Our Year: Working Together, Staying the Course | FreeS Fund 2021 Year in Review

峰瑞资本·January 28, 2022

Walk alongside more outstanding founders.

As we stand on the threshold of 2022, we wanted to share a look back at our 2021 with you.

In 2021, FreeS Fund completed its sixth full year. We refined our methodology and logical framework for interdisciplinary investing, hoping to identify trends and early directions sooner, and to walk alongside more outstanding entrepreneurs in their earliest stages. We continued to build our "4R+BP" organizational structure through close collaboration between our investment and portfolio management teams, empowering our portfolio companies and supporting their growth. We also witnessed breakthroughs among our invested companies over the year. The FreeS team welcomed energetic new faces, while veteran colleagues experienced the compounding returns of continuous growth.

Thank you to every friend who has supported and accompanied us. Happy New Year!

01 Finding Certainty in Uncertainty

In 2021, we and our portfolio companies:

Portfolio companies: 57 completed new funding rounds, raising a total of 16.4 billion RMB
Fundraising: Completed the closing of multiple funds; preparing for the first closing of our RMB Fund III
Investing: Invested in 48 projects, including 25 follow-on investments in existing portfolio companies and 23 new investments, with total investment amount nearing 1 billion RMB
Exits: Achieved 10+ exits

The past year remained challenging. As an early-stage investment firm, what we observed in the founders of our portfolio companies was their effort to make the world better while building strong businesses — their persistence in staying true to their original aspirations, their ideals intact, their continuous striving.

According to preliminary statistics, 57 FreeS portfolio companies completed new funding rounds in 2021, with total financing exceeding 16.4 billion RMB.

Newly minted high-valuation companies this year:

25 existing portfolio companies grew into "thousand-li horses" (valuation exceeding 1 billion RMB);
5 companies reached valuations exceeding 5 billion RMB in 2021;
3 companies achieved valuations exceeding 10 billion RMB this year.

Among these high-valuation companies, 9 are in biopharmaceuticals — a sector widely recognized as having the longest growth cycle. We were especially gratified to see these companies emerge in 2020 and accelerate in 2021. Additionally, in the metaverse sector that began heating up in 2021, we had already achieved an exit.

FreeS itself completed the closing of multiple funds in 2021 and is preparing for the first closing of our RMB Fund III. Beyond our early-stage flagship fund, we now have a growth-stage fund for continued follow-on investment in portfolio companies, and have established a technology-focused angel fund. In 2022, we will complete fundraising for RMB Fund III and plan to establish our USD Fund II.

Over the past year, we remained actively cautious toward systemic external changes while continuing to focus on long-term industry trends and inflection points. We invested in 48 innovative companies with intrinsic value, including 25 follow-on investments and 23 new investments. For new investments, consistent with our original commitment to investing early and small, we made decisive bets at the seed, angel, and Pre-A stages for 18 projects.

Our investment areas continue to cover consumer & TMT, hard tech, and biopharmaceuticals. Notably, over half of our 2021 investments spanned intersections of two or more disciplines and sectors, including but not limited to: chips + medical diagnostics, synthetic biology + personal care, AI + new drug R&D, entertainment + new technologies...

We have become increasingly convinced that breakthrough innovation typically occurs at the intersection of disciplines, and that interdisciplinary fields usually represent the most promising direction for technological innovation. As the era of interdisciplinary explosion arrives, Chinese business faces entirely new opportunities, and the paradigm of early-stage investing is also changing. We have preliminarily formed a methodology and logical framework for interdisciplinary investing, hoping to identify trends and early directions sooner, and to walk alongside more outstanding entrepreneurs in their earliest stages.

However, challenges in early-stage tech investing persist. Previously, over 50% of FreeS portfolio founders had study or work experience at top overseas universities or foreign tech companies. The fluctuations and barriers of the pandemic have made engagement with such potential entrepreneurs more difficult. In 2021, we organized 4 global livestreams and nearly 20 closed-door sessions targeting excellent universities worldwide, and remained active at events and conferences reaching these audiences. We are eager to discuss China's venture capital trends and innovation opportunities, and strive to facilitate the first step for founders returning to China to start businesses.

02 4R+BP: Continuously Mobilizing Resources, Systematically Serving Companies

"Entrepreneurship is a romance of right timing, right place, and right people." This was how one investment colleague summarized their reflections on observing and accompanying entrepreneurs this year.

In our eyes, every company is like a child with its own vitality. On the path to success, beyond the team's own efforts, external factors are needed. At different stages — gestation, startup, growth, rapid expansion — a company's needs and potential vary. In accompanying and witnessing companies' growth, FreeS matches corresponding support and services according to each stage's characteristics.

There is a consensus within FreeS: all investment professionals are portfolio management professionals. Through close collaboration between investment and portfolio management teams, we have built the "4R+BP" organizational structure to empower our portfolio companies and support their growth.

GR (Government Relations)

In 2021, we assisted over 40 portfolio companies with landing, applying for supportive policies and resources. When parties couldn't find each other, FreeS made the connection. Companies related to semiconductors, biopharmaceuticals, artificial intelligence, new materials, and environmental protection were particularly welcomed by governments. These more tangible technology projects also valued government cooperation — they needed policy support and collaboration with industrial chain resources.

To attract and support such projects, governments contributed both funding and effort. Many places built public experimental platforms, purchasing equipment for gene sequencing and various instruments, like building a library that startups could directly borrow from. Beyond this, for companies reaching certain scale that needed manufacturing, governments even provided land to help build factories, helped find customers and connect upstream and downstream partners, and could offer certain tax support.

HR (Human Resources)

Talent is always a company's core asset. We adopted a "store grain widely" strategy, building a human resources pool, conducting industry talent scans, and assembling expert networks to recommend partners, CXOs, and other key talent to portfolio companies at the right moments. Beyond recruiting, we also helped some portfolio companies build foundational HR infrastructure, including organizational diagnostics, equity incentive design, benefits platform setup, executive background checks, and systematic campus recruiting support.

The transition from managing tasks to managing people is a hurdle many founders must cross. We held OKR-focused events for portfolio company founders and HR leaders, discussing how to apply OKR in practice. We also provided point-to-point consulting services for portfolio companies encountering management challenges.

PR (Public Relations)

Whether for entrepreneurs or investors, industry know-how distilled from practice deserves to be heard. We leveraged our content production capabilities and accumulated resources to help companies build their brand influence through communications targeting C-end and B-end audiences. In 2021, over 70 articles appeared on the FreeS Fund WeChat account, with nearly 40 related to portfolio companies, helping them achieve 284,600 views in distribution. Sometimes we dialogued with founders and documented their growth; sometimes we introduced their business models and products to readers through firsthand industry research.

Additionally, we held PR-focused events for portfolio founders and CXOs, with discussion topics covering brand positioning, brand promotion and communication under new media formats.

IR (Investor Relations)

As companies charge forward, working hard to create business and social value, we — as partners walking the same path — regularly follow up on portfolio companies' cash flow and capital market situations, continuously seeking funding support for them. Through the investor network built by our IR colleagues, in 2021 we helped over 60 portfolio companies with more than 300 introductions to investment institutions.

Beyond equity financing, we also connected companies with bank loans, forming an investment-loan linkage to help companies find a bit more certainty in an ever-changing financing environment. In 2021, we helped 10 portfolio companies obtain loans totaling nearly 250 million RMB.

BD (Business Development)

For startups, landing major customers is a "critical leap" in their development. We helped portfolio companies connect with resources at Huawei, Alibaba, Amazon, Microsoft, Xiaomi, Douyin, TikTok, Kailas, and others.

PT (Partner)

PT takes its meaning from Partner. Entrepreneurship is lonely and needs support and companionship. Based on our deep thinking about industry evolution and endgames, we help open companies' minds and provide strategic direction guidance, including but not limited to: discussing market and industry prospects with founding teams, advice and key resource introductions when business hits bottlenecks, and advisory support at critical junctures such as M&A and IPO.

Beyond strategic support, we regularly organize offline events called "FreeS Flavor Tavern." "FreeS Flavor Tavern" is an intimate gathering launched by FreeS Fund for invested CEOs, encouraging sharing and listening, and providing support where possible. This mobile rest stop built for the FreeS family of CEOs rotates among Shanghai, Beijing, Shenzhen, and other cities.

03 The FreeS Family: Where Business Value Meets Social Value

"Do what's right, not what's easy" has always been FreeS Fund's investment philosophy, and we don't treat it as just a catchy slogan. We firmly believe that a good investment must deliver positive impact on society and the environment beyond financial returns. This is the social responsibility that enterprises and investors should bear.

Precisely because of this, since our founding, FreeS Fund has invested in numerous ESG-related projects. We've witnessed these companies achieve new breakthroughs in 2021, playing an active role in advancing sustainable development. Here's a partial summary:

Advancing Ecological Sustainability

Aoben Environmental Protection: 2,270 tonnes CO2e reduced

In 2021, Aoben Environmental Protection assisted 26,081 households and 552 institutions nationwide in recycling 1,214 tonnes of recyclable materials — equivalent to reducing 2,270 tonnes of CO2e, saving 14,350 trees from being cut down, conserving 1,493 tonnes of petroleum, and sparing 5,388 cubic meters of landfill space.

Bluepha: Biodegradable Materials

Bluepha uses synthetic biology to engineer microbes that produce PHA, a natural polymer with a green, low-carbon lifecycle and performance comparable to conventional petrochemical plastics. These materials can be processed into various products that degrade naturally in soil and water, making them far more environmentally friendly. On January 1, 2022, Bluepha's PHA industrialization project broke ground in Yancheng, Jiangsu, in an industrial park powered primarily by wind energy — helping Bluepha realize its vision of "biosynthesis plus clean energy."

Saturnbird: "Return Program"

In 2021, Saturnbird launched its fourth and fifth seasons of the "Return Program," collecting used coffee cans for offline recycling and repurposing to promote sustainable living. The fifth season established 196 return points across 56 cities, leading a sustainability movement among urban coffee enthusiast communities.

JUNO: Sustainable Beauty

In 2021, JUNO launched a ten-ingredient cleansing balm free of microplastics. Most cleansing balms and scrubs on the market use microplastic ingredients to achieve cleansing effects. When microplastics flow into oceans through wastewater, they pollute the environment, harm animals, and re-enter the food chain to endanger human health. JUNO's cleansing balm packaging uses fully renewable and recyclable plastics and paper, aiming to minimize environmental burden.

Maihai Environmental Protection: Water Treatment Technology

Maihai's dynamic nanocrystal filtration process is a pioneering technology that applies engineered nanomaterials to water treatment and reuse, effectively alleviating water scarcity and environmental pollution while saving energy and reducing carbon emissions. In 2021, Maihai Environmental Protection achieved ton-scale production of nanomaterials, and its self-developed core flexible filter tube automated production line completed testing and entered production.

Kunshan Meimiao New Materials: Graphene Electrode Manufacturing

In 2021, Kunshan Meimiao New Materials transitioned to electrode and chemical manufacturing. With graphene electrode production as its core business, its products are applied in circulating water treatment, sewage treatment, PEM hydrogen production, and electroplating electrodes — contributing to ecological and environmental protection.

QingTao Energy: Solid-State Lithium Batteries

QingTao's solid-state lithium batteries offer high safety, long cycle life, high energy density, and wide temperature tolerance. In 2021, passenger vehicles equipped with QingTao solid-state power batteries achieved single-cell energy density exceeding 360Wh/kg, with tested pure electric range surpassing 1,000 km. Additionally, QingTao solid-state batteries achieved scaled batch supply in specialized energy storage and other fields.

▍Less Disease, Better Quality of Life

NeuroXess: Individualized Brain Functional Mapping

NeuroXess strives to achieve technological breakthroughs in effectively preventing and treating major brain diseases and to efficiently translate scientific research, helping alleviate the suffering of brain disease patients and families in China as well as the social burden. In 2021, NeuroXess's original "Youdian Therapy" made breakthrough progress in early clinical trials, and the company established its first medical institution in Haidian, with plans to serve more brain disease patients in the future.

Novita: Breakthrough Anti-Cancer Drugs

Novita is dedicated to researching and developing innovative drugs that block cancer metastasis and enhance anti-tumor immune responses. In July 2021, Novita announced the licensing of China rights for NP-G2-044, a novel Fascin protein inhibitor, to China Resources Double-Crane Pharmaceutical. NP-G2-044 is the world's first small-molecule inhibitor targeting Fascin protein, effectively inhibiting Fascin protein function to reduce tumor invasion and metastasis rates.

Leo Medical: Minimally Invasive Medical Devices

Leo Medical's currently developed products cover minimally invasive medical devices for digestive endoscopy, peripheral vascular, and respiratory interventional therapy. Its peripheral vascular interventional devices have broken the international monopoly in related equipment. Moreover, the company has internationally first-in-class innovative devices in peripheral, digestive, and respiratory intervention fields, which will begin obtaining NMPA registration certificates in 2022.

OnQuality Pharmaceuticals: Oncology Supportive Care

OnQuality is dedicated to developing drugs to address specific side effects, helping patients reduce the suffering that cancer treatment may cause. In 2021, among OnQuality's pipeline, three programs targeted high-incidence skin side effects of commonly used oncology drugs, and three programs addressed severe gastrointestinal side effects of common cancer medications.

Longwood Valley: Orthopedic AI & Surgical Robots

Longwood Valley is committed to providing hospitals with globally leading full-process solutions including AI-assisted diagnosis, individualized surgical planning, surgical robots, and postoperative evaluation — making orthopedic surgery more intelligent and efficient. In 2021, Longwood Valley equipped its AI brain with a surgical robot system capable of precisely executing intelligent planning operations: ROPA (Robotic Physician Assistant), an AI joint replacement surgical robot.

Xitang Technology: Smart Elderly Care Platform

Xitang launched a multi-dimensional elderly safety perception and monitoring platform, providing 24/7 uninterrupted detection and alarm services. With all-hours protection, it aims to secure the golden window for rescue when abnormalities occur, offering more practical solutions for common challenges in elderly communities including home monitoring, care efficiency, timely assistance, and community management.

▍Innovation Is Not Just a "Distant Vision" — It Also Cares for the Present: Technology Empowering Epidemic Prevention and Control

Coyote Bioscience: Rapid COVID-19 Nucleic Acid Testing

In 2020, Coyote successfully developed the "Flash Test" series of rapid COVID-19 nucleic acid testing products with fully independent intellectual property rights and international patents, significantly accelerating testing progress in key regions and among key populations and contributing to pandemic response efforts. In June 2021, Coyote received a thank-you letter personally signed by Academician Zhong Nanshan, director of the Guangzhou Laboratory, who praised Coyote for responding to the call and actively participating in pandemic response.

Singleron: Single-Cell Sequencing for Pathological Investigation

Starting from February 2020, Singleron collaborated with Academician Fan Jia's team to investigate the pathological mechanism of SARS-CoV-2 invasion into the liver through single-cell sequencing databases. Huoshenshan Hospital also used Singleron's single-cell sequencing products to analyze pathological samples during the pandemic. In 2021, Singleron established its own laboratory in Germany and is currently conducting a research project on the mechanism of COVID-19 patient sequelae with a German university medical center affiliated hospital.

SoundAI: Precision Epidemic Prevention and Control

SoundAI is an AI enterprise recognized by the Ministry of Industry and Information Technology for outstanding contributions to pandemic response. From 2020 to 2021, SoundAI undertook national and Beijing municipal key projects including Beijing Health Kit and health epidemic prevention platforms for six provinces and cities, the Beijing Universal Studios smart cultural tourism platform, Winter Olympics support platform, and Winter Olympics epidemic prevention platform, as well as scientific research projects in far-field perception and AI operating systems.

/ 04 / Deep Learning Is the Best Way to Combat Noise

"In an industry full of noise, deep learning is the best way to improve the signal-to-noise ratio." This line also comes from an investment colleague's year-end summary. We believe this wholeheartedly. Since our founding, FreeS Fund has consistently adhered to research-driven investing, independent judgment, and deep thinking. In the alternation between input and output, we continuously refresh our understanding of the world, business, and people.

▍Input

For early-stage investing, evaluating people is paramount. Beyond that, we also require thorough research into the "business" and the "trend." At FreeS Fund's closed-door monthly meetings held roughly every 40 days, investors from biopharma, consumer & TMT, and deep tech, along with relevant portfolio founders, take turns sharing their latest industry insights. In 2021, we held seven research-focused monthly meetings with 58 themed presentations.

Topics that guest speakers focused on included:

▍Output

Regardless of market fluctuations, while maintaining respect for the market, we always remain cautiously optimistic. As one colleague put it in a year-end summary: "When you're researching something, 'slightly more good than bad' might be the best time." We believe you can sense, behind the words on FreeS Fund's WeChat account, our belief in solid research and our conviction in China.

In 2021, we published 31 industry research articles through our official account, including 19 on consumer and TMT, four on biopharma, four related to deep tech, and four on macro trends.

Welcome to click the collection links below to read our series of articles:

1. Consumer & TMT Research Collection

2. Biopharma Research Collection

3. Deep Tech Research Collection

4. Macro Trends Research Collection

Reader Giveaway

Our thanks to every reader who follows the FreeS Fund official account. We welcome your suggestions in the comments below — the six most thoughtful commenters will receive a custom New Year's gift from FreeS Fund (a Guancha x Palace Museum pastry gift box).

/ 05 / The FreeS Fund Team: Working Hard, Pushing Forward

In 2021, we celebrated our sixth anniversary in Beijing, hosted our annual investor summit in Xiamen, and followed up with team retreats amid the mountains and waters of Wuyishan and Nanjing. Over six-plus years, the FreeS Fund team has traveled far together and witnessed countless moving landscapes. The mutual support and companionship have made every single day precious.

As we enter our seventh year of continued exploration, we hope to build on our accumulated experience and go further on the path toward becoming "more than an excellent early-stage fund." We will keep doing what's right rather than what's easy — working hard, pushing forward.

▍ New Faces on the Team

In 2021, three FreeS Fund colleagues were promoted to partner, and nearly ten new members joined our team.

▍ Recognition Received

In 2021, we received a total of 61 honors — 39 for the firm and 22 for individual team members. Among the firm-level awards:

18 recognized FreeS Fund's commitment to early-stage investing, with keywords including "best returns," "most recognized by LPs," "most popular among entrepreneurs," and "most active..."
13 affirmed our investment practice in consumer and TMT, particularly in sub-sectors like retail, cross-border e-commerce, the metaverse, and culture.
Our biopharma and hard tech investment results are beginning to surface, with four honors each from media, consulting firms, and financial institutions.

▍ Work Hard, Play Hard

Guided by our spirit of inquiry and curiosity, we experienced an immersive team retreat in Fujian, exploring the province's tea culture and Hakka heritage.

In Wuyishan, we drifted down the Nine-Bend River on bamboo rafts, listening as our boatman recounted the legends of its eighteen bends. We watched the Impression Dahongpao live performance from 360-degree rotating seats, taking in the deep, serene nightscape of Wuyishan. Through tea-picking, roasting, tasting, and crafting Jian ware, we felt the living thread of millennia-old tea culture. During a treasure hunt in Xiamei Ancient Village, everyone brought different skills to the table yet collaborated seamlessly — every group was an irreplaceable first place. On our last night in Wuyishan, the team donned flowing traditional costumes for the ancient Manting Banquet performance.

In Longyan, Fujian, we visited the distinctive Hakka tulou earthen buildings, learning how generations of Hakka people carved out new lives through resilience and ingenuity. In Nanjing's Yunshuiyao, amid fine drizzle, we strolled ancient paths and felt the harmony of mountains, clouds, and water merging as one. After taking in the tranquil scenery, our team learned dragon and lion dances inside a tulou — to the beat of drums and gongs, a "golden dragon" and two "little lions" stretched and swayed through the roundhouse.

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The roads traveled, landscapes witnessed, and people and moments experienced — all nourish us. We invite you to revisit these retreat moments with us.

▍ A Small Bonus: What FreeS Fund Team Members Said in Their Year-End Reviews

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Reader Giveaway

▲ Synthetic Biology: The Heavenly Craftsman for the Next Twenty Years | 2021 FreeS Fund Annual Investor Summit

▲ Shize Bio Founder Xiang Li: The Latest Intersection of Biotech — The Spring of Stem Cell Therapy | 2021 FreeS Fund Annual Investor Summit

▲ How Can Single-Cell Sequencing Help You Understand the 40 Trillion Cells in Your Body? | 2021 FreeS Fund Annual Investor Summit

▲ What Are the Aesthetic Roots for China to Birth Luxury Brands? | 2021 FreeS Fund Annual Investor Summit

▲ If You Don't Lose the Domestic Rat Race, You'll Win Globally | Li Feng's New Year Outlook on Consumer Spending

▲ What Kind of Spiritual Consumption Does Gen Z Need? | 2021 FreeS Fund Annual Investor Summit