Code View | Source Code Capital's Yiwen Hao: Helping Entrepreneurs See Farther, Deeper, and More Precisely

"We're committed to investing early, investing small, and investing in technology. The strategy boils down to doing three things better and more intensely: First, seeing further — understanding end-user demand. Second, going deeper — really examining industrial chain structure. Third, providing more precise support to these founders."

Recently, the 23rd China Equity Investment Annual Forum, hosted by Zero2IPO and PEDaily, concluded successfully. The forum, themed "Persistence and Adaptation," addressed the future of the equity investment industry.

At a roundtable titled "Investing Early, Small, and in Tech: How to Navigate 'Uncharted Territory,'" Yiwen Hao, Managing Director at Source Code Capital, joined fellow panelists to discuss investment strategies in artificial intelligence, new materials, and other fields; how to help portfolio companies expand overseas; how early-stage investment firms have adjusted their strategies amid the broader economic downturn; and how to support company growth and identify assets that can weather economic cycles.

Hao argued that true technological "uncharted territory" is relatively rare — more often, it's investment territory that remains uncharted. China is transitioning from an overseas expansion 1.0 model to 2.0, where the biggest challenge lies in establishing local subsidiaries, production capacity, and sales teams. He analyzed investment strategies, emphasizing the need to deeply understand industrial chains and precisely support founders while meeting user demand.

The following is a transcript of the event, edited by Source Code Capital:

Product exports are a hot topic right now. Leveraging established foreign platforms like Amazon is relatively straightforward — this is China's overseas expansion 1.0 model. What Chinese companies are now pursuing in the 2.0 model is far more difficult: actually setting up local subsidiaries, local production capacity, and local sales teams. Talent is a massive bottleneck here.

From a dollar perspective, early-stage investments this year have been best matched to first-round funding for AI application companies and Embodied Artificial Intelligence companies. In AI applications, China can still draw on experience accumulated during the mobile internet wars. Combined with new generative AI technologies, this creates competitive advantages in both domestic and global markets. Many mobile internet entrepreneurs with proven track records have decisively reentered the arena this year, jumping into AI. Source Code's investments this year have largely been first-round bets on exceptional founders.

In robotics, for example, the technical challenge lies in maturing the "brain" and "cerebellum" — translating academic achievements into industrial applications. Teams need both academic depth and insight into end-user markets to flexibly identify ways to gradually deploy embodied robots across different scenarios.

Source Code has consistently invested early and small. The specific strategy is to do three things better and more intensely:

First, see further — understand end-user demand. What will AI compute chip architecture look like in five years? What methods should be used for data transmission? How will people move point-to-point in ten years? Seeing further helps identify earlier-stage opportunities and build conviction around them.

Second, go deeper — examine industrial chain structure more thoroughly. China has the most complete industrial catalog globally, but visible opportunities aren't always genuine ones. Many startups develop excellent technology, only to discover upon deeper industrial chain investigation that large companies are already researching or nearing mass production — making that technology far less scarce in the market. So we need to build broad relationships across industrial chains and develop deeper understanding of their structure and value distribution.

Third, help founders more precisely. Source Code has an entrepreneur services team that identifies a company's stage-specific weaknesses and provides targeted support. We need to identify needs more precisely, then help address them.

Truthfully, technological "uncharted territory" isn't that extensive. Much of the time, it's investment territory that remains uncharted — fields where no one dares to invest, or where no one sees a large market. Take low-altitude economy and private aerospace: a few years ago, there was no strong industry consensus. Source Code was among the earliest to make first-round investments in companies that are now progressing well in these sectors, and we're committed to finding more such uncharted investment territories. From a user demand perspective, customers are holding cash and waiting to buy — they're eager for companies that can actually deliver products and technology.