MaHui | Source Code Capital's Xingchen Zhang Named to Cyzone's 40 Under 40 Investors List

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"Finding tech founders full of conviction"

#MaKe Key Updates from Source Code Capital and MaHui Members

"Investing requires continuous exploration. Exploration is not only for one's own understanding, but for better supporting entrepreneurs and helping them realize their dreams. We are in an era of Chinese technological self-reliance and strength. More and more technology entrepreneurs are going from zero to one, creating lasting, real value. This strengthens my conviction in the meaning of investing: finding technology entrepreneurs full of belief, and witnessing and experiencing the entrepreneurial journey together with them."

— Xingchen Zhang, Source Code Capital

Source: Cyzone · RuiShou Analysis

This year marks Cyzone's tenth release of the "40 Under 40 Investors" list. Xingchen Zhang, Managing Director at Source Code Capital, made the list.

An Era of Great Transformation

Only Those with Insight Can Swim Against the Current

In 2013, Cyzone first launched its 40 Under 40 Investors list, with the original intention of identifying outstanding young investors under 40 who are active at the forefront of venture capital, possess remarkable insight, and stand steadily at the crest of the wave — while also uncovering the true hunters behind top unicorns. Over the past nine years, a total of 212 young investors have made the list, including Hua Wang of Sinovation Ventures, Anna Fang of ZhenFund, Zhenyu Zeng of DCM China, Chang Chen of Gaorong Ventures, Yi Cao of Source Code Capital, Kuiguang Niu of IDG Capital, Bingdong Xu of GGV Capital, Tian Cheng of Shunwei Capital, Peng Zhang of Northern Light Venture Capital, Colin Guo of HSG, Haoji Wan of Matrix Partners China, and William Hu of Qiming Venture Partners.

A decade has passed in the blink of an eye. Those once youthful investors have now reached the age of knowing destiny. Some have grown into partners and managing partners. Some now oversee funds several times larger. Some have accumulated ever more star portfolio companies. Some have struck out on their own to become industry leaders.

As the power of role models grows stronger, fresh forces continually emerge.

They Are Erudite and Distinguished

83% hold master's or doctoral degrees, and nearly half have studied overseas. Six investors hold PhDs: Kan Chen of Qiming Venture Partners, Dan Liu of CDH Investments, Rui Ma of FreeS Fund, Fei Qi of Legend Capital, Gaoguang Song of Northern Light Venture Capital, and Wenrong Wang of Fortune Venture Capital. Their investment domains are focused — four of these PhDs primarily invest in healthcare.

The top three universities attended by the 40 listed investors are Peking University, Tsinghua University, and Fudan University. Peking University alumni are the most numerous at 7, followed by 6 Tsinghua alumni and 4 Fudan alumni. Peking University alumni include Xingchen Zhang, Managing Director at Source Code Capital, Yibo Cao of HSG, Fei Qi of Legend Capital, Yumei Wang of Atlas Capital, Chenyao Wu of GGV Capital, Yangchun Wu of Intel Capital, and Xiong Fei of Matrix Partners China.

The average age is 37.2, with average investment experience of 9.5 years. The earliest age at which anyone began investing was 21. The youngest are two post-90s investors — Xutian Jing, Managing Director at 5Y Capital, and Lida Chen, Managing Director at New Ding Capital.

Over the past year, they invested in an average of 10.4 projects each, with investment amounts of 640 million RMB. They exited an average of 3 projects each, with exit amounts of 750 million RMB, and average annual return multiples of 4.5x. Their representative portfolio companies include JD Health, Kuaishou, Xpeng Motors, and SenseTime — companies with market caps exceeding 100 billion RMB — as well as unicorns such as SemiDrive, SmartMore, BYD Semiconductor, SVOLT Energy Technology Co., Ltd., Taimei Medical Technology, and Cyclone Robotics. They also include recent high-growth companies such as MetaX, Bluepha, Singleron, Xingji, Dianxiaomi, and Neox Biotech.

They Uphold Integrity and Innovation with a Global Vision

They maintain rationality amid hype, adhere to long-termism, and seek to be not merely shareholders but partners to their portfolio companies. They emphasize post-investment empowerment, doing their utmost to help companies grow through talent and resources. Moreover, the trend of pre-emptive empowerment is becoming increasingly pronounced.

Their investment style is shifting from "more is better" to "less but better," tilting toward a tone of "prudence and research-driven" investing. Rather than blindly chasing hot sectors, they choose long-cycle industries, focus on every link in the industrial chain, concentrate more deeply, research more thoroughly, and invest more precisely.

They follow national strategy, pay attention to frontier technologies across fields, and keep a close eye on "major academies and research institutes," striving to discover innovative companies at the earliest opportunity. For 2022, they will continue actively seeking opportunities in domestic substitution, innovative drugs, carbon neutrality, and other tracks, discovering and empowering entrepreneurial companies to jointly drive social development.

They hope to help more scientific and technological achievements move out of laboratories and into our lives. They hope to accompany entrepreneurs who want to change the world, or who have the ability to change the world, as they grow and mature step by step, ultimately producing world-changing technologies or products.

Characteristics of the 2022 40 Under 40 Investors

Through analysis of data on the 40 listed investors, we arrived at the following findings:

I. Steady Investment Pace

Looking at the investment pace of listed investors over the past three years (2019-2021), both deal count and investment amount maintained relatively stable growth. Average growth in deal count was 23.8%, while average growth in investment amount was 52.2%. In 2021, each investor made an average of 10.4 investments annually, with annual investment amounts of 640 million RMB.

Changes in Investment Pace Among Listed Investors, 2019-2022

Data source: RuiShou Analysis

II. Prudence and Research-Driven Investing as the Baseline

Famous investor Jeremy Grantham once said: "In investing, 90% of what passes for brilliance or just anything above average is because of a bull market." Despite the myriad styles of investors, we still found commonalities among this year's listed investors. Through our statistics, we found that over 50% of listed investors take "prudence" or "research-driven" as their investment baseline. They emphasize independent thinking, precise betting, deep professional competence, and industry immersion.

2022 Listed Investors' Investment Style Word Cloud

Data source: RuiShou Analysis

III. Hard Tech Becomes the Main Investment Track

Over the past year, education has risen and fallen, consumer investment has cooled, and market hotspots have continually shifted. The investment focus of investors has undergone earth-shaking changes. Comparing the top 10 tracks of listed investors in 2021 versus 2022, cultural entertainment has disappeared entirely, and consumer attention has dropped significantly. Hard tech has become the primary investment track for these 40 investors. Meanwhile, compared to 2021, tracks such as automotive and transportation, VR/AR, and tool software have entered the top 10 areas of investor focus. This shows that technology-driven approaches have become key to investment value.

Changes in Top 10 Investment Tracks Among Listed Investors, 2021 vs. 2022

Data source: RuiShou Analysis

IV. The Road is Long, But Arrival Comes with Walking

In today's capital winter, most investors are likely still searching for new opportunities in the market. Hotspots still exist. So among the many hotspots, which sub-tracks hold opportunity?

We surveyed the 40 investors on their views for 2022 tracks. From their responses, we summarize the following: First, hard tech remains the most closely watched hotspot, with particularly significant investment opportunities in frontier sub-sectors such as semiconductor equipment/materials, biochips, military electronics, new components, and innovative drugs. Meanwhile, against the backdrop of carbon neutrality, the new energy track is also receiving considerable attention, with solar, wind, storage, power, and hydrogen accelerating their layout. Beyond this, investors continue seeking opportunities in emerging tracks such as industrial digital upgrading, Web3/metaverse, and going global.

Investing itself is a long and arduous endeavor. Investors must hold to their original aspirations and forge ahead courageously to achieve returns. To borrow a phrase from Qu Yuan to describe the current state of young investors: "The road ahead is long and has no ending; yet high and low I'll search with my will unbending."

Word Cloud of Key Sub-Tracks for Listed Investors in 2022

Data source: RuiShou Analysis

Full "2022 40 Under 40 Investors" List (Click to View)

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