At the 24th China Equity Investment Annual Conference, Jin Haitao, the Honorary Chairman of ZVCA and Chief Executive Partner of Qianhai FOF, gives a keynote speech on "Reflections on Equity Investment under the Current Situation".

The following is an extract of the essence of the speech:

With various data on fundraising, investment management, and withdrawal declining to varying degrees, everyone is very clear about the situation of venture capital this year; but at the same time, we get some excitement. My overall feeling about the current industry is that it has not fully bottomed out and is beginning to rebound strongly. My speech today mainly revolves around how to do things in the current situation and share my personal opinions.

I have been in this industry for 25 years and have never seen the government provide such high-level and high-frequency support for venture capital. With the support of some government policies, the situation of the venture capital industry will improve. The downward trend we have seen this year will gradually change next year and the year after.

Specifically regarding the changes in the capital market, I have summarized the following four points:

Firstly, the stock market quickly recovers.

Secondly, IPOs are gradually returning to normalization. The attitude of the China Securities Regulatory Commission is very clear: IPOs should be normalized and support unprofitable technology companies to go public.

Thirdly, changes in the M&A market. With the introduction of new regulations on mergers and acquisitions, the two biggest features are: 1. Valuation needs to be handled flexibly, and cannot be simply based on the P/E ratio standard. The P/E ratio standard will cause a lot of unfairness, making it impossible to carry out many mergers and acquisitions that should have been put through. 2. Supporting cross-border mergers and acquisitions, how can innovation be supported without cross-border mergers and acquisitions? If it is emphasized that the target of the merger must be very close to the main business of the listed company, then the enterprise cannot achieve transformation and upgrading through mergers and acquisitions.

Fourthly, there has been a resurgence of overseas listings.

I think that the impact of the current surge in capital market heat is twofold. On the one hand, due to the improvement of the capital market environment, a group of enterprises will recover; On the other hand, the China Securities Regulatory Commission may have a faster approval process for IPOs.

Next, I would like to talk about my understanding and comprehension of equity investment under the current situation.

Firstly, it is necessary to strengthen the understanding of the strategic significance of equity investment for the country. Without venture capital, there can be no technological innovation.

In my opinion, China has a complete industrial chain, which is its advantage. Nowadays, some companies in the industrial chain cannot go public, and these industrial chains are lagging behind, which is inconsistent with China's current situation. China should first  strengthen weak areas, but not just them. Of course, I think all of this needs to be done step by step, and we still need to enhance our understanding. It's best to cancel some unfavorable measures, which is true support, and there needs to be a process in between.

Secondly, we need to enhance our understanding of the commercial essence of venture capital. Actually, I think the whole society needs to increase its understanding of the essence of VC/PE business - we rely on diversification to avoid risks, and the entire industry is not high-risk, but a low-risk industry.

So, what funds should be developed under the current situation? Under the current situation, these six types of funds should be the focus of our development or expansion: 1. Comprehensive FOF; 2. S Fund and Project Continuation Fund; 3. Capital Investment Promotion Fund; 4. Direct investment funds from venture capital firms; 5. M&A funds; 6. The currently popular AIC.