Summary of the Core Content
This conversation reveals the secrets behind the rise of Zhongke Chuangxing, a hard-tech investment firm that emerged from the Xi'an Institute of Science and Technology system in China. Through the personal experiences of Yuan Bo, one of Zhongke Chuangxing's partners, we understand how the firm was able to succeed in a city that is not traditionally considered a hot spot for venture capital (VC) activities. Yuan Bo resigned from Huawei and returned to Xi'an, bringing his business background to the field of hard-tech investment. Initially, his investments in semiconductors were met with skepticism, but he succeeded by conducting precise research and showing strategic patience, leading to several high-profile projects. Zhongke Chuangxing leveraged the resources of the Institute of Science and Technology and focused on the hard-tech sector, weathering the challenges of the early stages of the market. It eventually went from being unknown to becoming a benchmark in the industry. Essentially, this is a story of an institution and individual who went against the tide and realized their potential through the opportunities of the times.
Detailed Analysis
1. Why Could Zhongke Chuangxing Succeed in Xi'an, a Non-VC Hotspot?
Many believe that VC activities should occur in major cities like Beijing, Shanghai, and Shenzhen, but Zhongke Chuangxing started in Xi'an for three main reasons:
- Strong Support from the Institute of Science and Technology: Zhao Wei, the former director of the Xi'an Institute of Optics and Mechanics, advocated for transforming the institute's technology into commercial products. Zhongke Chuangxing was established within this context, gaining access to the institute's technical resources and talent (for example, Feisao Photoelectric, which was one of the first companies incubated by the institute).
- The Calm Environment in Xi'an: Unlike the bustling internet scenes in Beijing and Shenzhen, Xi'an allowed them to focus on hard-tech research without distractions. Yuan Bo noted that in Zhongguancun, surrounded by internet entrepreneurs like Zhang Yiming, it might have been difficult to concentrate; however, Xi'an enabled them to stay focused on their core competencies.
- Strategic Patience: Hard-tech projects have long cycles, and in the early stages, they faced challenges such as fundraising and exit difficulties. Zhongke Chuangxing had a mission (to help China regain its leading position in technology) and was willing to persevere, believing that the technology would create commercial value even if it meant waiting for the right opportunities.
2. Why Did a Business Graduate Choose to Invest in Hard Tech After Resigning from Huawei?
Yuan Bo’s decision seemed counterintuitive: just before the 2014 Double Innovation Initiative, he returned to Xi'an from his position at Huawei and invested in hard-tech companies that were ignored by others. The reasons behind this choice were practical:
- Family Considerations: His child was born in 2013, and he wanted to be with his family.
- Trust in the Team: Mi Lei, the founder of Zhongke Chuangxing, recruited him for Feisao Photoelectric and later invited him to join the firm. Yuan Bo trusted Mi Lei’s abilities and vision.
- Desire for Management and Industry Knowledge: As a business graduate, he wanted to manage but needed industry expertise. His experience in Huawei’s supply chain helped him understand communication technology, which led him to pursue investments in hard tech.
3. Challenges in Early Hard-Tech Investing
In 2016, when Yuan Bo invested in Chengke Microelectronics, he faced significant difficulties:
- Doubts from the Companies: Semiconductors were in high demand for funding, and potential investors were skeptical of new investors. It took him multiple attempts to get in touch with the company’s CEO, and he made the decision after just one meeting.
- Internal Challenges and Valuation Issues: With limited funds, a 10 million RMB investment was a significant commitment, and they had to convince the team. The valuation process was also problematic, as there were no established benchmarks for semiconductors, and the low profitability of these projects made them a poor choice for investors.
However, Yuan Bo knew the industry well; his background in Huawei gave him insight into optical communication DSP chips, allowing him to target specific opportunities effectively.
4. A Clear Investment Strategy: “Aiming Precisely”
Zhongke Chuangxing’s investment approach is straightforward, as Yuan Bo puts it: “The direction is generally correct, and the organization is full of vitality.” They:
- Conduct Research Before Investing: They first analyze industry weaknesses and then identify the best teams. For example, they found Xizhi Technology through a paper in Nature and pursued the company for two years before making an investment.
- Early and Small Investments: Many projects start with just one person and an idea; Zhongke Chuangxing helps with company registration and team building.
- Support Without Overburdening: They maintain a practical relationship with entrepreneurs, focusing on solving practical problems rather than superficial support (e.g., they have only eaten together a few times with Dr. Wang Yang from Ruishi Technology but have always helped him through challenges).
5. From Ignorance to Success
The launch of the Science and Technology Innovation Board in 2018 and the ZTE incident made hard-tech investments highly sought after, turning Zhongke Chuangxing into a leading firm. This was not luck:
- Early Preparation: They had already embraced the concept of hard tech in 2010 and were investing in related projects for seven years before the market took off.
- Matched Expertise: They focused on their area of expertise, so they were well-positioned to seize opportunities when the market changed.
- Building a Reputation: Their early successes (such as the listing of Yuanjie Technology) proved their vision, and entrepreneurs now seek their help.
Yuan Bo concludes, “The times need us, and we need the times.” Zhongke Chuangxing’s success is a result of personal commitment, strategic focus, and timely opportunities.
Final Message
Zhongke Chuangxing’s story shows that by doing difficult but right things and persevering through challenges, one can seize opportunities when they arise. Yuan Bo’s experience demonstrates that cross-industry transitions are possible as long as you understand the industry and are willing to persist—even in less popular cities, significant achievements can be made.