Linear Capital's 2023 Retrospective: Moving Forward Through Challenges

In September 2023, when summarizing Linear Capital's ninth anniversary, we wrote this line: the goal remains distant, the path still arduous, but there is light in our hearts — and it sums up our 2023 as well.

Twelve words to describe this year: "Recovery remains incomplete; comrades must keep striving." At the end of last year, we budgeted for $100 million in new investments for 2023. In reality, we deployed roughly $35 million across about 16 new deals. But we view this contraction as pragmatic and necessary. The main reasons: 1) we raised our investment bar; 2) the pool of viable early-stage targets meeting our criteria shrank dramatically; 3) early-stage valuations came down somewhat, improving capital efficiency; 4) follow-on funding dried up and exit channels stayed blocked, tightening the entire primary-market investment chain.

Yet these real challenges don't shake our confidence in China's long-term recovery. This is the moment that most tests our long-term conviction. I laid out many of these long-term views in last year's year-end summary, so I won't repeat them here. We simply believe in: 1) Chinese competitiveness (= intelligence × drive × hustle); 2) the pragmatism of China's government (its ultimate ability to seek truth from facts); 3) our collective belief that China can become better. The twists in the journey don't diminish our long-term optimism.

So, all told, we refused to lie flat in 2023. We got a lot done: 16 new investments, 26 portfolio companies closing follow-on rounds. On exits, Linear spent 2023 both exploring exit strategies suited to our model and rigorously enforcing exit discipline, pursuing phased, diversified approaches. Two companies have been fully exited; more than ten projects and asset packages are in the process of full or partial exit. We believe meaningful, large-scale exits in tech investing require long time horizons and patience — and that exiting well presupposes investing well. Beyond maintaining high investment standards, we aim to prove through strict exit discipline and proactive exit-strategy management that good investments can realize exit value in both up and down markets.

Below, we trace the year's key events chronologically (due to space constraints and confidentiality needs of certain portfolio companies, we list only select new investments and follow-ons):

January–February: Juehua Medical, which applies neuroscience to visual health, announced a multi-million-yuan angel round from Linear Capital. Meanwhile, microsurgical robotics platform Disight Medical closed a multi-million-yuan Pre-A round led by Linear. Our post-investment services continued, notably including a Linear Open House visiting portfolio companies — held at Agile Robots' Beijing office, where we emphasized "veterans guiding rookies" through site visits and discussions, bringing in experienced hands to share lessons.

(With portfolio companies at Agile Robots' Beijing office)

Early in the year, nothing commanded more attention than the new wave of AI sparked by ChatGPT. As a firm always focused on technology investing, we had already backed companies including Mindverse, Boolv, fasion.ai, and Shijian Ruilai during 2020–2022. We believed this AI surge would bring genuine paradigm shifts, and we encouraged all portfolio companies to leverage AIGC to empower products and productivity. In the months that followed, Linear's investment team shared our views on AGI and related investments through various media interviews and events.

March: Synthetic biology company Yiru Bio raised tens of millions of yuan, with Linear Capital leading its angel round — an important move for us into new materials. 3D real-time interactive virtual events platform Bizhen Technology also raised tens of millions of yuan, with Linear again leading the angel round.

This month, Linear had important personnel news: Songyan Huang was promoted to partner at Linear Capital. On the post-investment side, we once again held our branded event "The Wallfacers Alliance." This year's theme was energy storage, and we invited industry experts and entrepreneurs to discuss technical approaches for different energy storage scenarios, digitalization, and related topics. Additionally, Linear Academy — the entrepreneurial learning platform under Linear Capital — co-hosted an offline workshop with the AWS team, connecting Beijing and Shanghai, to share Amazon's hiring insights with founders and teams from Linear Capital's portfolio companies.

In April, Haoli Technology, a microfluidic production chip company, completed a ten-million-yuan angel round led by Linear Capital. With travel resuming, we organized a trip to Europe for our team and portfolio companies — Europe being one of the core regions for technological innovation. Over the past few years, we have invested in numerous technical founders with backgrounds from well-known European universities and research institutes, several of which have become star projects for Linear Capital (such as Agile Robots, RealView, Auscultech, DiSight Medical, Ruhr New Materials, Acesobio, and Ruixin Manufacturing — whose founders come from institutions including the German Aerospace Center, Cambridge University, and the Max Planck Institute). Our investment experience has strengthened our conviction: these technical entrepreneurs emerging from Europe's excellent universities and research institutes have the capacity to grow into outstanding technical business leaders, bringing the value of frontier technologies to more people. During this brief trip, we engaged with student organizations and entrepreneurs in the UK, Switzerland, France, and Italy on technology and entrepreneurship, and after five years, we once again visited Agile Robots' headquarters in Munich, Germany. Upon returning to Shanghai, we also invited some friends of Linear Capital and portfolio companies to our office for a closed-door discussion on the European market, and later published our reflections and takeaways from this European trip on Linear Capital's WeChat official account.

(Linear Capital Partner Songyan Huang speaking at an Oxford University student union event)

In May, after four years and three years of virtual annual meetings, we finally returned to an in-person format, hosting Linear Capital's USD annual meeting Rebound 2023 in Shanghai. We invited Linear Capital USD LPs, portfolio company founders, and partners — over 200 people gathered to connect. On the investment front, AIGC deals continued to attract intense interest. We remain bullish on this direction and actively engaged with projects, while maintaining a cautious stance toward market euphoria. This month we announced our lead investment in the A+ round of Tiamat, an AI image generation technology service provider, and hosted an AIGC tech salon in Hangzhou. On the personnel front, we announced that Henry Li, former Senior Director of Product Management at LinkedIn (Silicon Valley headquarters), had joined as a Venture Partner. Henry's addition strengthens our ability to actively source deals and talent in Silicon Valley.

In June and July, Linear Capital portfolio company MeFlow partnered with Zhipu AI to launch PowerLawGLM, a legal vertical large model based on a Chinese-language 100-billion-parameter foundation model. Dision Medical, a microsurgical robotics platform we led in the Pre-A round, completed a tens-of-millions RMB Pre-A+ round, with Linear Capital continuing its support as an existing shareholder. Shortly after, Dision Medical delivered more good news: its ophthalmic surgical robot completed Asia's first clinical application of an ophthalmic robot. We also announced our sole investment in the angel round of Yimu Technology, a startup focused on providing digital and intelligent ranch solutions, continuing our conviction in technology-enabled industrial upgrading.

Meanwhile, the World Artificial Intelligence Conference was held in Shanghai. Multiple Linear portfolio companies including Horizon Robotics, Techsun, and SenseTime's subsidiary Flashbot participated in live connections, hosted forums, roundtable discussions, and product launches. On the post-investment activities front, Linear Capital co-hosted a "ToB Tech Enterprise Operations Management Salon" with portfolio company Guandata, serving as a follow-up and synthesis of the Huawei BLM learning workshop that Linear Academy had organized for portfolio companies two years prior.

In August, on the portfolio front, follow-on rounds for existing investments were actively moving forward. Intelligent product design tool developer Auxengine closed a multi-million-yuan Pre-A round led by Linear Capital. Datablau, which we had previously backed as the sole investor in its Series A, completed its B1 round, with Linear Capital continuing its support as an existing shareholder. Also this month, our early-stage portfolio company Gritworld announced its B2 round led by BYD.

By September, after the first half's frenzy of excitement, discussions and investments in AIGC were gradually cooling down. Linear continued to focus on innovative projects at the application layer. We co-hosted a salon in Shanghai with Microsoft Accelerator on "AI+Vertical Industry Application Deployment", where Microsoft Data&AI solutions specialists and three founders from Linear's portfolio shared their perspectives and practical experiences with generative AI applications from their respective angles. September also marked Linear's ninth anniversary. At month's end, we announced that Jun Yang, a veteran tech entrepreneur and former CTO of Dada, would be joining as a Venture Partner. Yang will help Linear Capital source startups, participate in investment evaluation, and support portfolio company growth. He had previously appeared as a guest at Linear Academy, sharing his experiences and stories with founders from Linear's portfolio.

In October, Linear held an offline salon in Hangzhou on "From Intelligent Robots to General-Purpose Intelligent Robots". For this event, we invited Professor Jianwei Zhang, academician of the German National Academy of Science and Engineering and the Academy of Sciences and Humanities in Hamburg, along with researchers from university labs at Stanford University, Columbia University, and ETH Zurich, to join ten robotics-focused portfolio companies in discussing and exchanging views on the current state, challenges, and future development of general-purpose intelligent robots. At the event, I outlined Linear Capital's long-term focus and investment strategy in this direction: "Starting roughly five years ago, we expanded from focusing purely on data intelligence investments to combining software and hardware — particularly from the perspective of cutting-edge technology and artificial intelligence, thinking about and experimenting with how to dramatically improve the efficiency of machines completing core, critical steps in industries like manufacturing and construction." Guided by the principles of following technological evolution and staying two to three years ahead of the market, Linear Capital has already invested in several robotics startups. Going forward, Linear will continue to put its investment philosophy and commitment in this direction into practice. Additionally, by inviting Professor Zhang and researchers from university labs to exchange ideas with portfolio companies at this event, Linear hopes to have more in-depth exchanges and collaborations with industry experts and university labs in the future.

(Founders of general-purpose intelligent robot portfolio companies exchanging ideas)

In November, even as the broader market cooled, we stayed cautiously optimistic while raising the bar for both our team and our portfolio companies. With year-end approaching, our investment pace never let up. That month, Linear Capital led the Pre-A round of Kewoke Technology, a manufacturer of composite diaphragms for alkaline hydrogen production. We made a sole investment in the Pre-A round of Tanda New Materials, which develops non-cement-based, carbon-utilizing inorganic cementitious materials. Meanwhile, Wance, a company we led at the angel stage, closed a financing round of nearly 100 million RMB — its domestically produced sensors have already entered leading customers including BYD. Mid-month, we launched recruitment for the Global Young PhD Fellow program, our platform to identify outstanding technical entrepreneurs worldwide. Beyond investing, we'll continue devoting energy and resources to building a rapid learning and exchange platform for young talent at home and abroad who aspire to tech entrepreneurship, are in the early stages of building companies, or want to understand how China's best tech startups grow.

In December, new deal announcements kept coming. Beyond leading the tens-of-millions angel round of Yinghua Chenrui, a company advancing high-performance modification and innovative applications of biomaterials, we have additional new investments in the pipeline — stay tuned.

At the same time, we heard plenty of progress from existing portfolio companies. Linear Capital early investment MeFlow announced a nearly 80 million RMB Pre-B round, with Linear Capital continuing to participate as an existing shareholder. Riview, which Linear Capital led at the angel round, secured two consecutive rounds from HSG and Xiaomi. Tezign founder and CEO Ling Fan was named to the Harvard Business Review 2023 China New Growth · Pioneer list. Hebin Intelligence, another Linear Capital angel lead, deployed its ultrasound robot at a county hospital in Guoluo Prefecture, Qinghai Province, using telemedicine to solve access-to-care challenges. This is exactly what we hope to see from tech investment: technology for good, bringing better lives to more people.

Our Plans for 2024

• Keep investing well — this may be the best investment vintage of the next decade. The best prices, the highest-quality founders, and a downturn that forges stronger entrepreneurs. Suffering builds glory.
• Continue expanding our team — we plan to hire 5–8 additional investment professionals.
• Focus on how new AI, robotics, new biotech, and new materials will revolutionize productivity across industries and the commercial opportunities this creates.
• Live by "less talk, more action; make good decisions; execute well on those decisions."

Out with the old, in with the new — wishing everyone a Happy New Year!

About Linear Capital

Linear Capital is an early-stage investment firm focused on "frontier technology + industry" — applying frontier technologies such as data intelligence, digital new infrastructure, next-generation robotics, and technological transformation of traditional sectors (biotech, materials, energy, etc.) to vertical industries to dramatically improve efficiency, solve pain points, and enable industrial upgrading. Through substantial increases in industrial value, we aim to generate outsized commercial returns. We currently manage ten funds with total AUM of approximately $2 billion.

We primarily lead investments from angel through Series A, with typical check sizes of $3–8 million or RMB equivalent.

Our early investments include Horizon Robotics, Kujiale, Sensors Data, Tezign, Rokid, Guandata, Agile Robots, and over 120 other entrepreneurial teams. The aggregate valuation of Linear Capital's portfolio companies is approximately $20 billion.

In the near term, Linear Capital is working to become the best Data Intelligence Technology Fund, and over the long term, to build the most influential Frontier Technology Application Fund.