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recently, the listed company chinese media released an announcement stating that its private equity fund xiamen yuanqu xinrui venture capital partnership (limited partnership) (hereinafter referred to asyuanqu xinrui) has completed liquidation and obtained a notice of cancellation of registration. the fund manager is beijing yizhou yunting private equity fund management co., ltd., also known as challenger ventures. its founding partner tang binsen is better known as the founder of the beverage brand yuanqi forest.

public information shows that the fund was established inin 2020, a company that had invested in a game company founded by tang binsen’s old partner xie xianlin chose to cancel its registration because it had not found other suitable investment targets.

invested in a project in 4 years, the incomemore than 5 million

according to the information released by the china securities association, yuanqu xinrui was establishedin 2020, at that time, china media group issued an announcement stating that it would invest 25 million yuan to subscribe for shares of the fund. other investors included beijing challenger technology co., ltd., shanghai yushu boiling point investment partnership (limited partnership), etc. the fund size is 58.9 million yuan. challenger venture capital serves as the fund manager, and the duration of the fund is tentatively set at 10 years, of which the first 7 years of the duration are the investment period and the remaining period is the recovery period.

in terms of investment direction, yuanqu xinrui is mainly used to invest in beijing yuanqu entertainment co., ltd. project.with unanimous written consent, other investment projects may also be sought in the areas of electronic game culture and creativity, consumption upgrading and information services.in march 2021, yuanqu xinrui completed the filing with the china securities association.

challenger ventures is well-known in the investment community. its founding partner tang binsen is better known as the founder of the beverage brand hey tea. before founding hey tea, tang binsen was also well-known in the gaming industry. he ran celebrity games, a company that has launched several hit games, including farmville and clash of kings.

in 2014, zhixingtong "sold itself" to chinese media for 2.66 billion yuan. subsequently, tang binsen founded challenger ventures and frequently invested in the consumer goods sector. according to the official website, challenger ventures has invested in more than 200 startups and currently has assets under management of more than 10 billion yuan.

the above announcement shows that yuanqu xinrui invested in beijing yuanqu entertainment co., ltd. during the operation period and obtained investment income5.7043 million yuan. the reporter noticed that the company was established in 2020 and is headquartered in beijing. according to media reports, the founder is tang binsen’s old partner, xie xianlin, co-founder of elex. the company’s core business is games and social networking, and its focus is on the development of overseas markets. in 2020, yuanqu entertainment also received investment from tencent, which currently still holds 10.1745% of the shares.

as for the reason for choosing to cancel yuanqu xinrui now, the above announcement stated that due to changes in the macro-economy and investment environment, yuanqu xinrui has not found other suitable investment targets, and the equity investment in beijing yuanqu has been completely withdrawn. all partners unanimously decided to liquidate yuanqu xinrui and handle the cancellation registration matters.

"yuanqu xinrui is not large in scale and is a special fund. it will be normally cancelled after the project investment is exited." an informed source revealed to the reporter of "daily economic news".

game investment is quiet.VC/PEwhy no longer favored?

one background that needs to be mentioned is that the investment and financing market in the domestic gaming sector has been dormant for a long time.itjuzi data shows that the investment and financing of the chinese game market reached its peak in 2014-2015, with more than 400 investment events in two years and an investment amount of about 10 billion yuan. however, it left the main battlefield of investment after 2016, with the investment amount in a single year being only 5.3 billion yuan. although transactions have recovered since then, the mainstream investors have shifted to industrial capital such as tencent and bilibili.

"there are many reasons why the game track is no longer favored by vc/pe." angel investor guo tao told the reporter of "daily economic news" that giants such as tencent and netease dominate the market with their strong funds, huge user base and mature operation system. under fierce competition, small and medium-sized game companies are struggling. new entrants face extremely high competition barriers and find it difficult to break through the siege, which makes investment risks increase sharply and the return prospects are slim. in addition, the rising development costs also bring huge pressure to investors. in order to meet the increasingly picky needs of players, games need to invest huge resources in art, technology and plot. at the same time, the promotion costs are high, it is more difficult to acquire users, the profit margin is severely compressed, and the return on investment is greatly reduced. furthermore, strict regulatory policies have increased investment uncertainty, and the compliance costs of game development and operation have increased, which runs counter to the low risk and high return pursued by vc/pe. it is worth noting that the limitations of the business model of game companies cannot be ignored. the income of buyout stand-alone games is unstable, and the subsequent reliance on dlc or sequels is unattractive compared with the continuous cash flow of internet service products.

not long ago, the launch and popularity of black myth: wukong triggered the market’s renewed attention to game entrepreneurship and investment.however, guo tao believes that this phenomenal product has limited and uncertain impact on investment in the gaming sector. on the positive side, it demonstrates market potential, proving that high-quality games with cultural connotations can generate high returns, while also attracting talent and technology to provide impetus for the industry's innovative development, and may also expand game types and drive related investment."however, the limitations of this stimulus are also obvious. investment risks are still high, game development requires a lot of money and time, market competition is fierce and player tastes vary, making it difficult to replicate success, inherent industry problems have not been resolved, and the oligopoly structure, high costs and regulatory policies still affect investor decisions. the performance of a game is not enough to determine the direction of investment, and factors such as market size, competitive situation and company strength must be considered comprehensively," said guo tao.

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