Strengthen the "patient capital", alleviate the "difficulty of exiting", and after the four departments speak out, they will welcome another wave of publicity

Finance Associated Press

2024-06-27 21:55The official account of Cailianpress, a subsidiary of Shanghai Poster Group

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01The General Office of the State Council issued the "Several Policies and Measures to Promote the High-quality Development of Venture Capital", aiming to cultivate and expand patient capital.

On June 26, the relevant persons in charge of the four departments answered questions about the policy at the regular policy briefing of the State Council, which attracted market attention.

03 To this end, the regulator proposes three types of patient capital: insurance funds, bank funds, state-owned assets and government investment funds, and encourages central enterprises to use venture capital funds to invest early, small, long-term, and hard technology.

04 At the same time, multiple departments spoke out on the official WeChat account around the relevant measures of the four departments, and comprehensively sorted out and interpreted.

05 Experts believe that the encouragement and support of hard technology companies in the field of venture capital is expected to raise the valuation of "Kete Valuation" in the secondary market.

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Finance Associated Press, June 27 (Reporter Yan Jun) Cultivating and expanding patient capital is not only reflected in the secondary market, but also in the venture capital industry. After the General Office of the State Council issued the "Several Policies and Measures to Promote the High-quality Development of Venture Capital", on June 26, at the regular policy briefing of the State Council, the relevant heads of the four departments answered reporters' questions on this, which attracted attention in the market.

It is worth noting that on June 27, many departments, including the Chinese government website, the China Securities Regulatory Commission, the People's Bank of China, and the stock exchange, all spoke out on the official WeChat account around the relevant measures of the four departments, and comprehensively sorted out and interpreted the key measures, broadening the sources of funds, cultivating venture capital entities, and improving the exit mechanism.

Among them, the supervision proposes three types of patient capital: insurance funds, bank funds, state-owned assets and government investment funds, and encourages central enterprises to use venture capital funds to invest early, small, long-term, and hard technology, and clarify the development path of the venture capital industry from the capital side and the project side.

Focus 1: Optimization of the whole chain of "fundraising, investment, management and withdrawal".

A leading venture capital institution told the Financial Associated Press reporter that the current primary market investment has indeed become cautious, and it may have invested in 40 or 50 projects a year, and the current average investment is about 2 per month. Moreover, there are fewer projects in the PE sector, and more emphasis is placed on the VC sector, that is, it tends to be a more early-stage project, and the point to reduce PE investment concerns is whether the exit link is smooth.

Focusing on this pain point, the National Development and Reform Commission said that the "Policies and Measures" put forward the following policy measures around the whole chain and life cycle of venture capital "fundraising, investment, management and withdrawal".

On the fund-raising side, we will guide long-term funds such as insurance funds to invest in venture capital, expand the pilot scope of direct equity investment by financial asset investment companies, mobilize qualified social capital to do "patient capital", and solve the problems of "lack of long money" and "no rice to cook" in the industry.

On the investment side, many venture capital institutions report that "it is difficult to invest even if there is money", and they cannot find good investment objects and investment projects. In order to solve this problem, the National Development and Reform Commission will take the lead, in conjunction with relevant ministries and commissions, to establish a docking mechanism for venture capital and innovation and entrepreneurship projects, so as to provide a number of high-quality and good projects that are in line with the national development direction and strategic orientation for the majority of venture capital institutions, and solve the problem of where to invest money.

On the management side, it is proposed to continue to strengthen the management of venture capital funds funded by the government and state-owned enterprises, and establish and improve the management system and due diligence compliance liability exemption mechanism in line with the characteristics and development laws of the industry. In view of the tax and regulatory issues that are of general concern to all parties, it is proposed to continue to implement the preferential tax policies for venture capital enterprises. At the same time, in accordance with the relevant requirements of the Regulations on the Supervision and Administration of Private Investment Funds, differentiated regulatory policies are implemented for venture capital funds that are treated differently from other private funds.

On the exit side, the focus is on broadening exit channels and optimizing the exit policy of venture capital funds.

Focus 2: Where does patient capital come from? Identify three types of funding sources

In the field of venture capital, institutions need to accompany start-ups to grow together, and naturally have the attributes of patient capital.

So, where does patient capital come from?

"The risk appetite of residents' funds remains low, but low-risk assets are difficult to match investors' return expectations." Chen Jiachun, co-director of the Wealth Management Committee of CITIC Securities, pointed out a few days ago that patient capital is expected to become the core marginal increment of the market.

At the briefing, the National Development and Reform Commission clearly pointed out that it will focus on the key links of the institutional mechanisms such as fund assessment, fault tolerance and exemption mechanism, and performance evaluation system, and take the lead in cultivating state-owned assets and government investment funds into patient capital.

First of all, insurance funds. Insurance funds are "long money" in the traditional sense, with a long term of funds and an investment strategy of stable income.

The relevant person in charge of the State Administration of Financial Supervision said that the State Administration of Financial Supervision has successively issued five regulatory policy documents on the investment of insurance funds in venture capital funds and financial equity investment, comprehensively breaking down the institutional obstacles that hinder insurance funds from carrying out equity investment, venture capital and supporting scientific and technological innovation, allowing insurance funds to invest in equity investment funds actually controlled by non-insurance financial institutions, canceling the restrictions on the scale of investment in a single venture capital fund, and supporting insurance institutions to strengthen cooperation with professional equity investment institutions. Broaden the sources of long-term funding for start-ups.

In the next step, the State Administration of Financial Supervision will continue to optimize the rules for the use of insurance funds, and study the upper limit of the proportion of insurance funds investing in venture capital funds.

Secondly, bank funds. The mainland is a bank-led financial system, and the banking assets account for more than 90% of the total assets of financial institutions.

The director of financial supervision added that he is studying and exploring the expansion of the pilot scope of financial asset investment companies, such as encouraging banks to strengthen the docking with venture capital funds, standardizing the development of "loan + external direct investment" business, effectively solving the financing difficulties and pain points of start-ups, and promoting the virtuous cycle of "capital-capital-assets" of enterprises.

Third, state-owned assets and government investment funds. Properly handle the relationship between government funds and market-oriented funds. To this end, the "Policy Measures" proposes to focus on the key links of institutional mechanisms such as fund assessment, fault tolerance and exemption mechanism, and performance evaluation system, and take the lead in cultivating state-owned assets and government investment funds as patient capital and play a leading and exemplary role.

Relevant people from the National Development and Reform Commission pointed out that in addition to fully respecting the laws of the market, the "visible hand" of the government can also play an important role in guiding all kinds of capital to abandon the impetuous mentality of "quick success, fast entry and quick exit, and making quick money", and insist on long-term investment, strategic investment, value investment, and responsible investment.

Focus 3: What areas are encouraged to invest?

Venture capital is of great significance in encouraging industrial innovation, and the development trend of the future industry can be glimpsed through the investment direction of venture capital institutions. The above-mentioned venture capitalists told the Financial Associated Press reporter that at present, there are more investment projects in artificial intelligence, advanced manufacturing and biomedicine, which are inseparable from the momentum of China's economic transformation.

In fact, the trends from the industry coincide with the direction of regulatory encouragement. The State-owned Assets Supervision and Administration Commission of the State Council said at the briefing that central enterprises are encouraged to use venture capital funds to invest early, small, long-term and hard technology.

According to data from the State-owned Assets Supervision and Administration Commission, up to now, the central enterprises have managed a total of 126 venture capital funds, with a subscription scale of 52.9 billion yuan and an investment amount of 31.3 billion yuan, mainly invested in advanced manufacturing, energy, electronic information and other fields, and have achieved positive results in promoting scientific and technological research and increasing investment in scientific research.

In the next step, the SASAC will be based on its own responsibilities and positioning, strengthen communication and coordination with relevant departments, and give greater support to the central enterprise venture capital fund in terms of relaxing scale restrictions, increasing the proportion of capital contribution, focusing on overall performance and long-term return assessment, and clarifying the conditions for due diligence and fault tolerance.

At the same time, the State-owned Assets Supervision and Administration Commission will also guide the central enterprises to make full use of the current relevant policies, focus on the main responsibilities and main businesses, combine their own advantages and conditions, use venture capital funds to increase investment in industry science and technology leaders, the transformation of scientific and technological achievements and the upstream and downstream small and medium-sized enterprises in the industrial chain, encourage early, small, long-term, and hard technology, give full play to the role of long-term patient capital, support strategic emerging industries and future industries, help cultivate and develop new quality productivity, and further promote the high-quality development of the real economy.

From the perspective of the industry, the encouragement and support of hard technology enterprises in the field of venture capital is expected to raise the valuation of "Kete Valuation" in the secondary market.

(Financial Associated Press reporter Yan Jun)

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