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at a dinner party in september 2022, bao fan, the head of huaxing capital, lamented to his friends:

"i can retire, move anywhere on earth, and live a decent life. but what about the 600 or 700 people at huaxing?"

two years later, bao fan, who had been distressed about not being able to leave, ended the bao fan era at huaxing in a regrettable way.

on september 6, huaxing capital announced that bao fan's wife xu yanqing would replace sun qianhong as the company's non-executive director. xu yanqing, 54, had not previously worked at huaxing capital, but had founded a business jet leasing company and rarely appeared in the public eye.

the announcement stated that xu yanqing was deemed to have an interest in 277 million shares of the company, accounting for approximately 48.71% of the total issued share capital of huaxing capital holdings. such interests also represent bao fan’s interests in the company.

huaxing capital tried to downplay the connection between bao fan's being taken away by the relevant authorities and xu yanqing, claiming that xu had not received any relevant notifications and was not involved in any related legal proceedings. the announcement stated: "the board of directors and the nomination committee unanimously believe that the incidents involving mr. bao will not have an adverse impact on ms. xu's eligibility to be appointed as a non-executive director."

at the same time,china renaissance capital holdings (hk: 01911), which has been suspended for a year and a half,it finally resumed trading on the hong kong stock exchange.

on september 9, china renaissance capital holdings resumed trading. prior to this, the company reissued its financial reports for the first half of 2022, 2023 and 2024, and the company's management was also significantly adjusted. in order to enhance investor confidence, chairman of the board xie yijing and others promised that they would not sell shares before march 7, 2025.

however, on the first trading day after the resumption of trading, the share price of huaxing capital holdings still plunged, falling 66% in a single day to hk$2.45, and its market value evaporated by more than hk$2.7 billion.

investors do not seem optimistic about the future of huaxing capital in the post-bao fan era.huaxing capital has finally crossed the threshold of "de-bao fanization".

founded in 2005, china renaissance is one of the most well-known leading institutions in china's venture capital circle, and bao fan, as the founder, has left a deep personal imprint on the company. but in 2015, bao fan took the initiative to seek to "de-bao fanization", seemingly aware of the risk of the ten-year-old company being deeply tied to "boss bao".

bao fan, who is good at inspiring words, described the importance of this change as follows: "without bao fan, huaxing has no past, but with bao fan, huaxing has no future."

but bao fan, who was still in the arena, was ultimately unable to complete his farewell according to his own ideas and rhythm. in february 2023, the explosive news that "bao fan had lost contact" spread across the internet; half a year later, huaxing capital finally confirmed that bao fan was cooperating with the investigation of relevant authorities.

caption: bao fan

in february this year, bao fan, who had been missing for a year, reappeared in the public eye. huaxing capital holdings issued an announcement that bao fan resigned from a series of senior management positions including executive director, chairman of the board, and ceo. now, with xu yanqing's entry, the other shoe of huaxing's "de-bao fanization" has finally landed.

in bao fan's heyday, he tried to use himself as an anchor to mark the past and future of huaxing capital.bao fan has disappeared into the dust with his glorious past, and huaxing capital must also face the future after "boss bao" fades out.

considering the broader picture, bao fan's passive retirement is just a footnote to the great changes in the local investment and financing industry. with major changes in both the internal and external environment, the last era of vc, pe, and fa has come to an end; re-finding their own positioning and direction will be a long-term proposition for investment and financing institutions of all sizes.

during the 18 years at the helm of huaxing capital, bao fan started from scratch and became the most famous "capital matchmaker" in the venture capital circle by "running alongside" internet companies at the forefront of crisis.

with his distinctive personality of being loyal and valuing friends, as well as his strong connections in the industry, bao fan has become the "leader" of china's internet industry in his 40s. especially after assisting jd.com in its ipo, huaxing capital has participated in almost all major mergers and acquisitions in the internet industry, and even facilitated the alliance between didi and kuaidi, two mortal enemies.

but after last spring, bao fan, who made huaxing capital successful, also put the company into great difficulties.

as the number one person at huaxing capital,bao fan’s sudden loss of contact directly disrupted the company’s operations and management.two months later, because the auditor could not contact bao fan and could not issue the audit report, huaxing capital decided to postpone the release of the 2022 audited annual results and suspend trading from april 3, 2023.

in addition, in fiscal year 2023, huaxing capital paid a restricted amount of approximately rmb 78 million due to the bao fan incident. the accounting treatment of this amount of funds aroused the concern of the auditors, resulting in the auditors issuing a qualified opinion on huaxing capital holdings' 2023 annual report.

in addition to delaying workflow,the bao fan incident also dragged down the fundraising of the company's funds.

huaxing capital laid out its investment business many years ago and established several private equity funds. in the past, bao fan's connections and influence were of great help to this business; yang haoyong, who founded ganji.com and guazi.com, once said, "bao fan has a very high status in the industry. he has a good relationship with many people in the industry, and everyone gives him face."

according to huaxing capital's financial report, its asset management scale in the first half of this year was 34.8 billion yuan, of which the asset management scale that generated management fees was about 17.4 billion yuan. however, the company also mentioned in last year's annual report that the group's asset management business will face new challenges in 2023, affected by the disclosure of bao fan's situation on february 16, february 26 and august 9 last year.the fundraising of huaxing new economy rmb phase iv fund and usd phase iv fund ended ahead of schedule.at the same time, the investment period will be terminated early and no new project investment will be made.

huaxing capital is also losing employees. as of the first half of this year, huaxing capital holdings had a total of 521 employees, a decrease of 8% compared to the end of 2023.

the series of problems that arose after bao fan lost contact were eventually reflected in huaxing capital’s financial performance.

in 2021, huaxing capital holdings' revenue reached 1.744 billion yuan and its profit was 1.645 billion yuan. in 2022, affected by internal and external factors, the company's revenue fell by more than 9% to 1.585 billion yuan, with a loss of 454 million yuan, turning from profit to loss.

after the bao fan incident, huaxing capital's operating conditions further deteriorated.in 2023, huaxing capital holdings' revenue just exceeded 1 billion yuan, down more than one-third year-on-year;profits failed to improve and the company recorded a loss of 461 million yuan for the full year.

entering 2024, huaxing capital initiated drastic changes. bao fan resigned from his management position at the beginning of the year, and the company stated that it was due to "health reasons and the desire to spend more time on family affairs."

subsequently, huaxing capital hired auditors to re-audit past financial data and resolve issues left over from the bao fan incident, and resumed stock trading one month before being delisted by the hong kong stock exchange in accordance with procedures.

but the risks brought by the bao fan incident are still ongoing.to this day, there is still no information about where bao fan is and what his condition is.huaxing capital does not have the relevant information.the company said in its announcement that it “has not received any notification that it is under investigation, nor has it entered into any court proceedings related to such matters.”

from bao fan's resignation at the beginning of the year to xu yanqing's appointment as non-executive director, huaxing capital has made significant progress in "de-bao fan". this also means that the negative impact of the bao fan incident is fading.

however, huaxing capital, which has gradually emerged from the shadows, cannot escape the downturn in the entire venture capital circle.

according to cvsource data, in the first half of this year, the number of domestic vc/pe market investments was 3,971, a slight decline year-on-year and a 13% decrease month-on-month; the market transaction volume totaled us$68.4 billion, a 4% decrease year-on-year and a 29% decrease month-on-month. in addition, the average market transaction value was us$1.722 billion, almost the same year-on-year and a 18% decrease month-on-month.

despite the support of the ai ​​big model trend, domestic primary market investment and financing is still relatively quiet.this in turn affected huaxing capital’s first-half performance.

in the first half of this year, huaxing capital recorded a loss of 86 million yuan, a significant narrowing compared with 163 million yuan in the same period last year; but revenue also fell 38.7% to 329 million yuan, and the downward trend after 2022 has not been fundamentally reversed.

in fact, except for huaxing capital, the situation of domestic investment and financing institutions, large and small, is not ideal. the number and scale of their investments are not large. most of them are in a dormant period of adjustment to cut costs and wait for new opportunities.

behind this cyclical change, in addition to the fact that the domestic and foreign economies are still in the recovery stage and it is becoming more difficult for start-ups to gain a foothold, there are alsostructural changes in entrepreneurial projectsthis is a key factor.

take the fa business on which huaxing capital relies as an example. this service that helps entrepreneurs raise money complements the internet business model.

the classic strategy of the internet is to grab market share with the help of funds, rely on subsidies, free services and other means to attract consumers, and eliminate other competitors who are not as well-funded as themselves. under this logic, the strategic value of fa is beyond doubt.

but now, the focus of domestic and foreign entrepreneurship has shifted from the internet to high-tech fields such as ai, chips, medicine, new energy, and advanced manufacturing. similar to the internet, such projects also require a lot of investment. for example, openai, backed by microsoft, is still looking for money everywhere; but hoarding funds alone is far from enough to stand out. technical barriers are the key.

the problem that follows is that entrepreneurs prefer to take money from technology giants and gain support from their entire ecosystem.

for example, ai big models have been the hottest entrepreneurial field in the past two years, gathering global technical elites. although established investment institutions are actively involved, star companies often select one or two backers very early, such as microsoft overseas and alibaba and tencent in china.

in this case,the core function of fa in building bridges and paving the way has been replaced by the strategic investment department of large companies.naturally, it is difficult for them to get a share of the profits from star startups. they can certainly receive financing needs from relatively weaker startups, but the returns they get from them are difficult to compare with those from the "hottest newcomers".

in fact, many entrepreneurs have doubted the value of fa and even started lawsuits against their former "comrades-in-arms" for service fees.

in april this year, a fa agency named shanghai dingzhi sued the startup tongwan technology, claiming that the latter introduced nearly 100 investors and assisted in financing, but the latter refused to pay service fees. tongwan technology argued that shanghai dingzhi only organized an online roadshow and created a wechat group, but did not provide all services, so it was only willing to pay part of the fees.

fa’s embarrassing situation is just the tip of the iceberg of structural changes in the venture capital industry.

in the past few years, in addition to becoming less and less dependent on middlemen, many star startups prefer to take money from large companies and prefer rmb rather than us dollars. the situation is just the opposite for small and medium-sized entrepreneurs who lack outstanding highlights. due to their own conditions, it is more difficult for them to obtain financing than before.

on the other hand, the investors behind the investment institutions are also more cautious. in addition to selecting tracks and evaluating founders, they will also be more demanding on the operating indicators and financial conditions of startups, and even make gambling agreements a must.

star startups bypass "middlemen" and directly deal with large institutions and companies; investors tighten their wallets, act cautiously, and try every means to set terms that are favorable to them, with the bottom line being to protect the principal. venture capital was originally known for its high failure rate and high returns, but now it is increasingly showingrisk aversion, seeking stabilitypeculiar appearance.

faced with new demands on both the supply and demand sides, most investment institutions that are accustomed to quickly finding money, quickly matching, and quickly exiting will inevitably encounter a series of challenges. in recent years, huaxing capital's performance has not been ideal. in addition to the unexpected factor of bao fan's detention, it is actually related to the profound changes in the entire industry.

many years ago, bao fan once said that one of huaxing’s core capabilities is its foresight about trends. “maybe the feelings are not always right, but once we identify a direction, we will spare no effort in investing and planning.”

the judgment that bao fan is proud of has indeed played a key role in the development of huaxing capital.

as we all know, the rise of china renaissance capital is closely related to the financing and ipo of jd.com. however, compared with star projects like jd.com, china renaissance capital's role as a "matchmaker" and promotion of marriages between the top two players in multiple tracks can better reflect the skill of "boss bao".

in 2015, didi and kuaidi, 58.com and ganji.com, and meituan and dianping.com all ceased fighting and merged, and one of the key drivers was bao fan. before the merger, these companies were constantly at war, and it seemed that there would be no day to put down their weapons; but the bigwigs behind the scenes, including bao fan, saw that the business war was unsustainable, and finally pushed the former rivals to shake hands and make peace.

at the same time,bao fan is also sorting out and polishing his investment and financing methodology.

bao fan once said in 2012 that he has three major criteria for evaluating projects: whether the matter has prospects and development potential; whether it has a strong team; and whether people and things match.

when the company went public in the united states in 2018, he proposed that there were three types of people he would not invest in: entrepreneurs without ideals, those without the ability to continuously learn, and those without a vision. "those who only think about how to make money on their own little piece of land are just frogs in a well. greed is the root of evil. there is a lot of money in this world that cannot be made," bao fan said at the time.

by 2022, bao fan's three major criteria have changed: whether it is suitable for the environment; whether it is beneficial to society; and whether the project's governance model is in line with the model currently encouraged in china.“when we invest in a company, we must see whether the company’s values ​​are consistent with china’s overall values.”

however, bao fan still thinks that there are things to invest in now. he thinks there are at least three relatively certain opportunities: smart economy, reconstruction of global industrial chain and supply chain, and changes in consumption structure. as for bigger things, "we can't see clearly now, we can only actively watch and study."

a year later, bao fan lost contact and there is still no clear news to this day. during this period, a series of new changes have taken place on the internet at home and abroad.

from a technical perspective, the rise of ai big models is expected to give birth to a new batch of top startups, and the "six little dragons of big models" in china have already gained a lot of fame. however, these companies still have a long way to go before they can truly establish a viable business model, and this cannot be achieved without the support of investment and financing institutions.

in the business landscape, internet giants no longer seek all-out war, but instead cooperate in multiple fields; the "little brothers" who originally fought for the giants no longer have to fight to the death with the opposing camp, thus giving rise to the possibility of cooperation and even mergers.

perhaps it is conceivable that if "boss bao" is still in his position, huaxing capital may appear more frequently in the field of ai big models, and there may be more marriages in the internet field.but with bao fan's retirement, huaxing capital needs to rely more on the strategic judgment and choices of the existing team and get back on track in the post-bao fan era.