138-Year-Old Bosch Goes Deep on an Industrial Capital Experiment | Ruqiju

"Entering the Game" is a regular column from Waves. It grew out of our observation that once-reliable operating models are facing new challenges, and industry rules long inherited from West to East have been disrupted. People are hungry for a new map and new order of innovation and capital. "Entering the game" is the most precious posture one can take. "Entering the Game" was born amid transformation. To summarize its focus in one sentence: we hope to find new players and new strategies better adapted to a changing environment. This is the tenth article in the column.

By Zhiyan Chen

On December 12, Waves learned that Boyuan Capital had held the first close of its second fund at 500 million RMB. Since its founding in 2020, its total assets under management have now reached 1.1 billion RMB.

Boyuan Capital is a market-oriented investment platform established by Bosch Group, focused on China's deep tech sector. In addition to cornerstone capital from Bosch Group, this fundraising round attracted industrial capital, state-owned enterprises, and city- and district-level guidance funds — including Weifu High-Tech and Wuxi Industrial Investment — with a reinvestment rate of 50%. The second fund targets a final close of 1.5 billion RMB and will continue to focus on investment opportunities in the upstream and downstream of green intelligent mobility, Chinese companies expanding overseas, and AI industrial applications.

Founded in Germany in 1886, Bosch Group currently operates roughly 400 subsidiaries across more than 60 regions worldwide, with approximately 400,000 employees. China is one of Bosch's most important markets. The company has two main investment vehicles in China: Bosch Venture Capital, which established its China office in 2018, and Boyuan Capital, founded in 2020.

If Bosch VC, with its strategic investment nature, serves Bosch's own business development, then Boyuan carries Bosch Group's hopes for ecosystem building. In 2023, Xu Daquan, president of Bosch China, publicly articulated the complementary relationship between Boyuan and Bosch Group. "Given current technology trends, certain technical domains are difficult for any single company to tackle alone — this requires more partners. Bosch has deep understanding of all major OEMs, and we share that industrial experience and resources with Boyuan's portfolio companies." On the other hand, Boyuan can leverage Bosch's internal technical experts to evaluate a company's products and technical roadmap, and the investors Boyuan brings in will in turn support Bosch when it launches new products and seeks external investment. Both Xu Daquan and Yang Chuan, vice president of finance at Bosch China, serve as advisors to Boyuan Capital.

Dr. Jiang Hongquan, Boyuan's managing partner and chairman, has over 20 years of experience in automotive and electronics and is also a partner at Bosch VC. The other managing partner and CEO, Allen Zhu, is simultaneously a managing partner at Gobi Partners. Currently, Zhu continues to manage Gobi's legacy fund portfolio and exits, but operates Boyuan on a full-time basis. In essence, one of Boyuan's core decision-makers is deeply embedded in industry, while the other comes from the era of dollar-denominated funds.

Recently, Waves spoke with both GPs about Boyuan's origins, Bosch Group's expectations for industrial investment, and the value of equity investment in a transformed era. From this conversation, one can perhaps trace the roadmap of a 138-year-old multinational exploring industrial investment in China.

The conversation follows:

Finding the Most Unusual Structure in Ten Months

Waves: We've seen many investment institutions led by industrial champions in the market. How is Boyuan different from them?

Jiang Hongquan: Boyuan has a rather unusual structure. We are closely tied to Bosch Group, yet from day one we have operated as a market-oriented institution, raising capital independently. In 2019, we spent ten months with the group thinking through and evaluating Boyuan's entire structure, which led to what you see today. This is also the first time in Bosch Group's history since its founding in 1886 that it has raised capital from outside investors.

Waves: Were there other structural options at the start?

Jiang Hongquan: For the group, there were certainly many options for establishing an industrial investment platform. But for me, there were no other options. Because they would be difficult to succeed with.

Waves: Why?

Jiang Hongquan: Traditional CVCs are absolutely controlled by the parent company, so their investments are driven by corporate strategy rather than returns. In the short term, the results may look decent, but in the long run, the key to success for any industrial capital must be a return to investment fundamentals — the interests of investors and portfolio founders must be aligned. If the parent company's business interests dominate, that's unfair to other investors. More importantly, Boyuan must be aligned with the interests of our portfolio companies. Because at the time of investment, the interests of the parent company and the invested company may be aligned, but conflicts can emerge over time. Without aligned interests, problems arise.

Waves: There's also a category of industrial capital founded by investors with big-tech backgrounds — such institutions don't have this conflict-of-interest problem either.

Jiang Hongquan: Their connection to the tech giant is more about personal networks. Compared to Boyuan's equity ties to Bosch, it's a different matter. You could understand it this way: Boyuan has found a balance point between traditional CVC and network-based industrial capital.

Waves: So for Boyuan, returns and DPI come first?

Jiang Hongquan: Of course. But at the same time, consider: if we didn't invest in companies related to Bosch Group, what right would we have to invest in, incubate, and empower differentiated companies? Precisely because we are within the Bosch system, we can do more — and I believe we can do better.

Waves: What was the most difficult challenge to overcome during those ten months of preparation?

Jiang Hongquan: The difficulty was that Bosch Group wanted to do this at all. As the world's largest automotive technology supplier, every decision Bosch makes is extremely cautious. Because so many links were involved, within ten months we completed communications with all relevant departments — legal, finance, tax — and held numerous meetings on Boyuan's profit distribution and operational management, ultimately arriving at a viable structure and plan.

Waves: When you proposed that Boyuan become an independent investment institution, how did Bosch Group executives react?

Jiang Hongquan: To be precise, Boyuan's establishment involved discussion and advancement by the Bosch CEO and many headquarters departments, who offered considerable advice and support on feasibility. How to optimize an ideal structure and process? How to make this new Bosch investment platform succeed? Boyuan is the answer to these questions, and also an experiment for Bosch.

As a third-party investment institution backed by Bosch Group, Boyuan's greatest significance to the group is that we can build an interesting ecosystem, attracting companies and investors to this platform and generating more win-win scenarios through interaction.

Waves: Generally speaking, innovating organizational forms within large enterprises is very difficult. Why was it necessary to do this?

Jiang Hongquan: Allen and I have known each other for many years. Bosch was initially an LP in Gobi Partners, and later we would look at deals together, gradually seeing opportunities in industrial investment. After 2016, we realized that the internet business model era was ending, and the market had strong demand for market-oriented approaches with industrial and international backgrounds. Every time we met after that, we would discuss it. After a long period of gestation, we decided to build Boyuan.

The Logic of Investment Empowerment Has Changed

Waves: In 2016, the investment mainstream was still immersed in the bike-sharing wars, and you already saw the change coming?

Jiang Hongquan: That was also precisely the dawn of industrial investment. In 2017, Bosch Group partnered with Plug and Play on an "AI in Automotive" accelerator program. Many of today's leading companies in these two sectors in China — such as SenseTime, Hesai, WeRide, Horizon Robotics, Momenta, Black Sesame — were in that accelerator. Bosch Group invested tremendous energy into it, with C-suite executives as mentors and mid-level managers and experts as coaches. The motivation for nurturing these companies was that they might become Bosch Group's suppliers or partners in the future.

Looking back now, it's a great pity that not all of these companies were invested in at the time. If Boyuan had existed then, the returns would have been considerable by today's standards.

Allen Zhu: The bike-sharing phenomenon you mentioned was something that truly struck me. At the time, bicycles were piled up all over the streets, and I thought: why invest in bike-sharing? Wouldn't investing in a bicycle factory be enough to make money? In that moment, I suddenly felt that investment had lost all meaning — what value did I, as an investor, actually provide?

Waves: Many investors would say bubbles have their value. Capital can use money as a tool to accelerate the process of weeding out the weak during a bubble.

Allen Zhu: I disagree. The core value of investment is empowering companies, and the logic of empowerment has fundamentally changed from internet to industrial companies.

In the past, Chinese VC was primarily focused on internet, and resources boiled down to two things — traffic and capital. Because everything could be converted through these two resources. But industry is different: it has resources, brands, trust. Take new energy vehicles, for example — supplier culture runs deep. This isn't something capital alone can convert. For a new entrant in this space, the team needs endorsement, and this isn't something a financial investor can provide. Even the most top-tier financial investor cannot make a new product ready for immediate vehicle integration.

Against this backdrop, the empowerment logic of equity investment has shifted. So to invest well in advanced manufacturing and hard tech, industrial players with different methods of empowering companies should have greater advantages.

Waves: As industrial investment deepens, how will Boyuan's second fund strategy differ from the first?

Jiang Hongquan: The biggest problem entrepreneurs face now is involution. Extreme involution means that after developing a product, companies have no profit and struggle to make money. Meanwhile, product development cycles have shortened — from three years per generation to 18 months, even 15 months. It's intensely competitive, grueling, unprofitable, yet they must keep going in China. What can investors do?

China's industry currently faces fragmentation and lack of scale. Industrial chain restructuring can generate optimization effects. Boyuan's second fund will devote some attention to spin-off and restructuring opportunities.

Waves: Because M&A is so hot this year, you have similar ideas?

Allen Zhu: There are indeed some institutions in the market doing so-called M&A funds, where investors proactively approach companies and say you're not doing well, sell to me and I'll run it. What Boyuan does more of is companies proactively approaching us, asking us to spin out specific businesses. Because if they don't spin it out, their competitiveness will be gone within six months to a year, whereas spun out, efficiency will be higher.

In other words, Boyuan can achieve what M&A can accomplish through non-M&A means.

Waves: What motivates companies to proactively approach Boyuan?

Allen Zhu: Many reasons. Some hope to collaborate with Boyuan and Bosch to open overseas markets. Some hope to fill gaps in certain product segments through partnership — after all, Bosch has so many years of development experience. Some are capital-related: because Boyuan has core resources like Bosch, many of a company's future costs come down after collaboration.

In the internet era, money obscured all these possibilities — I didn't need to be the most efficient, just the richest. Now it's completely different.

The direct result of this era's transformation is that the entire valuation system for companies has changed. The internet era pursued high growth; revenue and profit didn't matter for long periods. But in real industry, this is impossible to ignore — a product without revenue means it cannot succeed. For founders, these are two completely different logics of entrepreneurship and ways of thinking. For investors too, completely different methods are needed to evaluate and invest in companies.

Waves: Are there already concrete cases of this approach?

Jiang Hongquan: Boyuan's first fund invested in Cavin New Energy. This company was actually spun out from Foton Motor's new energy vehicle division. Foton approached us at the time, saying that to adapt to China's NEV development in commercial vehicles, they were willing to spin out this division. They valued us because Bosch is the most important components supplier for new energy vehicles. So we led the seed round, and new vehicle models were produced within a year. The second round was still industry-only financing; it's expected that the third round will open to capital market investors.

Waves: For mature enterprises like Foton Motor, what is the necessity of spinning out divisions and bringing in external capital?

Jiang Hongquan: New energy vehicles are inevitably intelligent vehicles, so for traditional enterprises like Foton, their competitors in NEVs are definitely the new forces. That places demands on their development speed and capital replication. Within the original group business structure, there are natural constraints on development pathways and external capital cooperation. Conversely, once such enterprises integrate these factors, they possess underestimated advantages. They have decades of experience knowing how to build cars — very different from internet companies crossing over into automobiles.

Allen Zhu: Another case is Xinlian Power. It was spun out from SMIC Advanced Technology's automotive-grade silicon carbide business, and Bosch is one of its important customers, so we were invited to participate in the seed round. Besides Boyuan and SMIC Advanced Technology, founding shareholders include Xinlian Partners, XPeng Xinghang Capital, Luxshare Precision family office Liling Fund, SAIC Shangqi Capital and Hengxu Capital, CATL's Chengdao Investment, and Sungrow — all industrial players.

Waves: It seems much industrial investment happens below the surface.

Allen Zhu: In the industrial era, the importance of capital has declined. This is why the challenge for pure financial investors is growing — because when entrepreneurs raise capital today, industrial investors are often the better choice.

Waves: Industrial players are called "sugar daddies" — is there a difference between Boyuan's money and Bosch's strategic investment money?

Jiang Hongquan: Strategic investment is strategic — it calculates short-term economic returns more carefully and weighs ecosystem strategic value more heavily. Boyuan focuses more on building a broad ecosystem. And Boyuan's decision-making speed is much faster.

Allen Zhu: Industrial players are absolutely not sugar daddies, but ecosystem builders. You can see from Bosch Group's own business model that it is itself an ecosystem. Bosch serves so many different customers; it doesn't operate on the confrontational logic of internet-era giants. And from the current international trend, this ecosystem isn't merely domestic — if industry can help emerging companies enter international ecosystems and achieve rapid local deployment, that's even more valuable.

Waves: Besides industrial integration, another hot topic this year is going global. Backed by a multinational like Bosch, what is Boyuan's layout for overseas expansion?

Jiang Hongquan: One of our portfolio companies is U-Power, which makes chassis. It now has considerable overseas orders. But for a company to go global, simply selling products abroad is far from enough. We hope to help it take root overseas — understanding local market demands, local laws and regulations, building its own after-sales networks and brands. In this process, Bosch can play many roles.

For example, Bosch has an enormous global after-sales network, built up over a century. This is a resource that other institutions can hardly provide to our portfolio companies.

Image source: IC Photo