + scenario service" model

Faced with the new development opportunities that CVC will bring to the region incubating unicorn companies, Shenzhen is accelerating the attraction of CVC institutions to gather.

In 2023, Shenzhen took the lead in issuing the "Opinions on Accelerating the Construction of Shenzhen International Wealth Management Center" and launched the first CVC support policy in the country, covering the entire process of CVC "fund raising, investment, management and withdrawal"; launched the first CVC innovation service center in the country-Xiangmihu Listed Company CVC Innovation Service Center, and established the first listed company industrial investment alliance in the country-Xiangmihu Industrial Investment Promotion Alliance, which has absorbed more than 100 listed companies and CVC institutional member units in and outside the city.

As a core financial district, Futian District has relied on the CVC Innovation Service Center and the Xiangmihu Industrial Investment Promotion Alliance this year to accelerate the gathering of CVC institutions in key industrial chains and empower the development of Shenzhen's key industries.

In terms of space guarantee, the CVC Innovation Service Center provides a shared reception space for relevant institutions, which can be used for free to hold industry conferences. At the same time, social property companies provide preferential rents and government-supported special rent subsidies to provide office space for relevant institutions that settle in the CVC exclusive park. It is understood that CVC institutions such as BYD Investment, Huichuan Industrial Investment, and Chengda Investment have been attracted to settle in.

At the same time, the CVC Innovation Service Center continues to explore diversified scenario service models. For example, it focuses on the needs of CVC investment teams and launches a series of training courses on the "Steady CVC Road" around the full process of CVC's "fund raising, investment, management and exit" business.

In addition, the CVC Innovation Service Center also explores the provision of demand matching services for CVC institutions and invested enterprises based on the "20+8" industrial clusters and the industry special committees. After preliminary exploration, the CVC Innovation Service Center found that the matching effect is better by industry classification. At present, 16 "Industry-Finance Matching" activities have been held, covering new energy, new materials, high-end equipment, robots, low-altitude economy, biomedicine and health, semiconductors, cultural tourism and mass consumption.

The relevant person in charge of the CVC Innovation Service Center for Listed Companies in Xiangmihu said that in accordance with the "20+8" industrial layout direction, the service center will also build a CVC high-quality project library by track, organize listed companies to carry out regular industrial and financial docking activities and practical professional training. Research and explore the evaluation list of CVC institutions and investment projects ("two lists"), establish an industry-leading CVC evaluation system, match the corresponding support policies, form a precise match between the industrial supply, demand, and investment ends of listed companies and government guidance, and guide more new quality productivity and industrial resources to gather in Shenzhen.