The VC 2.0 generation celebrated its tenth birthday in early autumn.

By | Muxin Xu

Edited by | Zhiyan Chen

This past Mid-Autumn Festival, five investors from Source Code Capital penned a 4,000-word "love letter" to mark the firm's tenth anniversary. Founding partner Yi Cao concluded his essay, titled Venture Capital Is the Art of Balancing Reality and Optimism, with a pledge: that Source Code would "live up to its name" and commit to "running the long race."

China's VC 2.0 generation — once expected to forge an entirely new era — has been hitting this ten-year milestone one after another.

In September 2013, when Zhang Zhen, Gao Xiang, and Yue Bin downed two bottles of Moutai at a tavern in Beijing's Sanyuanqiao neighborhood, they may already have sensed a new chapter coming. Days later, all three submitted their resignations to IDG Capital.

The following year, Gaorong Capital was founded, positioning itself as China's answer to Founders Fund.

With Gaorong's launch, China's VC 2.0 generation — a term rarely heard today — took the stage in 2014.

Alongside Gaorong and Source Code, VC 2.0 essentially described a cohort of rising stars nurtured by established domestic venture firms, striking out on their own with innovation and ambition. During the boom years of investing and fundraising, the roster glittered: Chengyu Mao of Yunqi Partners, Erhai Liu of Joy Capital, Zhekuan Fu of Qifu Capital, Feng Li of FreeS Fund, Hui Wang of HighLight Capital, Boyu Hu of XVC, Haiqing Hu of Qianshi Venture Capital...

These were people capable — or at least convinced they were — of catalyzing their own spin-offs at the very peak of a golden age. They were hit, in succession, by the era's dividends, traps, inflection points, and opportunities. They backed unicorns that reshaped China's commercial landscape. They were creators, accelerators, and participants in one wave after another. They were an extraordinarily fortunate generation.

For venture capital firms, ten years is a critical juncture. In a typical fund lifecycle, the first four years are devoted to deploying capital, while the remaining six focus on exits and returns. Given the convention of raising a new fund every three years, a decade also tests an institution's ability to keep fundraising and to outgrow its founder's personal brand.

Sequoia China threw itself an exceptionally lavish tenth birthday — what came to be known as the "Spring Festival Gala of the startup world" in 2015. In attendance, besides Neil Shen, were Richard Liu, Bob Xu, James Liang, and Wang Xing, fresh from Dianping's merger with Meituan.

But for the VC 2.0 firms, the challenge may be steeper: unlike their predecessors' deep resources, they entered an industry of vast opportunity yet intensifying competition, facing tests of rapid rise and fall virtually from day one.

From the "Nine National Guidelines" to the "New Nine National Guidelines." From Alibaba's U.S. IPO to its dual primary listing on both Hong Kong and New York. From the everything-sharing mobile internet era to the new investment epoch where AI is the only conversation. Ten years on, the VC 2.0 generation misses it dearly.

A Birthday of Mixed Feelings

Source Code's tenth anniversary was a large-scale nostalgia session seated by the sea in Qingdao. Several current partners — Siying Liu, Wenna Jing, Yungang Huang, Xingshi Wang, and Yi Cao — each took turns "remembering the old days." Like how there were only five or six people at the start, squatting in office space "borrowed" next to a ByteDance server room, using the hotel lobby across the street as a conference room. Or how Cao came up with the name Source Code at a wooden dining table, eventually explaining his entrepreneurial motivation as "seeking the origin, investigating things to extend knowledge."

In July 2014, Mingming Huang left angel investing behind to found Mingyuan Capital. This year, the ten-year-old firm made a video to celebrate itself, recruiting big names including Li Xiang, Zexiang Li, Lei Jun, Junjie Yan, Yu Wang, and Neil Shen to each say "happy birthday." But the video and its soundtrack weren't produced by the usual vendor — they were generated by MiniMax's video model abab-video-1, music model abab-music-1, and Hailuo AI.

The large model "wrote" this for Mingyuan's tenth anniversary: "In the spark of AI / the light of technology guides the way, the pulse of computing power / brimming with imagination of the future."

As a representative of domestic Fund 2.0, Qifu Capital named its tenth anniversary event a "Glory Celebration." Afterward, Zhekuan Fu — a 20-year veteran of the investment industry — penned a reflection from his home in Shenzhen. From Dachen to Qifu, he considered himself among the weakest foundations in VC 2.0, "saved" only by his later sector choices.

Among domestic funds also celebrating a tenth anniversary was Yida Capital, "reborn" through restructuring in 2014. At the time, to solve the problem of purely state-owned systems ill-suited to venture investing, Jiangsu High-Tech Investment Group planned a mixed-ownership reform. The newly established mixed-ownership company — Yida Capital — saw 78 people abandon their state-owned employee status to join. By its tenth anniversary celebration earlier this year, staff had grown to 258 and fund AUM reached 102.4 billion yuan.

Linear Capital's tenth birthday was marked by founding partner Huaizi Wang answering several questions. One exchange went:

Q: How does it feel to turn ten?

A: Dreamlike. From the mass innovation and grand openings of ten years ago, to today's struggle for every step.

Also facing questions was Wu Shichun of Plum Ventures. Already on a "diversified track," he sends a personal letter every year, and the tenth anniversary was no exception. This year, he asked himself: How to walk the next ten years?

Unlike the relatively low-key celebrations of other VC 2.0 firms, Plum Ventures marked its tenth anniversary with high-profile fanfare. At a "summit forum" themed "Venture Capital Ten Years," Plum invited guests including Junbao Shan and Allen Zhu for dialogues. Notably, the anniversary was held in Hefei, Anhui — a city famous for the "Hefei model" — subtly echoing Plum Ventures' recent closeness to local government guidance funds.

At the end of the birthday party, Wu supplied his answer to the ten-year question: steadfastly moving forward is the answer. Meanwhile, Gaorong Capital — the pioneer of VC 2.0, whose birthday should have come this past January — still hasn't put its cake on the table.

What Whales Did They Catch?

Ten years in, what has VC 2.0 contributed to Chinese venture capital?

As a VC 2.0 standard-bearer, Gaorong Capital was the biggest winner in the Pinduoduo story. We previously reconstructed this in "The Investors Who Made the Most Money Off Pinduoduo": at Pinduoduo's Series B, during the most difficult fundraising moment of its transition from Pinhaohuo to Pinduoduo, Gaorong's investment became "lifesaving money." It became a classic home run. Conservative estimates put Gaorong's returns from Pinduoduo at over $7 billion.

Another legendary investment came from Source Code Capital. The relationship between Yi Cao and Yiming Zhang has long been held up as a textbook case of "investor and entrepreneur making each other." After Sequoia missed ByteDance, Cao — upon founding Source Code — made his very first investment, $5 million, in the company. After ByteDance grew into a super-unicorn, Zhang became a personal LP in Source Code.

As mobile internet dividends wound down, EV upstarts took center stage — and Mingyuan Capital's moment arrived. By late 2023, Mingyuan portfolio company iMotion Automotive had gone public, becoming Mingyuan's fourth IPO in smart mobility after Niu Technologies, Li Auto, and Motorcomm. This is Huang's strongest stronghold, and what made Mingyuan.

Later, people would say domestic firms fell into two categories: those that invested in EVs, and those that didn't. Among the EV upstarts, Plum Ventures and Source Code also got into Li Auto. Joy Capital, meanwhile, doubled down on NIO at its lowest ebb with a $30 million convertible note, when NIO's stock traded at just $3 — it would later surge to $60. Erhai Liu later revealed this return was equivalent to "getting back several funds."

Linear Capital scored in the robotics field that most investors had abandoned. In 2017, when most investors were fleeing robotics, Linear investor Songyan Huang connected with Agile Robots, leveraging the advantage of "engineers understanding engineers" to become its seed investor and follow on through subsequent rounds. By 2023, Agile Robots was valued at over $1.5 billion. Beyond that, Horizon Robotics — valued at over 60 billion yuan — was another Linear hallmark. Wang still remembers when Kai Yu was still at Baidu, the two of them eating skewers outside a run-down hotel in Haidian, talking late into the night many evenings, imagining industry transformations and entrepreneurial preparations. "But no matter how much we imagined, we never expected it would get this hard later."

When the pendulum swung toward RMB funds, home-run legends grew scarce. Qifu Capital's three consecutive rounds in Pop Mart over seven years, yielding hundred-fold returns, became one of the unavoidable classics. In hard tech, where RMB funds excel, Yida invested in 198 "little giant" specialized and sophisticated enterprises.

As the era entered the AI age, a new round of competition began, with TOP6 market share as the prize. Yunqi and Mingyuan invested in MiniMax, while Source Code and Gaorong backed Moonshot AI, and Joy Capital participated in Baichuan Intelligence.

Forgetting VC 2.0

In these challenging times, looking back is only part of the birthday assignment for decade-old VC firms — the more important task is looking forward, seeing the future. From the various celebratory details of these VC 2.0 firms, we've also found their respective new narratives for what comes next.

Mingyuan Capital is among the few firms to successfully raise capital from the Middle East, while also continuing to double down on AI with investments in projects like MiniMax and LibLib. As its tenth anniversary video proposed a new slogan: Computing Explores the Future.

Yida Capital emphasized several commitments: maintaining direct LP relationships, investing in direct deals; sticking to the philosophy that investing is in people; maintaining independent financial and legal due diligence; insisting that due diligence "only follows reality"; pursuing a dual-engine strategy of "sector research + regional depth"; and resolutely investing in technology.

Qifu Capital's overarching logic for the future is "making choices within a major upward trend," with new materials and industrial internet as its continued focus. "What we value are future opportunities. We just need to get in early, then win alongside the growing industry," Fu wrote in his personal account.

Wu Shichun said: "Get at the right table, don't leave the table." Get at the table of investing in new quality productive forces. Get at the table of partnering with local government guidance funds and meeting reinvestment requirements. Get at the table of building influencer presence through new media traffic. Then, persist in not leaving the table.

Wang said the future task is: Survive and thrive.

Haiqing Hu of Qianshi Venture Capital described a future that fits the profile of a vertical fund: "Respecting industry fundamentals, focusing differentially on vertical industry chains, going deep and going thorough in a new technology track that aligns with major future trends."

Source Code's early team resolved to return to a six- or seven-person team size "where a pizza could close a deal." Yungang Huang will take the lead managing and independently operating the "Code Rhythm" fund starting from the next vintage. By the Qingdao seaside where they celebrated their tenth birthday, he shared with colleagues something a CEO once told him that left the deepest impression: "I chose you not just for your professional capabilities, but because we have the chance to be friends for life."

On February 5, 2024 — 3,626 days after registering its WeChat public account — Gaorong Capital changed its name to: Gaorong Ventures.

Image source | IC photo